-
Sarah BerryWeb Marketing Consultant
-
March 17, 2023
-
4 minute read
- Sarah Berry is a Google Analytics-certified Web Marketing Consultant at WebFX. She’s written over 400 articles on digital marketing, covering topics like SEO, CRO, and Amazon. When she isn’t polishing her Time Magazine Person of the Year Award, she’s spending time with her flock of ducks.
Last updated: November 24, 2023

What is ROAS?
Return on ad spend (ROAS) is a marketing metric that measures the amount of revenue earned for every dollar spent on advertising. You can calculate your return on ad spend using the following formula: Revenue Attributed to Ad Spend / Advertising Costs.
Asking yourself, “what is ROAS?” or “what does ROAS mean”? Well, you’re in the right place!
On this page, we’re diving into all things return on ad spend! So, just keep reading to learn more about the ROAS definition!

Key Takeaways
- ROAS is a marketing metric that assesses the performance and financial return of a digital advertising strategy, campaign, or ad group.
- To calculate ROAS, use the ROAS formula, which divides your ad strategy’s total revenue by its total cost, to calculate your return on ad spend: ROAS = Revenue / Cost
- ROAS in marketing is essential for informing your company and your team about the performance and quality of your ad campaign.
- A good ROAS is usually a 4:1 ratio — $4 in revenue to $1 in ad costs.
Here’s a quick overview of everything we’ll cover below:
P.S. Don’t have time to manually complete the return on ad spend calculation? Use our free ROAS calculator below!
ROAS Calculator
What is ROAS?
ROAS is a marketing metric that assesses the performance and financial return of a digital advertising strategy, campaign, or ad group. Using and measuring this metric can help companies improve their ad strategies and monetary returns.
How to calculate ROAS
Now that you know the answer to the question, “what is ROAS in marketing,” let’s dive into how to calculate ROAS.

The ROAS formula
ROAS = Revenue / Cost
To calculate ROAS, use the ROAS formula, which divides your ad strategy’s total revenue by its total cost, to calculate your return on ad spend: ROAS = Revenue / Cost
Why ROAS matters
So you now know how to calculate ROAS and the answer to the question, “what is ROAS.” Now let’s explore why it’s important!
ROAS in marketing is essential for informing your company and your team about the performance and quality of your ad campaign. Return on ad spend provides you with actionable data you can use to optimize your ad spend. Without the calculation, it becomes easy to waste your ad spend and diminish the number of leads and sales coming in from advertising.
What is a good ROAS?

What is a good ROAS?
A good ROAS is usually a 4:1 ratio — $4 in revenue to $1 in ad costs.
A good ROAS is usually a 4:1 ratio — $4 in revenue to $1 in ad costs. There is no right answer, however, because some businesses might need more or less revenue to operate. The average return on ad spend is 2:1 — $2 in revenue to $1 in ad costs.
What determines a good ROAS?
Now that you know the answer to the question, “what is a good ROAS,” let’s dive into what determines it. When it comes to determining a good ROAS for your company, you need to think about the following:
- Your industry
- Your profit margins
- Your average cost-per-click (CPC)
Once you figure out these details, you can uncover the optimum dollar amount for your business.
View Average Google Ads ROAS By Industry
ROAS vs. ROI: What’s the Difference
So you know the answer to the question, “what is a good ROAS.” Now let’s dive into the main differences between ROAS and ROI.
ROI calculates how much your company makes from advertising (or another channel) after expenses, which includes operational costs, turnover, and more. In comparison, return on ad spend determines how much your business earns (on average) from advertising only.
Since they measure different aspects of your campaign, return on ad spend and ROI also use different formulas.
ROAS Formula | ROI Formula |
ROAS = Revenue / Cost |
ROI = Net Profit / Total Investment*100 |
If you’re struggling to remember the differences between ROI and return on ad spend, think about the two from this perspective. ROAS in marketing measures your average return from advertising, while ROI measures your total return from advertising.
93% of WebFX customers are extremely satisfied with their digital marketing results.
“Working with WebFX, everything is very organized and strategic. We’re only a year into our partnership, and our expectations have definitely been met.”
View More Client Testimonials

Improve your ROAS with help from WebFX
So now you know the answer to “what is ROAS,” along with how to calculate ROAS in marketing, why it’s important, and what makes a good return on ad spend.
But when your ads fail to generate the revenue and results that your business needs, it places your company (and you) in a difficult spot.
Professional ad management services from WebFX can take away the stress and worry over your ad campaigns and provide the results and revenue you need.
Learn more about how our paid advertising services, from search to social, can help your business earn an impressive return on ad spend by contacting us online or calling us at 888-601-5359 to chat with a strategist about your goals, company, and more!
-
Sarah Berry is a Google Analytics-certified Web Marketing Consultant at WebFX. She’s written over 400 articles on digital marketing, covering topics like SEO, CRO, and Amazon. When she isn’t polishing her Time Magazine Person of the Year Award, she’s spending time with her flock of ducks.
-
WebFX is a full-service marketing agency with 1000+ client reviews and a 4.9-star rating on Clutch! Find out how our expert team and revenue-accelerating tech can drive results for you! Learn more
Try our free Marketing Calculator
Craft a tailored online marketing strategy! Utilize our free Internet marketing calculator for a custom plan based on your location, reach, timeframe, and budget.
Plan Your Marketing Budget

Maximize Your Marketing ROI
Claim your free eBook packed with proven strategies to boost your marketing efforts.
Get the GuideTry our free Marketing Calculator
Craft a tailored online marketing strategy! Utilize our free Internet marketing calculator for a custom plan based on your location, reach, timeframe, and budget.
Plan Your Marketing Budget
What to read next



