Return on ad spend (ROAS) is the revenue earned for every pound of advertising budget you spend. It is the primary efficiency metric for paid campaigns: a ROAS of 4 means £4 in revenue for every £1 spent.
Formula
ROAS = Revenue from ads / Ad spend
For example: £8,000 in revenue from £2,000 in spend gives a ROAS of 4.
Worked example
Your Google Shopping campaign spends £1,500 in a month and drives £9,000 in attributed revenue.
ROAS = £9,000 / £1,500 = 6x
For every pound spent, you earn £6 back.
How Vendably calculates it
Vendably computes ROAS for your ad campaigns from attributed conversion value and cost. Both values are stored per performance snapshot and surfaced in the Ads performance views, so ROAS is calculated per campaign snapshot using the same formula: revenue divided by spend.
Vendably also computes a blended, merchant-level ROAS across channels in the Intelligence pipeline. This cross-channel figure is surfaced on the dashboard and lets you compare efficiency across platforms rather than looking at each channel in isolation. See Blended ROAS for detail on how that figure is constructed.
One caveat on revenue data: when no direct order feed is connected, order-derived revenue can fall back to Google Analytics 4 data, which is reported at daily granularity. Intraday ROAS figures in that case are based on daily totals spread across the day rather than order-level timestamps.
What good looks like
There is no universal "good" ROAS because profitability depends on your margins. A rule of thumb:
- Below 2x: the campaign is likely unprofitable for most product categories. Investigate targeting, bidding, and product selection.
- 2x to 4x: acceptable for many businesses, but check whether the margin supports it.
- 4x and above: strong ROAS. Vendably's Incremental Sales programme targets categories performing in this range to scale intelligently.
A high ROAS does not always mean the campaign is maximising profit. A campaign with a ROAS of 8x on a small budget may be leaving significant revenue on the table by being too conservative. Compare ROAS against CPA and total revenue to get the full picture.
How to improve it
ROAS is the outcome; the upstream inputs are conversion rate, cost per click, and product selection.
Improve conversion rate. More conversions from the same clicks means higher revenue without additional spend, which lifts ROAS directly. See conversion rate for the levers: product page quality, pricing, and checkout friction.
Reduce CPC. Lower cost per click means each pound of spend goes further. Improving Quality Score, refining targeting, and pruning low-performing keywords all reduce average CPC. See CPC for detail.
Refine product selection and targeting. ROAS at the account level can mask wide variation at the product level. Products with high margins and strong conversion rates should receive more budget; low-margin or low-converting products drag the average down. Use Vendably's product-level ROAS data to identify which products to scale and which to suppress.
Compare against CPA and total revenue. Optimising purely for ROAS can shrink the campaign to a small, highly efficient slice of spend while leaving growth on the table. Use CPA alongside ROAS to check that the cost of acquisition remains sustainable as you scale.