In the evolving landscape of digital marketing, Return on Ad Spend (ROAS) is a vital metric, offering a direct lens into how effectively your ads convert spend into revenue. This guide breaks down the essentials—from the formula to real-world applications, profit planning, and 2025 benchmarks.
Core ROAS Formula
The most basic form of ROAS is straightforward:
ROAS = Revenue generated from ads ÷ Ad spend
For example, spending €1,000 on ads and earning €4,000 in attributed sales gives you a ROAS of 4:1—meaning €4 back for every €1 spent.
It’s also often shown as a percentage:
Formula: ROAS% = (Revenue ÷ Ad spend) × 100, e.g., 4:1 = 400%
Why ROAS Matters
ROAS helps you:
- Gauge the efficiency of channels or campaigns
- Compare performance across platforms like Google, Meta and TikTok
- Communicate clearly with stakeholders
2025 Benchmarks & Channel Insights
Average Across Channels
- Overall PPC campaigns: 3.9× on average
- Google Ads median ROAS: 3.31× as of April 2025
Meta (Facebook & Instagram)
- Average Facebook campaign ROAS: 5.3×, with e‑commerce brands topping at 6.4× when using dynamic/video ads
- Median Facebook Ads ROAS around 2.2×–2.9×, depending on data sources
Industry-Specific
- eCommerce: 4:1 to 6:1 standard, top performers reaching 8:1+
- Retail: ~4:1, with strong cases of 9–10:1
- B2C: ~4.7×, while B2B averages 3.5×
- SaaS/B2B tech: ~3:1 to 5:1 benchmark
Standard vs Profit‑Adjusted ROAS
- Standard ROAS: Based on total revenue. Simple and top-line focused.
- Profit‑Adjusted ROAS: Profit after subtracting COGS and other product costs before dividing by ad spend.
Example: €100 sale, €40 COGS, €20 ad spend.
- Profit-adjusted: (100 – 40)/20 = 3×
This reveals true campaign profitability.
Break-even ROAS: Know Your Minimum
To ensure ads at least cover costs:
Formula: Break-even ROAS = 1 ÷ Profit margin
With a 50% margin, you need ROAS = 2:1 (i.e., €2 for every €1 spent)
What’s “Good” ROAS in 2025?
- 4:1+: Strong baseline for many businesses
- 6:1+: Top-tier e‑commerce & optimized campaigns
Advanced Adjustments: CLV & Attribution
- Customer Lifetime Value (CLV) matters—first-sale ROAS might be low, but long-term CLV increases ROI. Many DTC brands in 2025 prioritize CLV alongside ROAS by using influencer trackability and LTV-based optimization.
- Don’t forget overhead: platform/agency fees, shipping, returns.
- Attribution delays can mask revenue—account for post-impression lag.
ROAS Best Practices at a Glance
- Clarify your ROAS type: gross vs net-profit
- Calculate your break-even ROAS to cover all costs
- Set channel-specific targets (Facebook, Google, etc.)
- Factor CLV & longer-term returns, especially for subscription/SaaS
- Track all cost categories for true efficiency
| Metric |
Formula & 2025 Benchmarks |
| ROAS |
Revenue ÷ Ad spend (avg 3.9× PPC, 5.3× Facebook) |
Profit‑Adjusted
ROAS |
(Revenue – COGS) ÷ Ad spend |
| Break‑even ROAS |
1 ÷ Profit margin (e.g., 50% → 2×) |
| “Good” ROAS |
4:1+ overall; 6:1+ for optimized ecommerce |
| CLV‑adjusted |
Justifies lower initial ROAS |
ROAS remains your top metric for ad efficiency—but its true power lies in combining high-level benchmarks, company margins, and lifetime value into your planning. With average 2025 ROAS ranging 3.9×–6.4× depending on channel and vertical, your targets should be ambitious yet grounded in economics.
