What is ROAS and how do you calculate it?

ROAS = revenue from ads ÷ ad spend. If you spend $400 and Meta attributes $1,600 of purchases to those ads, ROAS is 4. Some people write it as 4x or 400%. They mean the same thing.

Meta reports it for you. Its insights reference defines purchase_roas as the total return on ad spend from purchases, “based on information received from one or more of your connected Facebook Business Tools and attributed to your ads”. There is a website-purchase version, based on the value of conversions recorded by the Meta Pixel, and a mobile-app version, based on the value you assigned to the app event.

A ROAS of 2 sounds like doubling your money. If the product costs you 70% of its price, that is a loss. The break-even ROAS is 1 divided by your margin. With a 25% margin, you need a ROAS of 4 just to cover the product and the ads. At 50% it is 2.

The last row shows why digital products can run on a lower ROAS: there is little to pay for per sale. Work out your own margin first, including payment fees, before you set a target.

• It depends on what was tracked. Meta’s figure comes from connected business tools, so a sale closed in a chat or paid by bank transfer may be missing unless it is reported back.
• Attribution decides which sales count as yours. A different attribution window gives a different ROAS for the same ads.
• It ignores repeat purchases. A customer worth three orders looks like one on a first-purchase ROAS.

Tip: Write your break-even ROAS on a sticky note before you open Ads Manager. Every number above it is profit before overheads, and every number below it is a loss.