# Marketing glossary: What is ROAS (return on ad spend)?

> ROAS (return on ad spend) is revenue from ads divided by what the ads cost. Formula, worked example, what a good ROAS looks like and how to improve it.

- Source: https://marketing.ushbatech.com/glossary/roas
- Language: en
- Updated: 2026-11-11
- Publisher: UshbaTech (Marketing Studio by UshbaTech), Mestia, Georgia

ROAS, return on ad spend, is the revenue an ad campaign generates divided by what the ads cost.

## What is ROAS (return on ad spend)?

ROAS, return on ad spend, is the revenue an ad campaign generates divided by what the ads cost. If $100 of ads brings in $500 of sales, ROAS is 5, often written 5:1 or 500%. It measures ad efficiency only; product, delivery and other costs are not included.

## Why does ROAS matter?

ROAS tells you which campaigns pay for themselves. The break-even ROAS depends on your margin: with a 25% margin you need at least 4:1 just to cover the product cost, so a "good" ROAS differs by business.

## How to improve ROAS

1. **Track conversions properly** — Connect analytics and conversion tracking so revenue is attributed to the right campaign.
2. **Know your break-even** — Divide 1 by your profit margin to find the ROAS you need to break even.
3. **Cut and scale** — Pause campaigns below break-even, test new creatives and move budget to the winners.

## What does ROAS look like in practice?

An online shop spends $200 on Google Ads and records $1,000 in sales from those ads: ROAS = 1,000 ÷ 200 = 5. With a 40% margin, break-even is 2.5, so this campaign is profitable.

## Marketing glossary: frequently asked questions

### What is the difference between ROAS and ROI?

ROAS compares revenue from ads with ad spend only. ROI compares profit with all costs, including products, delivery, fees and staff, so it gives a fuller picture of profitability. A campaign can show a healthy ROAS of 3 and still lose money if margins are thin.

### Does Marketing Studio report ROAS?

Yes. Marketing Studio's Ads Manager reports spend, clicks, CPC, CPA and ROAS per platform for Google Ads, ChatGPT Ads and Telegram Ads. ROAS guardrails keep campaigns within your targets, automatically or with your approval.