Marketing formula

ROAS Formula

Measure attributed revenue generated for each dollar of advertising spend.

The equation

How the formula works

Formula

ROAS = Revenue from ads ÷ Ad spend

What each term means

Attributed revenue: Revenue credited to the campaign under the chosen attribution method and time window.
Ad spend: The media cost included for the same campaign and period.
ROAS: Revenue per unit of advertising spend, often shown as a ratio or percentage.

How to calculate it

1
Use revenue and ad spend from the same campaign, scope, currency, and period.
2
Divide attributed revenue by advertising spend.
3
Report the result as a ratio, or multiply it by 100 for a percentage.

Worked example

Put the formula into practice

A campaign produces $10,000 in attributed revenue from $2,000 in ad spend.

$10,000 ÷ $2,000 = 5.0

ROAS is 5.0x, or 500%: five dollars of attributed revenue per advertising dollar.

How to interpret the result

ROAS measures revenue efficiency, not profit. A campaign can have positive ROAS and still lose money after product cost, fulfillment, agency fees, discounts, and overhead.

A useful target depends on contribution margin and which costs the business expects campaign revenue to cover.

ROAS versus ROI

ROAS divides attributed revenue by ad spend. ROI typically divides net return by total investment cost, so it accounts for more costs and answers a profitability question.

Assumptions and limitations

Revenue attribution is sufficiently reliable for the decision.
Revenue and spend cover identical dates and campaign scope.
The ratio does not include non-advertising costs unless they are deliberately added to spend.

Common mistakes

Calling ROAS profit or ROI.
Mixing platform-attributed revenue with spend from a different scope.
Comparing channels that use different attribution windows without noting the difference.

Frequently asked questions

Multiply the ratio by 100. A 5.0x ROAS is 500%.

Not in the standard formula. ROAS uses attributed revenue and ad spend, so profitability requires additional cost information.

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