What ROAS is and why it shouldn't be read on its own
ROAS (Return on Ad Spend) tells you how much money your ads bring in for every pound spent. It's one of the most used — and most misunderstood — numbers in marketing.
In short
- ✓ROAS = ad revenue ÷ ad spend
- ✓A "good" ROAS depends on your margin, not a universal threshold
- ✓Work out your break-even ROAS
- ✓Don't forget the customer's long-term value (LTV)
The formula
ROAS = ad revenue ÷ ad spend.
Example: £1,000 spent, £4,000 in sales → ROAS = 4 (or 400%). Every pound brought in £4.
What a "good" ROAS means
There's no magic number. The key is margin. If your margin is 25%, a ROAS of 4 means you've barely covered your cost — zero real profit.
Ask yourself: at what ROAS do I break even? Below it you lose, above it you win.
📌 Concrete example
Two stores, both with ROAS 4. The first has a 50% margin → solid real profit. The second has a 20% margin → loses money once you subtract the product cost. Same number, opposite conclusions.
Common mistakes
- ⚠️Comparing your ROAS with someone else's, ignoring margin.
- ⚠️Cutting low-ROAS campaigns that were bringing in valuable new customers for the long term.
What to keep an eye on
- →Your break-even ROAS (your profitability threshold)
- →ROAS in context with margin and customer value
How eFlo helps you
eFlo tracks ROAS in context — alongside margin and customer value — and optimises for real profit, not for a raw number that looks good in a report.
Frequently asked questions
What ROAS is good?
It depends on your margin. Work out your break-even point and aim to stay above it.
Want to see how your business is doing?
eFlo turns concepts into tasks, reports and recommendations for your account.
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