What is ROAS?
Return On Ad Spend — the revenue you generate for every euro you spend on advertising.
More details
ROAS = revenue ÷ advertising costs. A ROAS of 4 means you generate four euros in revenue for every euro of ad budget. What counts as a good ROAS depends on your margin: if your margin is 30%, you need a ROAS of at least 3.3 to break even.
For example…
A dataset of around 35,000 e-commerce brands covering all of 2025 shows a median ROAS of 1.93x on Meta and 3.68x on Google. But the bare number says little, because the outcome is driven mainly by your margin: a ROAS of 3 at a 30% margin barely breaks even, while 2 at a 60% margin is fine. The gap between the mean and the median is telling too — 2.87 versus 2.04. So half of all online shops are below 2:1, while the rule of thumb that ‘a good ROAS is 4x’ keeps doing the rounds. Work out your break-even first: 1 divided by your margin.
Source: eightx.coWhere it goes wrong
The most common mistake is treating ROAS as a score that has nothing to do with your business. A ROAS of 4 sounds excellent, but at a 20% margin you lose money on it. So first work out your break-even ROAS: 1 divided by your contribution margin. At a 40% margin that is 2.5 — everything above it is profit, everything below it costs you money.
A second pitfall is steering for the highest possible ROAS. It seems logical, but it almost always leads to shrinkage: you end up advertising only on your brand name and to people who would have bought anyway. ROAS goes up, revenue goes down. If you want to grow, you deliberately accept a lower ROAS on new audiences.
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