ROAS indicates how many euros of revenue you generate for every euro spent on advertising. When ROAS > 1, you are generating more revenue than you are spending; a good level depends on the margin.
What is ROAS?
ROAS (Return On Ad Spend) indicates the revenue generated from advertising in relation to media costs. The higher the ROAS, the more revenue each advertising euro brings.
In short: ROAS = Revenue / Advertising cost.
How is ROAS calculated (example)
Sales from the campaign: €18,000
Media costs: €2,000
ROAS = 18,000 / 2,000 = 9.0 (for each euro, €9 revenue)
Remember: ROAS does not take profit margins into account. A high ROAS does not always mean profitability if the margin is low.
6 steps to implementation
Select attribution. Use the same model across channels (e.g. GA4 data-driven).
Separate campaigns. Brand, generic, retargeting, and dynamic should be distinct → transparent ROAS.
Input the correct revenues. For GA4, taxable/non-taxable? Coupon discounts? Keep the logic consistent.
Set limits. For example, “Minimum ROAS 3.5” or “CPA ≤ €40” for lead campaigns (ROAS does not always apply to leads).
Scale wisely. When ROAS > target for 2–3 weeks, gradually raise the budget (10–20 %).
Check margins. Calculate POAS (profit on ad spend) or use margin-adjusted ROAS if data is available.
The most common mistakes
Incorrect revenue in GA4 (VAT included at times, excluded at others).
Brand and generic in the same basket → inflates ROAS.
Short evaluation period (less than 7 days) → variability is high.
ROAS mandatory for everyone → in lead campaigns, prefer to track CPL/CPA + close rate.
FAQ
What is a good ROAS?
It depends on the margin. If the margin is 50%, roughly ROAS 2.0 might suffice to break even (before fixed costs). In many eComs, the target is 3–6.
Why is ROAS high in brand campaigns?
Because the user already knows you. Therefore, the brand should be separated from generic and retargeting efforts.
Is ROAS suitable for leads?
Not perfectly. In lead campaigns, track CPL, lead quality, and close rate. ROAS only works when the sale and value are related to the lead.
How can I quickly improve ROAS?
Eliminate poor keywords/targeting, enhance product pages, increase conversion rates, and test creatives. Often, CVR improvement is the quickest lever.
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