Return on ad spend (ROAS) is the revenue your ads produce divided by what the ads cost. If you spend INR 10,000 and the ads bring in INR 40,000 of sales, your ROAS is 4, which people write as 4:1, 4x or 400%. Google uses the same idea in its Target ROAS bidding, where $5 of sales for each $1 of ad spend is a 500% target.
Why it matters for your business
ROAS answers the question owners actually ask: is this advertising paying for itself? It is more useful than clicks or CPM because it ties spend to money in.
But ROAS measures revenue, not profit. It ignores the cost of the product, delivery, returns and fees, and agency fees too. A 3x ROAS can be healthy for a business with high margins and a loss for one with thin margins. ROAS also depends on what gets tracked: missing sales make it look worse, double-counted sales make it look better.
An example
These are round, illustrative numbers for an online store.
| Item | Amount |
|---|---|
| Ad spend | INR 50,000 |
| Revenue from the ads | INR 2,00,000 |
| ROAS | 2,00,000 ÷ 50,000 = 4 (400%) |
| Gross margin on those sales (40%) | INR 80,000 |
| Profit after ad spend | INR 30,000 |
Break-even ROAS is 1 ÷ gross margin. At a 40% margin it is 2.5. Below 2.5 the ads lose money on the first order; above it they make money. Work this number out before you judge any campaign.
How to use it
- Track real sale values, not just "a conversion happened". Google requires conversion values before you can use Target ROAS, and sets minimum conversion volumes for each campaign type.
- On Meta, send purchases and their values reliably, ideally through the Conversions API as well as the pixel.
- Set your target from your margin, not from a number someone quotes as "good".
- For lead businesses with no online sale, use cost per qualified lead until you can feed sale values back from your CRM.
- Remember repeat customers. A first-order ROAS below break-even can still be worth it if customers come back.
If you run Shopping or Performance Max, a ROAS target is a common way to steer bidding; see Performance Max explained. Our digital marketing team sets targets from your margins, agreed with you first.
Frequently asked questions
What is a good ROAS?
The one above your break-even point. Divide 1 by your gross margin to find it. Any general benchmark you read ignores your costs, so it tells you little.
Is ROAS the same as ROI?
No. ROAS compares revenue with ad spend only. ROI compares profit with all the money invested, including product costs, fees and time.
Why do Google and Meta show different ROAS for the same sales?
Each platform counts sales it believes its ads influenced, using its own attribution rules and windows. Both can claim the same order, so compare with the real sales in your store or CRM.
Last reviewed 22 Oct 2026 by the Astrafolio team.