ROAS (Return on Ad Spend) is a metric that measures how much revenue you generate for every pound or baht spent on advertising. It is one of the primary performance metrics used to evaluate paid media campaigns.
How is ROAS calculated?
ROAS is calculated by dividing total revenue attributed to ads by the total ad spend over the same period. For example, if a campaign generated 150,000 baht in revenue from 30,000 baht in ad spend, the ROAS is 5.0, often expressed as 5x or 500%. This means every baht spent returned five baht in revenue. ROAS can be calculated at campaign level, ad group level, or for individual products or audiences.
What is a good ROAS?
There is no universal benchmark. A "good" ROAS depends on your profit margins, business model, and the type of campaign. A business with a 20% profit margin needs a ROAS of at least 5x to break even on ad spend before overheads.
A business with a 50% margin can sustain a lower ROAS. For e-commerce clients in Thailand, we typically establish a target ROAS during onboarding based on the client's margin structure, and use that figure as the primary bidding and reporting benchmark.
[Screenshot: Google Ads campaign view showing the ROAS column alongside cost, conversion value, and conversions for a list of campaigns. Alt text: Google Ads campaign performance table showing ROAS, cost, conversion value, and conversion columns for multiple campaigns.]
How is ROAS different from ROI?
ROAS measures revenue relative to ad spend only. ROI (Return on Investment) accounts for all costs, including cost of goods, fulfilment, overheads, and agency fees, against net profit rather than gross revenue. A campaign can show a high ROAS while still being unprofitable once all costs are factored in.
ROAS is useful for evaluating campaign efficiency; ROI gives a more complete picture of business profitability. Both metrics have their place, and using ROAS alone can be misleading without understanding the underlying margin.
What are the limitations of ROAS as a metric?
ROAS relies on accurate conversion tracking. If purchases are not being tracked correctly, or if some sales happen offline or through other channels, the ROAS figure will be incomplete. Attribution is another limitation: a customer who clicked an ad but later returned directly to buy will be counted differently depending on the attribution model in use. ROAS also does not distinguish between new and returning customers, which matters when customer acquisition is the goal.
Related KB articles:
• What is Smart Bidding in Google Ads
• What is a Conversion in Digital Marketing
• What is Cost Per Lead (CPL) and How Do You Calculate It
External links:
• Google Ads Help, target ROAS