ROAS (Return on Ad Spend)

What is ROAS (return on ad spend)?

ROAS, or Return on Ad Spend, is a marketing metric that shows how much revenue a business earns for every dollar spent on advertising. It helps measure the effectiveness of ad campaigns by comparing the amount spent on ads to the revenue they generate.

A high ROAS means your advertising efforts are working well—bringing in more revenue than they cost. A low ROAS may indicate that your ad strategy needs improvement or that you’re spending too much without enough return.

Calculating return on ad spend (ROAS)

The formula for calculating ROAS is:

ROAS = (Revenue from Ads / Cost of Ads) * 100

Why it matters?

ROAS helps marketers make data-driven decisions, allocate budgets effectively, and scale the campaigns that deliver the best returns. It’s especially critical in paid digital marketing like Facebook Ads or Google Ads.

Example of ROAS (return on ad spend)

A Shopify merchant spends $300 on Instagram ads and earns $1,200 in sales directly attributed to those ads. ROAS = 1200 / 300 = 4.

Driftcharge Tip

Always evaluate ROAS in context, consider profit margins, average order value, and customer lifetime value to get a more accurate picture of campaign success.

Ganesh Pawar

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Ganesh Pawar is the founder of Driftcharge, a subscription management app designed to help Shopify merchants streamline and scale their subscription businesses. With a deep focus on solving real-world pain points—like legacy account page support, flexible subscription options, and advanced analytics—Ganesh is passionate about building tools that drive growth and retention.