ROAS (Return on Ad Spend)

ROAS = revenue from ads ÷ ad spend × 100%

Illustrative example (hypothetical numbers): an online coffee shop spends €600 a month on Google Ads. The platform attributes 60 orders worth €3,000 to the ads. ROAS is 3,000 ÷ 600 × 100% = 500%.

For the numbers to mean anything, follow three rules:

• Same VAT basis: count both revenue and costs excluding VAT. If you send order values including VAT to the ad platform, ROAS looks higher than it really is.
• Correct conversion value: ROAS depends on conversion tracking that passes the order value. Duplicate or missing conversions distort it more than anything else.
• Same data source: Google Ads, Meta Ads and Google Analytics each attribute conversions by their own rules, so ROAS for the same period usually differs between tools. Compare campaigns within one tool.

Break-even ROAS is the point at which advertising just pays for itself out of your margin. Calculate it as 100 divided by your margin in percent:

• 20% margin → break-even ROAS 500%
• 25% margin → break-even ROAS 400%
• 40% margin → break-even ROAS 250%
• 50% margin → break-even ROAS 200%

In the coffee shop example with a 30% margin, the threshold is roughly 333%. A ROAS of 500% is above it, so the campaign is profitable. If the same shop sold goods with a 15% margin, it would need a ROAS above 667%, otherwise every order from ads would lose money.

Use the most accurate margin you can: after the cost of goods and, if you know them, shipping, payment fees and returns. The more costs you include, the more reliable the threshold.

There is no universal "good" ROAS. A good ROAS is one above your break-even ROAS that does not hold back growth. When judging it, consider:

• Product margin: cheap goods with thin margins need a high ROAS; services or high-margin products are profitable at a lower one.
• New versus returning customers: a campaign that brings in new customers can have a lower ROAS if those customers buy again. The first order is not the full value of the customer.
• Campaign type: brand and remarketing campaigns tend to show a high ROAS because they reach people who already know you, and some of them would have bought without the ad. Campaigns aimed at new audiences usually have a lower ROAS.
• Volume: a high ROAS on very few orders may mean the campaign reaches too narrow an audience and leaves customers to competitors.

ROAS is not the same as return on investment (ROI): ROAS compares revenue with ad spend, while ROI works with profit after all costs, so a campaign with a 300% ROAS can have a negative ROI when margins are thin.

In the Czech market, online shops often use PNO (cost-to-revenue share), which is the inverse of ROAS: PNO = costs ÷ revenue × 100%, so a ROAS of 500% equals a PNO of 20%.

ROAS also complements cost per action: CPA tells you what one order costs, ROAS takes into account how large that order was.

Target ROAS is an automated bidding strategy in Google Ads. You enter the average conversion value you want for every euro spent, and the system adjusts bids in each auction based on the predicted value of a conversion. According to Google Ads Help:

• Conversion values are required. Without tracking the order value, the strategy does not work.
• Minimum data: for Search and Shopping campaigns Google states at least 15 conversions in the past 30 days; other campaign types have different thresholds.
• New name: since June 2026 Google labels "Maximize conversion value with a target ROAS" simply as "Target ROAS". Bidding behaviour is unchanged and no action is needed in your account.
• A target set too high limits traffic. The campaign then gets fewer impressions and orders. Change the target gradually; according to Google, changes take one to two conversion cycles to take full effect.

In Meta Ads, the ROAS goal bid strategy plays a similar role in campaigns optimised for purchase value. You set a minimum average return, and Meta warns that a target set too high leads to under-delivery.

For step-by-step setup, see our Google Ads guide and the article on Google Shopping ads.

1. Fix tracking: check that every order is counted once and with the correct value excluding VAT.
2. Split products by margin: products with different margins need different ROAS targets; in one group they compete for the same budget.
3. Exclude loss-makers: search terms, products and placements that keep spending without orders.
4. Improve the website: a higher conversion rate lifts ROAS without increasing ad spend.
5. Raise order value: cross-selling, product bundles or a free-shipping threshold increase revenue per order.

If ROAS stays below break-even for a long time, or you are not sure which numbers to trust, an audit of your campaigns and tracking pays off. Our PPC advertising service covers setup and management of performance campaigns. Then track ROAS as one of your shop's key KPIs.