Marketing metrics explained

What is ROAS

ROAS stands for return on ad spend: the revenue your advertising produced divided by what the advertising cost.

About the Google Ads connector

Spend £1,000 and attribute £4,000 of sales to it, and your ROAS is 4.0, or 400%. The two ways of writing it are the same figure.

It is quick to read. Above 1.0 the ads brought in more than they cost. Below 1.0 they did not. Whether 4.0 is actually good is a separate question, answered on the what is a good ROAS page.

How it's calculated

ROAS = revenue from ads ÷ ad spend

Google Ads reports it as "Conversion value / cost". The formula, a Google Sheets version with a guard against a campaign with no spend, and the reason you should never average it are on the ROAS formula page.

What it tells you, and what it doesn't

ROAS tells you how efficiently a campaign turned money into attributed revenue. It is the right figure for comparing two campaigns in the same account, and for noticing when one of them has drifted.

It does not tell you whether you made a profit. Revenue is the figure before the cost of goods, shipping, returns and any agency fee come off it. A 3.0 ROAS on a product with a 70% gross margin is profitable. The same 3.0 on a 25% margin loses money on every order. Break-even ROAS is 1 ÷ gross margin, so the margin figure matters more than the ROAS figure does.

It also does not tell you what would have happened without the ads. The revenue in the numerator is what the platform attributed to itself under its own rules. Some of those customers would have bought anyway. Incrementality testing is how you find out how many.

Where it goes wrong

Averaging across campaigns. A column of ROAS figures run through =AVERAGE() gives a £50 campaign the same weight as a £5,000 one. The correct account-level figure is total revenue divided by total spend. The two can differ by a lot.

Comparing across platforms. Each platform attributes conversions under its own window and its own model. Google Ads, Meta Ads and TikTok Ads can all claim the same order. Adding their reported revenue together counts it three times, and their ROAS figures are not on a common scale. Marketing attribution covers why.

Reading it over too short a window. Conversion value arrives after the click, sometimes days after. Yesterday's ROAS is nearly always understated because yesterday's clicks have not finished converting. Look at a period that has had time to settle.

Treating a high ROAS as a reason to spend more. Brand campaigns post high ROAS because the customer was already looking for you. Scaling that budget rarely scales the revenue. Diminishing returns explains the shape of the curve.

Related metrics

• ROAS formula: the calculation and a worked example.
• What is a good ROAS: what moves the target, and how to find your own baseline.
• Marketing ROI formula: return after costs have come off, where ROAS stops at revenue.
• Marketing efficiency ratio: total revenue over total marketing spend, across every channel at once.
• Gross margin formula: the figure that turns a ROAS into a profit or a loss.

Keeping it current

A scheduled Fresh Sheets report can pull Cost and Conversion value from Google Ads into a tab of your spreadsheet by campaign. It replaces that tab's contents on every refresh, so keep your formulas on a separate tab. This finds each column by its heading, so it still works if the columns move:

=SUM(INDEX('Google Ads'!A:Z, 0, MATCH("Conversion value", 'Google Ads'!1:1, 0))) / SUM(INDEX('Google Ads'!A:Z, 0, MATCH("Cost", 'Google Ads'!1:1, 0)))