Question 1

What is ROAS?

Accepted Answer

Return on Ad Spend (ROAS) measures revenue generated per dollar spent on advertising. A ROAS of 4:1 means every dollar of ad spend produces four dollars of revenue. It is the primary metric for evaluating paid advertising performance.

Question 2

How do you calculate ROAS?

Accepted Answer

ROAS = Revenue from ads / Cost of ads. If a campaign costs $1,000 and generates $5,000 in revenue, your ROAS is 5.0 (or 5:1). Make sure you attribute revenue correctly to the specific campaign or channel.

Question 3

What is a good ROAS?

Accepted Answer

A 4:1 ROAS (400%) is a common benchmark, but the right target depends on your margins. If your profit margin is 50%, you need at least a 2:1 ROAS to break even on ad spend. High-margin businesses can profit at lower ROAS; low-margin businesses need higher ROAS.

Question 4

What is the difference between ROAS and ROI?

Accepted Answer

ROAS measures revenue against ad spend only. ROI measures profit against total investment (including product costs, overhead, and labor). A campaign can have a great ROAS but poor ROI if your margins are thin. Track both.

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