Return on Ad Spend (ROAS)
ROAS shows how much revenue you generate per euro invested in Google Ads. A ROAS of 500% means: for every euro invested, you receive €5 in revenue back.
What is ROAS?
Return on Ad Spend (ROAS) is the central metric for the profitability of your Google Ads campaigns. The formula is simple: ROAS = Revenue from Ads ÷ Ad Spend × 100. A ROAS of 400% (or 4:1) means you generate €4 in revenue for every euro invested.
ROAS vs. ROI — the Difference
ROAS only looks at the ratio of revenue to ad spend. ROI (Return on Investment) also factors in all other costs like product costs, staff, and overhead. ROAS is therefore always higher than ROI and better suited for daily campaign management.
What is a Good ROAS?
- E-Commerce (40% margin): At least 250% ROAS to be profitable
- SaaS/Subscriptions: Even 100-200% can be profitable if Customer Lifetime Value is high
- Services (high margin): 300-500% ROAS is often sufficient
How to Optimize ROAS
Track conversion values: Assign a value to each conversion. For e-commerce, it's the cart value; for leads, an estimated order value.
Target ROAS bidding: Google's automated "Target ROAS" strategy optimizes your bids toward a defined ROAS value.
Pro Tip: Don't view ROAS in isolation. A campaign with lower ROAS can still be valuable if it brings new customers who generate high long-term revenue.
Further resources
Frequently Asked Questions
ROAS = (Revenue from Google Ads ÷ Ad Spend) × 100. Example: €10,000 revenue at €2,000 ad spend = 500% ROAS.
Related Comparisons
Related Terms
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