ROAS, or return on ad spend, is one of the most important numbers in paid advertising. It tells you how much revenue you earn for every dollar you spend on ads. A ROAS of 4x means you earned four dollars for every one dollar spent.
So what counts as a good ROAS? The honest answer is that it depends on your margins. A business with high profit margins can be very profitable at a 2x ROAS, while a business with thin margins may need 5x or more just to break even.
As a rough guide, many ecommerce brands aim for a blended ROAS of 3x to 4x. Lead generation businesses often think in terms of cost per acquisition instead, since revenue arrives later in the sales cycle.
Be careful with ROAS as a single number. A very high ROAS can actually mean you are under-spending and leaving growth on the table, while a lower ROAS at higher volume can produce far more total profit. The goal is not the biggest ROAS, it is the most profit.
That is why we optimize to your real business goals, not just a vanity metric. We look at margins, customer lifetime value and total profit to decide how hard to scale.
If you are not sure what ROAS your account should be targeting, request a free audit and we will give you a clear, honest benchmark for your business.