What is ROAS? Return on Ad Spend Explained
A plain-English guide to ROAS: what it means, how to calculate it, what counts as a good ROAS, and how it differs from ROI.
What is ROAS?
ROAS stands for Return on Ad Spend. It measures how much revenue you earn for every pound you spend on advertising. If your ROAS is 4x, that means every £1 of ad spend generates £4 in revenue.
How to calculate ROAS
The formula is simple:
ROAS = Revenue from ads ÷ Ad spend
For example, if you spent £2,000 on Google Ads and those ads generated £10,000 in sales, your ROAS is 5.0x.
What is a good ROAS?
It depends entirely on your profit margins:
- High-margin businesses (software, digital products): A ROAS of 2–3x can be profitable
- Medium-margin businesses (services, branded goods): Aim for 4–5x
- Low-margin businesses (retail, reselling): You may need 8–10x to be profitable
ROAS vs ROI: what is the difference?
ROAS measures revenue per pound of ad spend. ROI measures profit relative to total investment. ROAS does not account for cost of goods, staff, or other overheads — so a high ROAS does not automatically mean high profit.
Try the calculator
Use our ROAS Calculator to work out your return on ad spend instantly.
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Related calculators
- ROAS Calculator — ROAS = Revenue ÷ Ad Spend. A ROAS of 4x means you earn £4 for every £1 you spend on advertising.
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Last updated
Last reviewed: 2026-04-12T13:08:32.782Z.