Return on ad spend (ROAS)

Return on Ad Spend (ROAS) is a valuable metric for advertisers, as it provides insight into the profitability of a campaign and helps to inform decisions around budget allocation and campaign optimization. Advertisers aim to achieve a high ROAS, as this indicates that a specific campaign is generating a significant return on investment.

What is ROAS?

ROAS, or Return on Ad Spend, is a key performance indicator in digital advertising that measures the return on investment for an ad campaign. ROAS is an easily-interpretable percentage, calculated by dividing the revenue generated from an advertising campaign by the cost of the campaign. It is typically expressed as a ratio, with the resulting figure representing the amount of revenue generated for every dollar spent on advertising.

ROAS is important because it gives valuable insight to marketers on their hard advertising costs as opposed to a soft, vague picture of how effective their advertising is.

This metric is best interpreted with others like Cost per Acquisition (CPA) or Cost per Lead (CPL) to give a fuller picture of how much your advertising costs are contributing to overall spend on customer acquisition. In other words, it helps you understand the quality of your ads and how much they are contributing to netting new customers.

How is ROAS calculated?

The calculation for ROAS is fairly simple, as below:

ROAS = Revenue attributed to ads / Cost of implementing those ads

For example, if a company spends $1,000 on an advertising campaign and generates $5,000 in revenue, the ROAS would be 5:1, or 500%. This means that for every dollar spent on advertising, the company earned five dollars in revenue.

ROAS is a powerful metric because you can make it as granular as you need to understand where you’d like to allocate your advertising budget. There are several dimensions you might consider:

ROAS benchmarks: What is a good return on ad spend?

As a general rule, the higher your ROAS, the better. A large return on ad spend indicates that you are getting a lot back from what you put into a campaign, so the more you get in return, the better for long-term profits. Generally speaking, if you’re seeing a 3:1 ratio (Organic) or 1.5:1 (Paid) in your ROAS, you’re most likely doing well.

Industry benchmarks are helpful here, and knowing how those benchmarks intersect with ROAS averages across different channels will inform you of your campaign’s level of success. Note that a good SEO strategy is your best friend when it comes to increasing your ROAS, as the financial investment in an organic SEO strategy is much lower than a paid campaign (with the potential for a comparable return).

For now, we’ll just focus on Paid ROAS. Let’s review some top performers and low-runners as of 2023.

ROAS by industry

2023 statistics are showing some consistent high performers in the Automotive, Financial Services, Medical, Real Estate, and Higher Education fields. Interestingly, there are those who are beginning to show signs of strong performance, including Aviation, Biotech, Cybersecurity, and Solar Energy.

In descending order, here are some of the top performers in ROAS for 2023:

*Data sourced from FirstPageSage.

ROAS by channel

From 2023 data, we can see that paid social media advertising and well-nurtured affiliate partnerships are key to advertising success. However, the ROAS across all channels is still well-represented. In descending order of best performers, we have:

Data sourced from FirstPageSage.

Of course, not all campaigns are designed to generate immediate revenue. Many marketers combine analysis of ROAS and Return on Investment (ROI) to understand how their brand awareness campaigns may be contributing to increased revenue later in the funnel.

How to increase return on ad spend?

For marketers unhappy with their ROAS, there are many ways to inject new life into a campaign to push this key metric up. Here are some tips to try and boost ROAS:


Return on Ad Spend (ROAS) and Return on Investment (ROI) are both metrics used in digital marketing to evaluate the effectiveness of advertising campaigns, and both are represented as either ratios or percentages. Their key difference lies in their scopes.

Both metrics are valuable in helping marketers make informed decisions about how to allocate their resources and optimize their campaigns. In fact, understanding both and comparing the two creates a fuller picture of marketing investments relative to the business’ long-term vision. More specifically, a disproportionately small ROAS within the larger picture of the ROI indicates that something is going wrong with advertising.

As with all other advertising metrics, understanding ROAS as part of an ecosystem rather than in isolation is essential. Think of it as an indicator of how well your ad spend is working to drive customer uptake, as well as one of many levers to pull to increase campaign success, and you’ll be well on your way to using ROAS to your benefit.