What is ROAS, and what does a good one look like?

ROAS stands for return on ad spend. It's the revenue the ads produced divided by what the ads cost. Spend £1,000, track £5,000 in sales from it, and the ROAS is 5, sometimes written as 5:1 or 500%.

It's the most quoted number in paid media and one of the most misread. Two examples from my own accounts show why.

Two good results that look nothing alike

For Cheezious, a national fast food brand in Pakistan whose account I ran at an agency in 2023 and 2024, the Meta account averaged a 36.88 ROAS once I'd introduced sales campaigns, with the strongest campaign at 46.43. The case study has the detail.

For Ginyaki, a restaurant group with an ordering app, a Performance Max campaign I ran in 2023 returned 4.27. The Ginyaki Google Ads case study covers that one.

Is 36.88 nine times better than 4.27? No. Cheezious is a brand almost everyone in the country already knows, selling to people who were going to order food that night. A large share of the revenue the ads are credited with came from customers who needed a reminder, not an introduction. The Ginyaki campaign was finding new customers for an app on Google, where every order had to be won from someone searching for food in general. Both results were excellent for what they were asked to do. They're just not comparable.

The two questions to ask first

What was counted as revenue? ROAS is only as honest as the tracking behind it. When I took on Cheezious, the account was running only awareness and engagement campaigns and nothing was recording purchases, so there was no ROAS to report at all. Before the first sales campaign went live, purchase events with values were set up through Tag Manager and tested order by order. The 36.88 is trustworthy because I know what's behind it. If a ROAS figure comes without that, ask how the revenue was recorded.

What does the business keep? ROAS is revenue, not profit. A 4 ROAS on a product with a 60% margin is a healthy business. A 4 ROAS on a product with a 20% margin is losing money once the product cost comes out. The number that matters is the one after margin, delivery and discounts, and that's a conversation with the owner, not a column in Ads Manager.

What a good ROAS looks like

There's no universal answer, but there is a way to work it out for your own business.

1. Take your gross margin on an average order.
2. Decide how much of that margin you're willing to give to advertising to win the order. For a brand buying new customers who will order again, that can be most of it. For a one-off sale, less.
3. The break-even ROAS is 1 divided by that share. If you can give 25% of order value to ads, your break-even ROAS is 4. Anything above that is profit on the first order.

Most ecommerce and fast food accounts I've seen sit comfortably above their break-even once tracking and targeting are right. The accounts in trouble are usually the ones where nobody has done the sum, so a 3 looks fine on a product that needed a 5.

When ROAS isn't the right number

For lead generation, there's no order value to divide by. The number that matters is cost per qualified lead and, after that, what those leads close into. For a launch or an awareness campaign, it's reach, frequency and watch time. Judging a lead campaign on ROAS, or a sales campaign on reach, is how good campaigns get switched off and poor ones get kept.

So when someone quotes a ROAS, I ask what was counted, what the margin is and what the campaign was for. Then the number means something.