ROAS (return on ad spend)
ROAS is revenue attributed to advertising divided by advertising spend. A 4.0 ROAS means $4 of tracked revenue per $1 of ad spend — before any product or fulfillment costs.
ROAS is the default performance metric on every ad platform, and its biggest weakness is what it leaves out: cost of goods, shipping, fees, and returns. A 4.0 ROAS is excellent on a 60%-margin product and a loss on a 20%-margin one, which is why ROAS targets should always be derived from contribution margin rather than copied from benchmarks.
Platform-reported ROAS is also attribution-dependent — each platform credits itself using its own attribution window, so per-channel ROAS figures usually sum to more revenue than the business actually made. Use ROAS to compare campaigns within a platform; use MER to judge whether the whole system is profitable.
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