ROAS (Return On Ad Spend)
Also known as: Return On Ad Spend
ROAS is the revenue generated for every dollar of ad spend, calculated as conversion revenue divided by ad spend.
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What it actually means
Return on ad spend is the bottom-line measure of advertising efficiency, expressed as a ratio or multiple. A 4x ROAS means every $1 spent produced $4 in tracked revenue. It is most reliable for e-commerce, where every sale has a clear dollar value Meta can attribute; for lead-gen and local service businesses, ROAS has to be modeled by multiplying leads by close rate and average customer value. ROAS is not the same as profit — it ignores your cost of goods, labor, and overhead. A 3x ROAS can be wildly profitable for a software product and a money-loser for a low-margin retailer, so always interpret it against your margins.
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$1,000 in spend driving $5,000 in attributed revenue is a 5x ROAS.
Local businesses with thin tracking should compute a blended ROAS by hand: leads times close rate times customer value, divided by spend. It keeps you honest about whether ads actually pay for themselves.
Official definitions
Straight from the ad platform's own help pages:
- Meta Business Help Center — Purchase ROAS (return on ad spend) (undated page; read September 26, 2026)Purchase ROAS is purchase conversion value divided by amount spent.
- Google Ads Help — About Target ROAS bidding (undated page; read September 26, 2026)Target ROAS is the average conversion value you want for each dollar spent on ads; $5 in sales from $1 of ad spend is a 500% ROAS.
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Numbers and costs
Related terms
CPA is the average cost to acquire one paying customer (or completed action), calculated as spend divided by conversions.
LTV is the total revenue (or profit) a customer generates over the entire span of their relationship with your business.
CAC is the total cost to acquire one new customer, including ad spend and all sales and marketing expenses, divided by customers won.
A conversion is a completed action you've defined as valuable — a purchase, form submission, call, or booking — tracked back to your marketing.
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