ROAS (Return on Advertising Spend) is a metric that indicates how much revenue is generated per euro spent on advertising.
How ROAS is calculated
ROAS is calculated as revenue divided by advertising expenditures, expressed as a percentage or ratio. A ROAS A 400% (or 4:1) ratio means that every euro invested generates €4 in revenue.
ROAS versus ROI
Unlike ROI, it measures ROAS It doesn't take into account profit margins, production costs, or other overhead expenses; it's purely a revenue-to-ad-spend ratio. That makes ROAS A popular KPI that’s quick to calculate and useful for comparing campaigns, but it doesn’t tell the whole financial story: a high ROAS Selling low-margin products can still result in a loss.
Where ROAS is used most often
ROAS is the standard KPI in e-commerce advertising (Google Shopping, social ads) where revenue per campaign or product group can be measured directly, and is often set as a target within automated bidding strategies such as Target ROAS.
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