Ads

ROAS

Also called Return on ad spend.

ROAS, or return on ad spend, is how much revenue you earn for each dollar you spend on ads.

Divide revenue from ads by what the ads cost. Spend $200, earn $600, and your ROAS is 3. It uses revenue, not profit, so a ROAS of 3 can still lose money if your margins are thin.

Work out your break-even ROAS before you run ads: the point where you neither make nor lose money. Anything under it loses money. Ad platforms count sales their own way, so check attribution against your own orders and UTM parameters. Calculate break-even ROAS from your real margins.

Go deeper

How to calculate break-even ROASD2CCalculate your break-even ROAS from what one order really leaves you after product, packing, shipping, fees and returns, then check every ad against Shopify's orders each day and move your budget every Sunday by a simple cut, keep or add-20% rule.
How to run Meta ads for a Shopify storeD2CRun Meta ads for a Shopify store on a small budget: check you are ready, connect the store with Shopify's free Facebook & Instagram app and a test order, launch one Sales campaign locked to 10 times what an order leaves over 14 days, turn off losing ads daily, and raise 20% or stop every Sunday on Shopify's orders.
How much to spend on adsSet your first ad budget from what one sale leaves you: a yes-or-no check by business type, a test limit of 10 times that number over 14 days locked in Google, Meta or LinkedIn, a daily stop line at 3 times, and a Sunday rule to raise 20% or stop.

Related terms

Cost per click (CPC)
Ad creative
Attribution
Customer acquisition cost (CAC)

All glossary terms, A to Z