Return on Ad Spend

Return on ad spend (ROAS) shows how much attributed revenue each unit of money spent on advertising produced, a direct measure of ad efficiency.

ROAS is the most direct measure of ad efficiency, but it has two fundamental weaknesses that are often ignored. First, it measures revenue, not profit; a ROAS of four can actually be a loss at a low margin, so ROAS without knowing the margin is an incomplete number. Second and more important, ROAS depends entirely on the attribution model: which revenue do we attribute to this ad? Under last-touch, an awareness ad that first discovered the user gets no credit and its ROAS comes out artificially low. Like any ad-cost metric it has two halves from two worlds: the attributed revenue on the site side, and the ad cost in the ad panel. The honesty point is that the ad panel reports its own ROAS with its own attribution and it almost always differs from a site-side calculation; neither is wrong, they are two different frames.