Return on Ad Spend

Also called ROAS

Return on ad spend: the revenue generated for every unit of currency spent on advertising. A 4x ROAS means four rupees back for every one spent.

ROAS = revenue from ads / ad spend

Why it matters

ROAS is the fastest read on whether paid marketing is paying off, especially in e-commerce. But it ignores margins and lifetime value, so a high ROAS on an unprofitable product can still lose money.

For example

A campaign spends 2 lakh on ads and drives 8 lakh in sales, a return on ad spend of 4.

Related terms

Cost Per Acquisition Customer Acquisition Cost Unit Economics

Go deeper

See how founders actually handle this on Money, pricing and metrics, part of the Starting Up hub.

eChai Partner Brands