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.

Go deeper

ROAS vs MER vs Blended CAC: Which Metric Actually Matters Eightx · article If full incrementality testing is more than your team can run right now, blended metrics are the honest shortcut, and this article lays them out cleanly. Blended CAC (total spend divided by all new customers) and MER (total revenue divided by total spend) cannot be gamed by any single platform, because they count every rupee of spend against every real customer. For a small team building outside the big startup hubs, this is the most practical way to stop the platforms from grading their own homework. Open eightx.co →

Related terms

Also in Starting Up

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

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