What is ROAS and how is it calculated for an online store?
ROAS is the ratio that shows how many ₺ in sales come back for every ₺1 you spend on ads; it is found by dividing revenue from ads by ad spend. ACoS, common in marketplace panels, is the inverse of the same relationship.
ROAS = Revenue from ads ÷ Ad spend
ACoS = Ad spend ÷ Revenue from ads × 100
ROAS measures revenue, not profit. So it cannot be called “good” or “bad” on its own; the same 3x ROAS means profit for a high-margin store and loss for a low-margin one. You can find the difference between ROAS and ROI in detail in the ROAS and ROI guide.
What is the minimum ROAS I need for my profit margin?
The minimum ROAS required is the inverse of your gross profit margin; any campaign below this value cannot cover its ad expense with product profit.
Break-even ROAS = 1 ÷ Gross profit margin
| Gross profit margin | Break-even ROAS | Highest ACoS |
|---|---|---|
| %20 | 5.00x | %20 |
| %25 | 4.00x | %25 |
| %30 | 3.33x | %30 |
| %40 | 2.50x | %40 |
| %50 | 2.00x | %50 |
How do I measure my ad revenue correctly?
In the calculation, enter not the figure shown by the ad panel but the amount of orders actually completed in your store, excluding VAT and after returns. The panel may show revenue including VAT or without deducting cancellations, which makes ROAS look higher than it is.
- Tag your links. Give each campaign its own source information; the UTM builder does this in one step.
- Calculate channels separately. Search, social media and marketplace ads have different margins and ROAS; the total figure hides the weak channel.
- Keep the period the same. Take spend and revenue from the same date range.
For measurement methods, see the ad analytics article.
What should I change first if ROAS is low?
Before cutting the budget, try increasing the profit margin and basket value; both lower break-even ROAS and can make the same ad profitable.
- Check the margin. Have shipping and payment commission been deducted correctly? Find the real margin with the profit margin calculator.
- Grow the basket. Bundled products and free shipping above a certain amount spread the ad cost per order over a larger basket.
- Choose products. Direct ads to the products with the highest margin and sufficient stock.
- Factor in repeat sales. A campaign that falls below break-even on the first order can be profitable in the long run if the customer buys again.
When should I increase the ad budget?
If ROAS is clearly above the break-even value and stock is sufficient, increase the budget gradually; if ROAS is close to break-even, improve the campaign first. As the budget grows, ads are also shown to less relevant people, and ROAS usually drops somewhat.
- Increase step by step. Instead of doubling the budget at once, grow it in small steps and recalculate ROAS at each step.
- Know the ceiling. The “Maximum spend without losing money” box shows the amount at which the ad leaves zero profit with the current revenue and margin.
- Watch the stock. Ads sent to a sold-out product are wasted; check the stock of advertised products regularly.
Updated: · Calculations are for information only; consult your accountant for official transactions.