ROAS: what each euro of ads brought back
ROAS means return on ad spend: the revenue the ads brought divided by what they cost. Whether a ROAS is good depends on what fees take and on how long your customers keep paying.
The formula
ROAS = revenue from the people the ads brought ÷ ad spend
An example
€1,000 of TikTok ads brought people who paid €1,800: ROAS is 1.8×. With a store keeping 15%, you keep €1,530, so the break-even is 1 ÷ 0.85 = 1.18× and these ads pay.
Work it out with your numbers →How Sumly counts it
- ROI shows every source and campaign you tie a cost to: what it cost, and what the people it brought have paid since, after fees and refunds. Brought ÷ spent is the ROAS.
- A subscription keeps paying, so next to it is what those people still bring each month, and how many months the cost needs to be earned back.
Mistakes that make it lie
- Judging a subscription app's ads on the first week only. The renewals that make the money come later.
- Using revenue before the store's commission and the tax it keeps back.
- Counting everyone who came after an ad ran. Only the people the ads brought count, and for organic posts that is an estimate.
Questions
What is a good ROAS?
Anything above your break-even, which is 1 ÷ the share you keep after fees. With 15% fees that is 1.18×. Above it the ads pay for themselves; how far above you need depends on your other costs.
Is ROAS the same as ROI?
No. ROAS divides revenue by spend. ROI divides the profit (revenue less spend) by spend, so a ROAS of 1.8× is an ROI of 80% before fees.
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