By Corey Frankosky · Last Updated

What Is ROAS?

ROAS, or return on ad spend, is the revenue you earn for every dollar you spend on ads. You calculate it by dividing your conversion value by your ad cost. A ROAS of 4 means you made $4 in revenue for every $1 you spent. Google Ads reports it as conversion value per cost.

Google's Definition

"Conversion value per cost estimates your return on investment."

Source: Google Ads Help.

How ROAS Is Calculated

The formula is conversion value divided by cost. Some people write it as a ratio, like 4.0, and some as a percentage, like 400%. They mean the same thing.

ROAS needs a value on every conversion. Ecommerce stores get this from the purchase amount. Lead generation businesses have to assign a value to each lead, or ROAS will not mean much.

ROAS Example

Example

Your store spends $2,000 on Google Ads this month and the ads drive $8,000 in sales. Your ROAS is $8,000 divided by $2,000, or 4.0 (400%).

Why It Matters

  • It shows profitability: ROAS tells you whether ad spend is turning into revenue.
  • It powers Target ROAS bidding: Google uses your ROAS goal to decide how much each click is worth.
  • It compares campaigns fairly: You can see which campaigns return the most per dollar, not just which spend the most.

How to Improve It

  1. Pass accurate values. Make sure purchase values and lead values are tracked correctly.
  2. Shift budget to winners. Move spend toward the campaigns and products with the highest return.
  3. Know your break-even ROAS. Your margins decide the minimum ROAS you need, so set targets from that number.
  4. Bring back past visitors. Remarketing can return more per dollar than cold traffic, because those people already know you.

Watch: ROAS Explained

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Question to AnswerWhat is your break-even ROAS based on your profit margins, and which of your campaigns are above it?
  • Smart Bidding: Google's automated bid strategies that use AI to bid for conversions or conversion value in every auction.
  • Conversion Rate: The percentage of ad clicks that turn into a lead, call or sale. The 2026 median is 8.18%.
  • Cost Per Lead (CPL): What you pay on average for each lead or conversion, also called CPA. The 2026 median CPL is $66.69.
  • Remarketing: Showing ads to people who already visited your website or interacted with your business.

Go Deeper

To learn how Target ROAS bidding works, read Google Ads Bidding Strategies Explained.

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