ROAS (Return On Ad Spend)
ROAS (Return On Ad Spend) is revenue divided by ad spend. Unlike ROI, ROAS does not subtract cost — it shows the gross return of advertising.
The ROAS formula
ROAS = revenue / ad spend. For example, $2000 revenue at $1000 ad spend — ROAS 2.0 (or 200%). ROAS 1.0 means ads returned exactly what was put in.
ROAS vs ROI
ROAS is handy for a quick ad read but ignores domains, service and fees. For real funnel profitability use ROI, with ROAS as an operational guide.
FAQ
- Is ROAS 1.0 a profit?
- No, it is ad break-even: revenue equals ad spend. With other costs included it is still a loss.
- When is ROAS handier than ROI?
- ROAS for a quick ad read, ROI for final funnel profitability including all costs.
- Why does ROAS look better than ROI?
- Because it does not subtract cost. The same result looks more favorable by ROAS than by ROI.
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