ROAS means return on ad spend. It is the revenue from your ads divided by what you spent on them. A ROAS of 4 means every $1 of ad spend brought in $4 of revenue.

How do you calculate ROAS?

Divide the revenue credited to your ads by the ad spend for the same period. $5,250 of revenue from $1,500 of spend is a ROAS of 3.5, also written as 350%.

What is a good ROAS for ecommerce?

It depends on your margin. Your break-even ROAS is 1 divided by your gross margin rate, so at a 40% margin it is 2.5. A good ROAS is above that, with room left for fixed costs and profit.

Is ROAS the same as ROI?

No. ROAS compares revenue with ad spend. ROI compares profit with cost. A ROAS of 3.0 at a 40% gross margin brings back $1.20 of gross profit per $1, a 20% return on the ad spend.

What is the difference between ROAS and MER?

ROAS usually means the revenue one platform credits to its ads divided by the spend on that platform. MER divides total store revenue by total ad spend across all channels, so it does not depend on any attribution model.

Why is my ROAS in Meta higher than in Shopify?

Meta can count view-through purchases, uses its own attribution window and credits orders that another channel also claims. Your store sees each order once, so platform-reported revenue is often higher.

ROAS meaning: formula, types and what a good ROAS is

Key takeaways

ROAS means return on ad spend: revenue from ads divided by ad spend, so $4 of revenue per $1 of spend is a ROAS of 4.
Platform ROAS uses the revenue an ad platform credits to itself, blended ROAS uses all store revenue, and new-customer ROAS uses first orders only.
A good ROAS is one above your break-even ROAS, which is 1 divided by your gross margin rate.
Ad platforms usually report more revenue than your store, because they count view-throughs, use their own windows and claim the same orders.
ROAS measures revenue, not profit, so read it next to your margin or use POAS.

ROAS means return on ad spend. It is the revenue your ads bring in divided by what you paid for them: a ROAS of 4 means each $1 of ad spend brought in $4 of revenue.

ROAS is the most common way to judge a paid campaign, and it is easy to misread. This guide covers the formula, the different kinds of ROAS, what a good ROAS depends on, and why the number in your ad account rarely matches your store.

The ROAS formula

ROAS=revenue from ads ÷ ad spend

Revenue from ads: The value of the orders credited to the ads. Which orders count depends on who does the crediting: the ad platform or your own tracking.
Ad spend: What you paid the platform for the same campaigns in the same period.

$5,250 of revenue from $1,500 of ad spend: 5,250 ÷ 1,500 = 3.5.

People write the same result in different ways. Google Ads, for example, sets target ROAS as a percentage. These all mean the same thing:

Format	Example	How to read it
Ratio	3.5	$3.50 of revenue per $1 of spend
Multiple	3.5x	Revenue is 3.5 times the spend
Percentage	350%	Revenue is 350% of the spend
Ratio with colon	3.5:1	$3.50 of revenue for every $1

A worked example

A store runs a Google Shopping campaign for a month. It spends $1,500, and the campaign is credited with $5,250 in sales. ROAS is $5,250 ÷ $1,500 = 3.5. In the same month, a Meta campaign spends $800 and is credited with $2,000. Its ROAS is $2,000 ÷ $800 = 2.5.

The Google campaign looks better. Whether either one made money depends on the margin on those sales, which we get to below. ROAS also depends on who counts the sales. Both numbers come from the platforms themselves, and each platform counts by its own rules. You can run your own numbers in the free ROAS calculator.

Kinds of ROAS: platform, blended and new-customer

"ROAS" can mean several different numbers. They answer different questions, so know which one you are looking at.

Platform ROAS

The revenue an ad platform credits to its own ads, divided by your spend on that platform. Meta, Google and TikTok each decide which purchases count with their own attribution settings. Platform ROAS is what you see in Ads Manager, and it is what the platform's bidding uses.

Blended ROAS

Your store's total revenue divided by your total ad spend across all channels. It ignores who gets credit and answers one question: for everything we spent on ads, how much did we sell? Many teams call this number MER (marketing efficiency ratio). Our guide to MER vs ROAS explains when to use which.

New-customer ROAS

Revenue from first orders by new customers divided by ad spend. Returning customers often buy without an ad, so this version leaves their orders out. It is lower than blended ROAS, but it shows what the ads add in new business.

Here is how the kinds compare for one example month:

Kind of ROAS	Calculation	Result
Meta platform ROAS	$32,000 reported ÷ $10,000 spend	3.20
Google platform ROAS	$21,000 reported ÷ $5,000 spend	4.20
Blended ROAS	$45,000 store revenue ÷ $15,000 total ad spend	3.00
New-customer ROAS	$18,000 from first orders ÷ $15,000 total ad spend	1.20

Example store, one month. Each row is a correct ROAS, but each answers a different question.

Revenue claimed by the platforms vs revenue in the store

Meta claims

$32,000

Google claims

$21,000

Sum of claims

$53,000

Store revenue, all channels

$45,000

The two platforms claim $8,000 more than the store took in, even though email and organic search also brought in sales.

Meta and Google together claim $53,000 in revenue. The store only took in $45,000 that month, and part of that came from email and organic search. The platforms are counting some of the same orders. The section on Ads Manager below explains why.

What is a good ROAS?

There is no single good ROAS. A good ROAS is one above your break-even ROAS, with room left for fixed costs and profit. Break-even ROAS is 1 divided by your gross margin rate, where gross profit is revenue minus product cost, shipping you pay, payment fees and handling. A ROAS of 2.0 leaves a healthy profit for a store with a 70% margin and loses money for a store with a 35% margin:

At a ROAS of 2.0	Store A	Store B
Ad spend as a share of revenue	50%	50%
Gross margin rate	70%	35%
Break-even ROAS	1.43	2.86
Left after ads, as a share of revenue	20%	−15%

The same ROAS is a profit for one store and a loss for the other.

Use the full gross margin, not just the price minus the product cost. Take a product that sells for $50 without VAT and costs $20. Shipping costs $5 and payment fees $1.50. Gross profit is $50 − $20 − $5 − $1.50 = $23.50, a gross margin rate of 47%. Break-even ROAS is 1 ÷ 0.47 = 2.13.

Our break-even ROAS guide covers this in depth, with break-even points per product line and a formula for a target ROAS. Three more things change what counts as good:

New vs returning customers. A campaign that finds new customers who order again can run below first-order break-even and still pay off. A retargeting campaign can show a high ROAS while it mostly reaches people who were going to buy anyway.
Product mix. A campaign that sells mostly low-margin products needs a higher ROAS than one that sells high-margin products.
Which revenue is counted. A ROAS with tax, shipping charges or double-counted orders in the revenue looks better than it is. Use the same revenue definition on both sides.

Why is ROAS in Ads Manager different from your store?

If you compare Ads Manager with your Shopify revenue, the numbers will not match. Several things cause the gap, and most of them push platform ROAS up.

View-through conversions

Some platforms count purchases by people who saw an ad but did not click it. On Meta this depends on the attribution setting of the ad set. Your store has no record of an ad view, so it cannot credit the ad.

Attribution windows

Each platform credits purchases that happen within a set number of days after a click or view. If your own report uses a shorter window, or a different model such as first click, the totals differ even when both sides see every order.

Several platforms claim the same order

A shopper clicks a Meta ad on Monday, clicks a Google ad on Thursday and buys on Friday. Meta and Google each see a click inside their window, so both claim the full order:

fbclid → /products/mugMonday: the shopper clicks a Meta ad

gclid → /products/mugThursday: the same shopper clicks a Google ad

order #1042 · $90.00Friday: one order in the store

Meta: $90.00Meta credits the full order

Google Ads: $90.00Google Ads credits the full order

Σ $180.00 ≠ $90.00The platforms report twice the real revenue

Each platform is right by its own rules, but the sum of platform revenue is larger than the revenue the store took in.

Missed purchases

The gap can go the other way too. Ad blockers, browser cookie limits and declined consent stop browser pixels from reporting some purchases, so a platform can also undercount. Server-side tracking sends purchases from the store's order data and closes part of that gap.

Different revenue definitions

A platform reports the value sent with the purchase event. That value may include tax and shipping, and it usually does not change when the order is refunded later. Your store report may use net revenue after refunds. A separate problem is one platform counting the same order twice, for example when two apps send the same pixel. See how to prevent double counting.

ROAS vs POAS and ROI

ROAS compares revenue with ad spend. It does not look at what the orders cost you. Two related numbers do:

POAS (profit on ad spend) divides gross profit by ad spend. It equals ROAS times your gross margin rate, and its break-even is always 1.0. Read what is POAS for the full method.
ROI (return on investment) compares profit with cost. For ad spend, that is profit after ads divided by ad spend, which equals POAS − 1.

An example: a ROAS of 3.0 at a 40% gross margin rate is a POAS of 3.0 × 0.40 = 1.2. Each $1 of ad spend brings back $1.20 of gross profit, so the return on the ad spend is 20%. A ROAS of 3.0 does not mean a 200% return.

How to use ROAS well

Pick the ROAS that fits the question
Use blended ROAS to judge total ad spend. Use platform ROAS for decisions inside one platform, such as which ad set gets more budget.
Compare every ROAS with its break-even
Calculate break-even ROAS from gross margin per product line, not from product cost alone.
Clean the revenue
Use revenue without VAT or sales tax and minus refunds, and make sure no purchase is counted twice.
Split new and returning customers
A campaign that only re-sells to existing customers should not look like it wins new ones.
Compare channels with one set of rules
Credit orders to channels with your own tracking and one attribution model, so no platform grades its own work.

ROASaurus shows these numbers side by side in its profit dashboard: Blended ROAS with break-even ROAS under it, POAS, and Ad ROAS (revenue of orders whose last click was a paid ad) with new-customer ROAS (ncROAS) under it. By default, revenue there includes the taxes you collect. To use revenue without tax, as this guide recommends, set Taxes collected to Left out of revenue under Profit › Cost settings.

Channel and campaign ROAS use the ad clicks your store recorded, credited under any of the twelve attribution models, from last click to data-driven Markov and Shapley and Total Impact, which also uses the answer to the post-purchase survey. Spend syncs from the ad accounts you connect. For other channels, add it under Profit › Manual ad spend.

Sources

In ROASaurus

Keep reading

Profit and metricsBreak-even ROAS: the minimum ROAS your ads needBreak-even ROAS is the ROAS at which ads pay for themselves. Learn the formula, work through examples and set a target ROAS for each product line.Profit and metricsCohort analysis for ecommerce: are new customers worth it?Cohort analysis for ecommerce: group customers by first-order month, read retention and gross profit per customer, and avoid the common mistakes.Profit and metricsContribution margin in ecommerce: CM1, CM2, CM3 explainedContribution margin in ecommerce explained: CM1, CM2 and CM3, a worked example from revenue to net profit, and which profit layer fits which decision.