What is ROAS?
Return on ad spend measures the revenue generated for every euro invested in advertising. A ROAS of 5 means five euros of tracked revenue per euro spent.
The honest view
Platform reported ROAS flatters itself: it counts conversions that would have happened anyway and double counts across channels. Add every platform's claimed revenue together and you will usually exceed what the business actually sold. ROAS is a useful ratio inside a channel; it is a dangerous compass for the whole budget.
The target trap
Chasing a ROAS target too hard shrinks the account into retargeting and branded search comfort zones that block growth: the easiest way to raise ROAS is to stop prospecting, which is also the easiest way to stop growing. High ROAS on a small, harvested audience is worth less than a moderate ROAS that keeps bringing new customers in.
How to use it properly
- Judge it with margin: revenue based ROAS hides unprofitable products; profit based targets fix that.
- Pair it with incrementality: let Media Mix Modelling and lift tests arbitrate what the spend actually added.
- Differentiate by role: prospecting and retargeting deserve different targets, because they do different jobs.
- Watch new customer share: a healthy account grows the base, not just the ratio.
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