What is ROAS, and what is a good ROAS?

What is ROAS and how do you calculate it?

ROAS means return on ad spend. It tells you how much revenue each unit of ad money brings back.

The formula is simple: ROAS = revenue from ads ÷ ad spend. Google Ads writes it as a percentage: conversion value ÷ ad spend × 100%. In Google's own example, USD 5 in sales from USD 1 of ads is a 500% ROAS (Google Ads Help, Target ROAS).

Two worked examples

These are illustrative numbers to show the math. Neither tells you yet if the brand made money. For that you need the margin.

What is break even ROAS?

Break even ROAS is the ROAS where ad spend exactly eats your gross profit. Below it, every sale from ads loses money.

The formula: break even ROAS = 1 ÷ gross margin. Gross margin here means what is left from each sale after product cost, shipping, payment fees and returns.

This table is pure math. Plug in your real margin, not the margin on the price tag. In Egypt, cash on delivery returns and refused orders can cut the real margin by several points.

So what is a good ROAS?

There is no single good ROAS. A ROAS of 3 is great for a brand with 60% margin and a loss for a brand with 25% margin.

Three things decide your target:

• Margin. It sets the floor, as the table above shows.
• Repeat purchase. If customers buy again, the first order can sit below break even and still pay off. A grocery or pharmacy app can accept a lower first order ROAS than a furniture store, because the customer comes back.
• Goal. In a launch or market entry, you may accept a lower ROAS to buy growth. In a mature brand, you protect profit.

Also watch where the ROAS comes from. Retargeting people who already visited your site often shows a high ROAS, because many of them would have bought anyway. Prospecting to new people shows a lower ROAS but builds the future.

ROAS vs POAS vs CAC: which should you track?

ROAS looks at revenue. Many owners care more about profit and about new customers. These metrics fill the gap.

We use ROAS to steer campaigns day to day, and POAS, CAC and MER to judge the business.

Read our guide to customer acquisition cost

Why platform ROAS is not your real ROAS

Meta, Google and TikTok each report their own ROAS. Each one counts conversions using its own attribution window, meaning the number of days after a click or view in which a sale is credited to the ad.

• Double counting. A customer sees a TikTok ad, clicks a Google ad, then buys. Both platforms may claim the same sale.
• View through credit. Some platforms count a sale if the person only saw the ad, not clicked it.
• Returns and cancellations. Platforms count the order when it is placed. In cash on delivery markets like Egypt, some of those orders are never paid.
• Tracking gaps. Missing pixels, broken events or privacy settings can hide sales and make ROAS look worse.

A quick check: add up the revenue every platform claims in a month. Compare it with paid revenue in your store or backend. If platforms claim more than you actually banked, their ROAS is inflated.

Egypt vs Saudi Arabia vs UAE: what changes

• Egypt: lower basket sizes and cash on delivery mean you should measure ROAS on delivered and paid orders, not placed orders.
• Saudi Arabia: we usually see larger baskets, so the same ROAS often carries more profit per order. Snapchat and TikTok can drive a large share of sales.
• UAE: a mixed Arabic and English audience. Split campaigns by language so ROAS is not averaged across very different groups.
• All three: Ramadan, Eid, White Friday and back to school raise ad costs. Set seasonal ROAS targets instead of one target for the year.

How we approach ROAS at OneKind

1. Calculate the real contribution margin with the finance team, after shipping, fees and returns.
2. Set break even ROAS, then a target ROAS above it for profit, and a separate target for new customer campaigns.
3. Fix tracking first: pixel and server side events on Meta, conversion tracking on Google, Events API on TikTok, and AppsFlyer or Adjust for apps.
4. Report MER and POAS weekly next to platform ROAS, so nobody makes decisions on inflated numbers.
5. Split budgets between prospecting and retargeting, and judge each against its own target.
6. Scale spend in steps and watch whether blended results hold, not only platform ROAS.

How do Google Ads work, and what do they cost?

Growth marketing or performance marketing: what's the difference?

See our performance marketing service

Related guides

What does a media buyer do?

Marketing KPIs that matter

Sources

Google Ads Help: About Target ROAS bidding

HubSpot: Customer acquisition cost glossary

FAQ

Is a ROAS of 2 good?

Only if your gross margin is above 50%. At 50% margin a ROAS of 2 is break even, so you need more than 2 to make a profit.

What does a 4:1 ROAS mean?

It means every 1 unit of ad spend brought 4 units of revenue, for example EGP 4,000 in sales from EGP 1,000 of ads. Whether that is profitable depends on your margin.

Is ROAS the same as ROI?

No. ROAS uses revenue and only ad spend. ROI uses profit and all costs, so ROI is usually much lower than ROAS.

Why is my Meta ROAS different from my Shopify sales?

Meta uses its own attribution window and can count view through sales, while your store counts every order once. Other platforms may also claim the same order, so platform totals often exceed real sales.

How can I improve my ROAS?

Fix tracking, refresh creative often, cut audiences and placements that do not convert, and improve the landing page and offer. Raising average order value with bundles also lifts ROAS without extra ad spend.