Return on Ad Spend
Also called: ROAS, marketing ROI
What is Return on Ad Spend?
Return on ad spend measures the revenue generated for each rupee of advertising. A ROAS of 4 means ₹4 of revenue for every ₹1 spent — revenue, importantly, not profit.
Why Return on Ad Spend matters
ROAS is the standard campaign metric and a misleading one on its own. On a 25% contribution margin, a ROAS of 4 exactly breaks even, so the headline number can look strong while earning nothing.
Return on Ad Spend formula
ROAS = Revenue attributed to ads ÷ Ad spend
Break-even ROAS = 1 ÷ contribution margin.
How Return on Ad Spend works in practice
Convert ROAS into contribution before judging a campaign: multiply revenue by contribution margin and compare with the spend. Then check whether the revenue was genuinely incremental.
Worked example
At a 30% contribution margin, break-even is a ROAS of about 3.3 — anything below that loses money.
Frequently asked questions
Above your break-even ROAS, which is one divided by your contribution margin.