A good ROAS depends on your profit margin. Rule of thumb: ROAS should be at least 1/margin. With 25% margin you need at least ROAS 4, with 50% margin ROAS 2 is sufficient. For most e-commerce businesses, a good ROAS is between 4 and 8.

Performance Metrics

ROAS – Return on Ad Spend

Definition

ROAS (Return on Ad Spend) measures the revenue generated per advertising euro spent. A ROAS of 5 means: for every €1 in ad spend, €5 in revenue is generated. ROAS is the most important profitability metric in performance marketing and the basis for budget allocation and scaling decisions.

Formula

ROAS = Revenue from Advertising / Advertising Cost

Example

A campaign generates €15,000 in revenue with €3,000 in ad spend. The ROAS is 15,000 / 3,000 = 5.0 (or 500%). This means: every euro invested returns €5 in revenue. Whether this is profitable depends on the margin – with a 30% margin, the break-even ROAS is 3.3.

Optimization Tips

Use Target ROAS bidding in Google Ads. Focus budget on the most profitable campaigns and products. Optimize your product feed for Shopping campaigns. Use remarketing for higher ROAS values. Analyze ROAS by device, location, and time of day.