Metrics & KPIs
What is ROAS (return on ad spend)?
ROAS (return on ad spend) is the revenue earned for every unit of currency spent on ads: revenue from ads divided by ad spend. A ROAS of 4 means every $1 spent brought back $4 in sales.
Formula
ROAS = revenue from ads ÷ ad spend
Example
Spend $500 and the campaign returns $2,000 in revenue → ROAS = 2,000 ÷ 500 = 4. At a 30% margin, that $2,000 leaves roughly $100 in real profit — which is why ROAS is always read against your break-even point, not a gut-feel target.
Why it matters
ROAS is the headline profitability metric for Meta ads, but it works on revenue, not profit — the same ROAS can be a win or a loss depending on your margin. Compare it to your break-even ROAS (1 ÷ gross margin): at a 25% margin you need a ROAS above 4 just to break even.
How to use and improve it
Improve ROAS by raising average order value, lifting the landing-page conversion rate, and cutting spend on ad sets below break-even. Better targeting and creative help, but the offer and the page often move ROAS more than the ads do.
Frequently asked questions
What is a good ROAS?
For most e-commerce stores a ROAS of 3–4 or higher is profitable, but the only honest answer is 'above your break-even ROAS', which is 1 divided by your gross margin.
What's the difference between ROAS and ROI?
ROAS compares revenue to ad spend only; ROI (return on investment) compares profit to total costs including product, shipping and overhead. ROAS is easier to track daily; ROI is the truer measure of whether you made money.
Why is the ROAS in Ads Manager higher than my real revenue?
Ads Manager uses attribution windows and modelled conversions, so it can credit sales the ad influenced but didn't solely cause. Reconcile it against your store's actual revenue rather than trusting the platform number alone.
Related
How does your account score?
A free Meta ads audit gives you a 0–100 score, shows wasted budget, and lists the exact next steps.
Run a free audit