ROAS Formula
Learn the return on ad spend formula and how attributed revenue relates to advertising spend.
ROAS = revenue attributed to ads ÷ ad spendWhat the formula means.
Divide the revenue attributed to an advertising campaign by the amount spent on advertising. The result is usually shown as a multiple such as 4×.
ROAS is a revenue-efficiency ratio, not profit.
Attribution settings can change the numerator.
A target ROAS can be converted to required revenue by multiplying spend by the target multiple.
Variables.
RRevenue credited to the advertising activity under the chosen attribution method.
AAdvertising cost included in the denominator.
ROASRevenue generated per unit of ad spend.
Worked example.
- $4,000 ÷ $1,000 = 4
Common mistakes.
- Calling ROAS profit.
- Mixing total company revenue with campaign-specific spend.
- Comparing platforms that use different attribution windows without noting the difference.
Quick questions.
What does 4× ROAS mean?
It means $4 of attributed revenue for each $1 of ad spend.
Is ROAS the same as ROI?
No. ROAS compares attributed revenue with ad spend; ROI compares gain or loss with total investment.