What is a Good ROAS? Real Benchmarks and Smart Ways to Improve Yours

ROAS (Return on Ad Spend) tells you how much revenue you're getting back for every dollar spent on advertising. It's the metric that reveals whether your campaigns are actually making money.

The basic formula is simple: ROAS = Revenue from ads / Ad spend

But don't take this calculation at face value. 

Even a seemingly strong ROAS can be misleading if it doesn’t account for your actual costs or profit margins.

Read on to uncover what makes a 'good' ROAS, how it differs across industries and platforms, and #4 ways to improve your numbers.

What is ROAS?

ROAS shows you the money you get back for every dollar you spend on ads.

ROAS = Revenue from ads / Ad spend

For example, if your Facebook PPC campaign brings in $300 from a $100 ad spend, that's a 3:1 ROAS. 

This number helps you quickly see which campaigns are worth keeping and which are draining your budget.

Beyond that, ROAS can show you which specific optimizations, such as targeting, creatives, or adjusted bidding strategies, deliver the best results.

However, don’t rely on ROAS alone right off the bat. 

You need to understand your break-even ROAS first before you get to actual profitability.

How do you calculate that?

Break-even ROAS = 1 / Profit Margin

So if your profit margin is 25%. Your break-even calculation would be: 

1 / 0.25 = 4.0

This means you'd need to make $4 in revenue for every $1 in ad spend just to break even. Anything less, and you're losing money, even if the ROAS looks decent.

What is a good ROAS?

What counts as a 'good' ROAS is highly subjective since return rates vary widely across industries.

Marketers haven't reached a consensus on universal benchmarks yet. 

Some suggest aiming for a 4:1 ROAS as your target, while others argue that 2:1 is a more realistic and attainable goal for most businesses.

All in all, a good ROAS is one that makes the most financial sense for your business. It should exceed your break-even ROAS and ideally match or surpass the industry average.

To help you determine where your campaigns stand, let's look at how ROAS varies across different marketing channels and industries. 

ROAS by channel

Average ROAS across industries [PPC/SEM]

Average ROAS across industries [Facebook]

ROAS vs. ROI

Yes, at face value, these two can be confusing, but they are actually different in what they measure and how they measure it.

How is ROAS different from ROI?

ROAS focuses purely on ad spend and the revenue it generates. It doesn't factor in broader costs like salaries, software, or production, just how much you earned from what you spent on ads. 

ROI in digital marketing, on the other hand, measures the net return after all expenses. ROI is ideal when you want to understand the overall profitability of your marketing efforts. 

ROAS is better for drilling into the specific performance of individual campaigns.

Which should you use?

Use both for a more accurate view of your campaign performance. ROI gives you the big-picture perspective, while ROAS provides campaign-level insights.

4 ways to improve your ROAS

These are the #4 must-try strategies if your goal is to bring your ROAS up. 

1. Be laser-focused with your campaign

Your ad creatives, copy, and targeting should be hyper-focused on your customers and their biggest pain points. 

Sure, impressions and clicks might be lower initially, but in turn, you’ll attract a qualified audience that’s more likely to convert. 

Quality always beats quantity when the goal is to improve ROAS.

2. Track all the leads

Sometimes you'll optimize a campaign for calls, only to have your prospects fill out a form instead. Other times, it’s the vice versa.

Now, if you just focus on the calls and fail to account for the forms, you won't know just how profitable your campaign was. 

Therefore, always track all your leads, including emails, form submissions, phone calls, texts, live chat, transactions, and if you have a physical store, the walk-ins too.

This will show you which channels drive revenue and help you shift the budget to what's working and away from what's not. 

3. Retarget to keep your conversion rate higher

Warm audiences always convert better than people hearing you for the first time. 

They're familiar with your brand, have shown interest in your products, and need fewer touchpoints before making a decision. 

Retargeting keeps you visible to these high-potential prospects, catching them right when they're ready to buy. 

Instead of constantly chasing new traffic, leverage the value of people who already know you. The ad spend goes much further with these audiences. 

In fact, retargeting ads can increase conversion rates by 150%. And we know that higher conversions mean a higher ROAS ratio. 

4. Use dynamic ads

Dynamic ads deliver the right product to the right person at the right time. 

Because they adapt in real time to user behavior, these ads increase relevance and significantly improve the chances of conversion, all without raising your ad spend.

When your budget goes toward showing people exactly what they’re already interested in, your ROAS improves naturally.

One electronics brand put this to the test with Cropink's Dynamic Product Ads and saw dramatic improvements. They achieved:

• 3× higher conversion rate
• 9× higher ROAS
• 4× higher average order value (AOV)

FAQs

What is a good ROAS ratio?

While many marketers aim for 4:1, anything above your break-even point can be profitable. For eCommerce, 2:1 is often considered acceptable, while industries with higher margins might need 5:1 or better to justify ad spend. Check our industry benchmarks above to see where you stand.

How to calculate average ROAS?

To calculate your average ROAS across multiple campaigns, divide your total revenue from all advertising by your total ad spend.

What factors can impact my ROAS?

ROAS can be affected by your industry competition, product price points, profit margins, targeting accuracy, ad creative quality, landing page experience, and seasonal trends. Even your bidding strategy and campaign budget allocation can significantly impact performance. The most overlooked factor is the failure to capture the full customer journey.

How frequently should I measure my ROAS goals?

Monitor ROAS weekly for active campaigns, but evaluate performance against goals monthly. New campaigns need time to optimize, so avoid making major changes too quickly. For seasonal businesses, compare year-over-year performance during similar periods rather than against previous months. 

Final thoughts

ROAS is shaped by everything from your creative quality to how well you understand your audience. 

Generic, broad-stroke ads will not be effective for today’s consumers who expect relevance, personalization, and a reason to care about your brand.

When your ads are well-designed, well-placed, and well-timed, you’ll notice the difference, not just in conversions, but in how far your budget goes.

A smarter way to improve ROAS

Cropink helps you get the most from your ad spend by eliminating the usual roadblocks. 

Our dynamic product ads can help you automatically show customers exactly what they're looking for and when they’re most likely to buy. 

On the other end, our real-time feed management keeps your product catalog fresh and accurate across all your platforms.

These smarter adjustments make your ads more relevant, connect you with the right audience, and naturally drive up your ROAS. 

In fact, some brands we've worked with have reported up to 9× higher ROAS using the same ad spend, just with better tools and targeting.

What could that look like for your campaign? 

Book a free demo to see how Cropink can help you make every ad dollar count.

Sources

1. First Page Sage. ROAS Statistics
2. Intensify. Facebook Ads ROAS by Industry Benchmarks
3. Cropink. ROI in Digital Marketing
4. Cropink. Retargeting Statistics
5. Cropink. Dynamic Ads vs Static Ads