What ROAS Means
ROAS (Return on Ad Spend) measures how many units of revenue you generate for every unit spent on advertising. Formula: revenue from ads divided by ad spend.
Example: if you spend €200 on Google Ads and generate €800 in sales, your ROAS is 4. For every €1 invested, you got €4 back.
ROAS doesn't tell you if you're profitable. It tells you how efficient your ads are at generating revenue. Profitability depends on your margin.
How to Calculate ROAS
Formula: ROAS = Revenue from ads / Ad spend
Both Google Ads and Meta Ads calculate it automatically in the dashboard. On Google it appears as "Conversion value / cost". On Meta, as "Purchase ROAS".
What's a Good ROAS
There's no universally "good" ROAS — it depends entirely on your gross margin. Break-even ROAS formula: 1 / gross margin. A store with 25% margin needs ROAS 4 just to cover ad costs, before operational expenses.
From Romanian accounts we manage: eCommerce fashion 4–8, home & decor 3–6, electronics 2–4, local services 5–15.
When ROAS Is Misleading
Three situations where a high ROAS is deceptive: incorrect attribution (both Meta and Google claim the same conversion), ROAS calculated without returns/platform fees/fulfilment costs, and short-term ROAS that ignores customer lifetime value.
Why Improving ROAS Is Harder Than It Looks
The directions are logical: reduce cost per acquisition or increase average order value. The problem is that each involves decisions that interact with each other. Reduce budget on low-ROAS campaigns, and the algorithm loses the data it needs to optimize. Increase average order value through bundles, and you change conversion rate. Refine audiences, but a smaller audience can exhaust budget inefficiently.
ROAS doesn't improve through a single isolated change. It improves when multiple variables — bid strategy, structure, creative, product page, offer — align simultaneously. Identifying which variable is blocking ROAS and in what order to intervene is exactly where most accounts waste entire months.
At DAFE Digital we optimise campaigns on real ROAS, not estimates. Correct tracking, clear attribution, data-driven decisions.
ROAS is a simple metric with a complex problem: it depends entirely on how correct the tracking is. We configure conversion and attribution correctly so reported ROAS reflects actual revenue.
Adela Mincea
Marketing Economist · Fondatoare DAFE Digital · Formator ANC
Adela is a Marketing Economist with over 10 years of paid media experience across Europe, the US and Asia. She founded DAFE Digital for one reason: serious Romanian businesses deserve the same paid media expertise companies get in any other market. That's what DAFE Digital does.
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