Calculate your Return on Ad Spend (ROAS), see your ROAS percentage and find out whether your ad campaign is generating profit or running at a loss.
ROAS stands for Return on Ad Spend. It measures how much revenue you generate for every £1 spent on advertising. A ROAS of 4x means you generated £4 in revenue for every £1 spent. It's the primary metric for evaluating ad campaign performance across Google, Meta, TikTok and Amazon.
A ROAS of 1x means you broke even on ad spend — you made back exactly what you spent. Below 1x means the campaign cost more than it generated in revenue. What counts as a "good" ROAS depends on your profit margin — a low-margin business may need 6–8x to actually be profitable after product costs.
ROAS only measures revenue versus ad spend. ROI (Return on Investment) factors in all costs including product cost, fulfilment and overheads. A campaign with a 4x ROAS looks great, but if your product margin is 25%, you need at least a 4x ROAS just to break even in real profit terms. Always combine ROAS with margin data for a full picture.
It depends on your profit margin. As a rough guide: if your profit margin is 50%, a 2x ROAS breaks even. If your margin is 25%, you need 4x ROAS to break even after costs. Most ecommerce brands target 3–5x ROAS as a baseline for profitable growth.
Minimum ROAS = 1 ÷ Profit Margin. If your margin is 30%, your minimum ROAS is 1 ÷ 0.30 = 3.33x. Below that, you're spending more to acquire customers than you make per sale after costs.
Three levers: increase conversion rate (better landing pages, offer, targeting), increase average order value (upsells, bundles), or reduce ad spend waste (tighter audience targeting, pausing non-performing ad sets). Raising prices also directly improves ROAS if volume holds.
No. ROAS only measures revenue against ad spend. It tells you nothing about whether the revenue itself is profitable after product cost, fulfilment, platform fees and overheads. Use it alongside a profit margin calculation for the complete picture.