Education • V2 guide
ROAS Tracking: How to Measure Return on Ad Spend Correctly
ROAS compares revenue attributed to advertising with advertising cost. The arithmetic is simple; reliable attribution and revenue data are the difficult parts.
Short answer: ROAS compares revenue attributed to advertising with advertising cost. The arithmetic is simple; reliable attribution and revenue data are the difficult parts.
Key takeaways
- ROAS = attributed revenue ÷ ad spend.
- A 3.0 ROAS means $3 of attributed revenue for each $1 of ad spend.
- ROAS is not the same as profit.
- Your result is only as useful as the conversion and revenue data underneath it.
The formula
ROAS = attributed revenue ÷ advertising spend
If a campaign spends $2,000 and your measurement system attributes $6,000 in revenue, the reported ROAS is 3.0x.
Why ROAS can mislead
Revenue is not profit. Cost of goods, refunds, commissions, payroll, agency fees and overhead may materially change the economics.
Attribution changes the answer
If Meta, Google and your independent tracker each credit the same order, you cannot add all three revenue totals together. Decide which view is used for which decision.
Useful companion metrics
- Contribution margin
- Customer acquisition cost
- Lead-to-sale rate
- Refund rate
- Lifetime value where supportable