Should you continue pouring money into Google Ads? Or is Facebook giving you a better return?
The best way to know for sure is to measure your return on ad spend (ROAS) for each platform.
Calculating ROAS shows exactly where your ad dollars bring value—or fall short.
From small online stores to large e-commerce brands, any business can use this metric to refine their advertising and marketing campaigns for better results.
What is ROAS?
ROAS is a simple but powerful metric for understanding ad performance.
It measures the revenue generated by an ad campaign against the cost of running it.
For example, spend $100 on a campaign, and if it pulls in $500 in revenue, that’s a ROAS of 5:1—meaning for every dollar spent, you’re making five back.
You can measure ROAS for individual campaigns, channels, or platforms.
You can also track ROAS over time, such as monthly or quarterly, to identify trends in your ad performance.
How to Calculate ROAS
Calculating Return on Ad Spend (ROAS) starts with a fundamental concept in digital marketing: the ad spend formula.
The formula looks like this:
ROAS = Total Revenue Generated / Total Ad Spend
For example, if you invest $500 in ads and generate $2,500 in sales, the ROAS is:
$2,500 ÷ $500 = 5
This means every dollar spent brings back $5 in revenue.
The formula stays the same across different platforms like Google Ads, Facebook Ads, or Amazon. However, the specific inputs may differ slightly—Google Ads often uses conversion values, while Facebook typically relies on sales tracked via the Facebook Pixel.
ROAS Calculation on Google Ads
Google Ads offers a Target ROAS bidding feature that adjusts bids automatically to reach your ROAS goals.
To use this, Google recommends having at least 15 conversions over 30 days, though ideally, more data—30 or 50 conversions—leads to better accuracy.
When using Target ROAS, set your goal at the campaign level, and Google will optimize your bids and placements based on your target.
For manual tracking, divide revenue generated from each Google Ads campaign by its cost to see which keywords or ads perform best.
ROAS Calculation on Facebook Ads
Facebook's Ads Manager provides built-in ROAS tracking through Facebook Pixel. This tool tracks user actions after clicking your ads.
Setting up requires:
- Installing Facebook Pixel on your website
- Setting up conversion tracking
- Defining your value metrics
Once configured, Facebook shows your ROAS directly in the Ads Manager dashboard. Track it at the campaign, ad set, or individual ad level.
You can also calculate ROAS manually by dividing your total Facebook-referred sales by your ad spend. The results will show you which audiences and creatives bring the highest returns.
ROAS Calculation on Amazon
Amazon's Ads Manager displays your return on ad spend right in the Campaign Manager. When you access Amazon Seller Central and set up conversion tracking, your performance metrics appear across all advertising campaigns.
Your targeting choices drive campaign success. Close match targeting delivers strong ROAS numbers, while loose match expands your reach. Monitor these patterns across campaigns, ad groups, and keyword levels to refine your marketing efforts.
The basic steps to calculate ROAS:
- Gather your total ad-attributed sales
- Record your total advertising spend
- Divide sales by spend ($500/$100 = ROAS of 5)
Most businesses aim for a ROAS between 3-5, but ideal targets depend on profit margins. Stay on top of testing match types, monitoring margins, adjusting bids, and scaling what works. Amazon's Seller Central updates best practices regularly as market conditions shift.
Calculating ROAS in Excel
Excel is a powerful tool for ROAS tracking across multiple platforms and campaigns. You can use it to check performance daily, spot trends, and adjust your advertising spend based on results. Here's how marketers organize their advertising efforts:
Excel Template Structure
Your spreadsheet should include these key columns:
Campaign Details:
- Campaign Name
- Platform (Google Ads, Facebook, etc.)
- Start Date
- End Date
Performance Metrics:
- Ad Spend ($)
- Revenue ($)
- ROAS% (calculated automatically)
Here's a practical template you can use right away:
Simply copy this template, input your marketing data, and Google Sheet will automatically calculate your ROAS for each campaign and overall advertising performance.
Pro Tips:
- Update weekly to monitor campaign effectiveness
- Use filters to analyze by platform
- Add conditional formatting to highlight high/low performing campaigns
- Create charts to visualize ROAS trends
- Include notes about successful advertising efforts
Break-Even ROAS Calculation
The break-even ROAS formula helps determine the minimum return needed to cover ad costs without losing money.
The formula for break-even ROAS is: 1 / Profit Margin / 100
If your profit margin is 20%, the break-even ROAS is 5:1, meaning you need $5 in revenue for each $1 spent just to cover costs.
Tracking break-even ROAS allows you to set realistic ROAS goals and ensures campaigns contribute positively to profitability.
Multi-Attribution ROAS Calculation
Running ad campaigns across multiple platforms demands a complete view of performance. Traditional single-touch ROAS misses the full customer journey.
For instance, a buyer might first see your Google Display ad, then click a Facebook ad, and finally convert through an Amazon Sponsored Product. In this case, every ad platform influenced the sale.
Calculate multi-touch ROAS by:
- Tracking all platform interactions
- Recording total ad spend across channels
- Combining revenue from all sources
- Dividing total revenue by combined spend
This approach reveals your true return on digital marketing efforts. While single-platform ROAS might show 2:1, your complete advertising campaigns could deliver 4:1 when measured together.
What is a Good ROAS Ratio?
I've seen ideal return on ad spend vary dramatically by business and industry. While experts cite 4:1 as the standard ratio for advertising campaigns, your specific model drives the target.
For example, a luxury brand running social media campaigns might be content with a 3:1 ROAS due to higher profits. But for businesses like electronics and grocery stores - those tight margins and high costs demand bigger ad returns.
The numbers also shift based on your ad platforms. Search campaigns tend to deliver stronger ROAS because buyers come ready to purchase, while Display ads build awareness over time at lower returns.
Common ROAS Mistakes to Avoid
Even seasoned marketers slip up here. Let’s go over some pitfalls you should dodge.
Focusing Only on Short-Term Results
It’s tempting to chase quick wins and boost ROAS fast.
But if you’re only looking at the immediate return, you might miss out on long-term brand value.
Sometimes, an ad that brings in less direct revenue builds brand awareness that pays off later.
Ignoring Seasonality
Your ROAS during the holiday season will look different from a regular month.
Consumer behavior changes throughout the year, and so should your expectations.
Don’t get too comfortable with high ROAS numbers in peak seasons; they might drop once the rush ends.
Not Factoring in Lifetime Value
If you only consider the first sale, you’re undervaluing customers who return.
Calculate your ROAS with a view towards customer lifetime value (LTV).
Factoring in LTV makes this marketing metric more accurate and highlights the true value of repeat buyers.
How to Improve Your ROAS
Did you not see the ROI you were hoping for?
Don’t sweat it—there are plenty of ways to give your ROAS a boost.
Here’s what I’d try first to get those ad dollars working harder for you.
1. Priortize High-Intent Keywords
High-intent keywords can power up your advertising campaign by bringing in customers who are ready to make a decision.
Try using phrases like “best” or “seller” since they reflect a genuine purchase interest. Phrases such as "how to" or "guide" would indicate someone not ready.
You can also keep an eye on search trends to refine your list and get more traction with your campaigns.
2. Test and Refresh Your Ad Creative
Don’t let your ads go stale—if people keep seeing the same old ad, they start ignoring it.
Try switching up the images, tweaking your headlines, or changing the call to action.
Fresh creative keeps your marketing campaigns lively and your return on ad spend from dropping off.
3. Match Your Ads to Your Landing Page
When your ad promises a discount, the landing page should deliver exactly that—no surprises.
Think about it: You click on an ad for “30% off winter jackets,” but land on a page showing full prices.
Consistency between ad and landing page keeps the buyer’s trust, which leads to more completed purchases.
4. Streamline Your Targeting
Too broad a target, and your ads get lost. Too narrow, and you miss potential sales.
Refine your audience segments based on performance data—like age, interests, and behavior—to hit that sweet spot.
Dialing in on precise targeting reduces wasted ad spend and improves overall campaign performance.
5. Increase Your Average Order Value (AOV)
To stretch your ad spend further, get your customers to spend a little extra each time they shop.
Bundle products, suggest upgrades, or offer discounts on bigger purchases right at checkout.
When the average order value goes up, your ROAS rises too—because you’re making more revenue per sale without paying more for clicks.
6. Double Down on Top-Performing Channels
Don’t waste time on platforms that aren’t giving you a good return.
If you’re getting a ROAS of 6:1 on Google Ads but only 2:1 on Instagram, it’s clear where your focus should be.
Shift your budget to the channels that are already delivering strong results and scale from there.
7. Re-Engage Visitors with Remarketing
Sometimes a little reminder is all it takes to bring back a potential buyer.
Set up remarketing ads to re-engage users who clicked through but didn’t make it to checkout—maybe offer a small discount or perk.
This tactic often converts those almost-sales, squeezing more value from your direct ad spend.
ROAS vs. Other Key Marketing Metrics
Tracking ROAS helps you measure direct returns from your ad strategy. But it’s only one part of the equation.
Here are a few other important metrics and how they stack up against ROAS.
ROAS vs. ROI
ROAS measures direct revenue from your ad spend, but it’s just the tip of the iceberg. ROI factors in all costs, from production to shipping.
You might have strong ROAS, but ROI can reveal if hidden expenses are eating into your profits.
Tracking both helps you see what’s truly working in your ad strategy and where adjustments are needed.
ROAS vs. CPA (Cost Per Acquisition)
ROAS measures revenue per dollar spent on ads. But CPA zeroes in on what it costs to get a single customer.
Looking at both helps you find the balance between generating revenue and controlling costs.
ROAS vs. CTR (Click-Through Rate)
CTR tells you how often people click on your ads. ROAS, on the other hand, shows whether those clicks are turning into real revenue.
A high CTR might look impressive, but without strong ROAS, it could signal wasted ad spend on visitors who aren’t converting.
Keep an eye on both to understand the full picture of your ad performance and refine your strategy accordingly.
ROI-tally Up Time
I hope you now have a clearer picture of how to calculate ROAS and the different methods to track it.
Use these insights to fine-tune your cross-channel ad campaigns and see where your ad dollars bring the best bang for your buck.
With this approach, you’ll be able to spot the real winners and tweak the underperformers—let’s turn those clicks into lasting profits.
