Return on Ad Spend (ROAS)
Also known as: Return on Ad Spend
ROAS (Return on Ad Spend) is the revenue you earn for every rupee spent on advertising. A ROAS of 4 means ₹4 of revenue for every ₹1 of ad spend.
ROAS is the headline efficiency metric for any paid campaign. It answers the simplest question a business owner has — 'is this advertising making money?' — at the channel, campaign, ad set, or keyword level.
A 'good' ROAS depends entirely on your margins. A business with 80% gross margin can thrive at a 2x ROAS; a low-margin retailer might need 6x or more just to break even. That's why ROAS should always be read against your break-even ROAS, not a generic benchmark.
ROAS measures revenue, not profit, and only counts ad spend — it ignores product cost, fulfilment, and overhead. For a truer picture of acquisition efficiency, pair it with CAC and customer lifetime value.
Formula
ROAS = Revenue from ads ÷ Ad spend
Often shown as a ratio (4:1) or multiple (4x).
Example
A campaign spends ₹50,000 and generates ₹2,00,000 in tracked sales → ROAS = 2,00,000 ÷ 50,000 = 4x.
Frequently asked questions
What is a good ROAS?
It depends on your margins. A common rule of thumb is 4x, but a high-margin software business can profit at 2x while a low-margin e-commerce store may need 6x+. Always compare against your break-even ROAS (1 ÷ gross margin).
What is the difference between ROAS and ROI?
ROAS measures revenue against ad spend only. ROI (return on investment) measures profit against total cost, including product cost, salaries, and overhead. ROAS can look healthy while ROI is negative.
Related terms
Customer Acquisition Cost (CAC)
CAC (Customer Acquisition Cost) is the total cost of sales and marketing required to win one new paying customer over a given period.
Cost Per Click (CPC)
CPC (Cost Per Click) is the amount you pay each time someone clicks your ad. It's the core pricing model of search and many social ad platforms.
Pay-Per-Click (PPC)
PPC (Pay-Per-Click) is an advertising model where you pay a fee each time someone clicks your ad, buying visits rather than earning them organically.
Customer Lifetime Value (LTV)
LTV (Customer Lifetime Value) is the total profit a business can expect from a single customer across the entire relationship.
Conversion Rate
Conversion rate is the percentage of visitors who complete a desired action — a purchase, sign-up, or enquiry — out of everyone who had the chance to.
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