ROAS
Revenue earned for every dollar of ad spend, written as a multiplier (revenue / ad cost).
ROAS, or return on ad spend, is the revenue you earn for every dollar you spend on ads, written as a multiplier. A 4x ROAS means four dollars back for every one spent, and the formula is just ad revenue divided by ad cost.
On its own the number means nothing until you compare it to your break-even, which is set by your margin (1 divided by your gross margin). A 3x ROAS can be a strong month for a high-margin jewelry brand and a quiet loss for a low-margin seller. That is why we never set a target from an industry average; we set it from the account's own economics.
Work out the number that fits your store with the break-even ROAS calculator, and read the full picture in what is a good ROAS for ecommerce. The honest version of the figure depends on the conversion tracking underneath it: if the values are wrong, the ROAS is fiction in either direction.
Put the number to work: the break-even ROAS calculator turns your margins into the ROAS you need, and a free Due Diligence Audit checks whether the figures you see are the ones you are getting. Back to the glossary.