Published: 2026-02-17 · Paid Media · Ricky Bandelin
Return on Ad Spend (ROAS) is one of the most widely used metrics in digital advertising. It measures the revenue generated for every dollar spent on ads, giving marketers and business owners a direct read on whether their advertising is producing profitable results.
This guide covers everything you need to know about ROAS: how to calculate it, how to use it, what it does not tell you, and how it relates to the broader metrics that determine whether your marketing is actually working.
What Is ROAS?
Return on Ad Spend (ROAS) is a marketing metric that measures the revenue generated for every dollar spent on advertising. It is calculated by dividing the total revenue attributed to an advertising campaign by the total cost of that campaign.
ROAS is expressed as a ratio or multiple. A ROAS of 5:1 means you generated $5 in revenue for every $1 spent. A ROAS of 2:1 means you generated $2 for every $1 — which may or may not be profitable depending on your gross margin and operating costs.
How to Calculate ROAS
The ROAS formula is straightforward:
ROAS = Revenue from Ads ÷ Ad Spend
If your campaign generated $50,000 in revenue and cost $10,000 to run, your ROAS is 5:1 (or 5x).
The more important — and more difficult — part is accurately measuring the revenue attributed to your ads. This requires proper conversion tracking, a defined attribution model, and a clear definition of what counts as a conversion for your business.