● The short answer
A good ROAS is one above your break-even point, which depends on your margins. Break-even ROAS equals 1 divided by your profit margin: at a 25% margin you need 4:1 just to cover the ad cost. So 3:1 can be excellent for one business and a loss for another. Set your target from your own numbers, not an industry average.
Key takeaways
- ROAS is attributed revenue divided by ad spend.
- Break-even ROAS equals 1 divided by your gross margin.
- There is no trustworthy universal ROAS benchmark; margins and attribution settings vary too much.
What ROAS measures
ROAS (return on ad spend) is revenue attributed to ads divided by what you spent on them. Spend $1,000, track $4,000 in sales, and your ROAS is 4:1 (or 400%). It is simple, which is why everyone quotes it, and incomplete, which is why it misleads people.
ROAS ignores your cost of goods, labor, shipping and overhead. A 4:1 ROAS on a product with a 20% margin loses money. The same 4:1 on a service with a 70% margin is very profitable.
The how is where we come in.
What we walk through with you, for your business:
- How to calculate your break-even ROAS
- Why published ROAS benchmarks are shaky
- Our take
Every business is different, so the plan is too. Tell us where you want to show up and we will show you what it takes.
Talk to usMore questions
Is ROAS the same as ROI?
No. ROAS compares revenue to ad spend only. ROI compares profit to the total investment, including product costs, fees and labor. A campaign can have a 3:1 ROAS and a negative ROI if margins are thin. Use ROAS for day-to-day campaign management and ROI for deciding whether the channel is worth it overall.
What ROAS target should I set in Google Ads?
Start at or slightly below your current actual ROAS, not an aspirational number. Setting a target far above what the campaign achieves tends to choke volume, because the bidding system only enters auctions it thinks will hit the target. Raise it gradually once results are stable, and keep it above your break-even line.
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