Return on ad spend (ROAS)
Return on ad spend (ROAS) is revenue divided by ad spend, for the same channel and period. Revenue is charges minus refunds, before processor fees. It is the quickest check of whether an ad channel pays for itself, though for subscriptions it understates channels whose customers keep paying after the period ends.
Formula
ROAS = revenue(channel, period) ÷ ad spend(channel, period)Take the revenue (charges minus refunds and chargebacks, before processor fees) of payments attributed to a channel in a period, and divide it by that channel’s ad spend for the same period. A channel with no spend has no ROAS.
Worked example
| Meta Ads revenue in Q3 | $2,100 |
|---|---|
| Meta Ads spend in Q3 | $1,500 |
- $2,100 / $1,500 = 1.4
ROAS is 1.4×: each dollar spent returned $1.40 of revenue in the quarter.
How ProductLense shows it
ProductLense shows ROAS per channel, source and campaign on the Sources and Profit pages. It uses revenue after refunds and chargebacks rather than gross charges, so a channel whose customers refund often does not look better than it is; fees show up in profit, beside it.
ProductLense needs ad spend rows for the channel and period, with channel, source and campaign values that match your UTM tags, plus a billing connection so attributed payments, fees and refunds are known.
ROAS: questions
- What is ROAS?
- Return on ad spend (ROAS) is revenue divided by ad spend, for the same channel and period. Revenue is charges minus refunds, before processor fees. It is the quickest check of whether an ad channel pays for itself, though for subscriptions it understates channels whose customers keep paying after the period ends.
- How do you calculate ROAS?
- Take the revenue (charges minus refunds and chargebacks, before processor fees) of payments attributed to a channel in a period, and divide it by that channel’s ad spend for the same period. A channel with no spend has no ROAS. For example, $2,100 of revenue from $1,500 of Meta Ads spend is a ROAS of 1.4×.
- Where does ProductLense show ROAS?
- ProductLense shows ROAS per channel, source and campaign on the Sources and Profit pages. It uses revenue after refunds and chargebacks rather than gross charges, so a channel whose customers refund often does not look better than it is; fees show up in profit, beside it.
- What does ProductLense need to calculate ROAS?
- ProductLense needs ad spend rows for the channel and period, with channel, source and campaign values that match your UTM tags, plus a billing connection so attributed payments, fees and refunds are known.
- How is ROAS different from CAC?
- ROAS compares revenue with spend; CAC compares spend with customer count. A channel can have a good CAC and a poor ROAS when its customers choose cheaper plans. Looking at both, plus profit, avoids rewarding a channel that brings many low-value customers.
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