# Return on ad spend (ROAS)

URL: https://tnb-tech.com/en/glossary/return-on-ad-spend/

## What is return on ad spend (ROAS)?

Return on ad spend (ROAS) is the revenue advertising brought in divided by what was spent on it. Take €7,800 of sales from a €2,000 budget and the ROAS is 3.9, or 390%. It tells you how much turnover each euro of advertising buys, not whether any profit is left — that depends on your margin. So it is read next to the margin, the cost per acquisition and the attribution window.

**Example**

A sports-nutrition shop spends €2,000 a month on Google Ads. The campaigns report 120 orders at an average value of €65: €7,800 of revenue. ROAS = 7,800 / 2,000 = 3.9.

The number looks healthy until margin enters it. If the goods cost 60% of the selling price, €7,800 leaves €3,120 of gross margin. Take the advertising out and €1,120 remains, before delivery, platform fees and salaries. The break-even point is 1 divided by the margin: 1 / 0.40 = 2.5. A campaign running at 2.2 is not slightly under target — it is losing money on every order.

**Why it matters for a business**

ROAS is what turns an ad account into a sentence the finance side can use. It depends entirely on what was measured. Count orders that were later returned, or leave searches for your own shop name inside the campaign, and ROAS climbs without a single extra sale. We read it separately for brand and non-brand keywords, and with the same attribution window across every channel.

It also looks only at the first purchase. For subscriptions, consumables or anything bought again, the decision needs lifetime value beside it: a campaign at 1.8 can still be profitable when the customer comes back three times. The reverse is just as common — a flattering ROAS on a product nobody reorders.

**What to ask**

- What ROAS covers our margin? The break-even figure is 1 divided by the gross margin.

- Is revenue counted at order value, or after returns and cancellations?

- What is the ROAS once brand searches are excluded?

- Is the same attribution window used in Google and in Meta?

We work that break-even figure out with you and set it as the target inside Google Ads.

- Services: [Google Ads](https://tnb-tech.com/en/services/google-ads/)
- Glossary: https://tnb-tech.com/en/glossary/