ROAS(ROAS)
Advertising
Advertising
ROAS is revenue generated by your ads divided by what you spend on them. A ROAS of 4 means €4 revenue per euro spent.
ROAS uses revenue, not profit. At a 20% margin, a ROAS of 4 is still a loss once other costs are included. So work out your break-even ROAS before agreeing a target.
With a long sales cycle or lots of repeat purchases, one-month ROAS is misleading. Put customer value over time next to it.
Related terms
- CPACPA is ad cost per conversion: total spend divided by conversions, such as enquiries or purchases.
- Customer acquisition costCAC is the total cost of winning one new customer: ad spend plus the people, tools and hours involved.
- Customer lifetime valueCustomer lifetime value is the total margin you earn from an average customer for as long as they stay, not just on the first purchase.