ROAS Meaning, Formula, ROI Difference and Target ROAS

ROAS (Return On Ad Spend) is the ratio of revenue to ad spend. The formula is revenue ÷ ad spend × 100%. If you spend 1,000,000 KRW on ads and generate 4,000,000 KRW in revenue, your ROAS is 400%. Google Ads Help describes a goal of selling 5,000 won of product for 1,000 won of ad spend as "revenue 5,000 won ÷ ad spend 1,000 won × 100% = 500%" (About target ROAS bidding, checked on October 3, 2026). But what counts as a good percentage is set by your own product's margin, not by an industry average.

ROAS meaning: how much revenue each unit of ad spend returned

ROAS only shows how much revenue came back from the money you spent on ads. It is based on revenue, not on the profit left after ad spend. So a ROAS of 100% means you earned revenue equal to your ad spend. Once you subtract product cost, that can still be a loss.

How to calculate ROAS, with examples

The amounts below are assumed examples to show the method. They are not real ad results. If you keep ad spend fixed and change only the revenue generated by ads, ROAS changes as shown below. Use amounts from the same period and on the same basis (both including VAT or both excluding it).

Ad spend	Revenue from ads	Calculation	ROAS
1,000,000 KRW	1,000,000 KRW	100 ÷ 100 × 100%	100%
1,000,000 KRW	2,000,000 KRW	200 ÷ 100 × 100%	200%
1,000,000 KRW	4,000,000 KRW	400 ÷ 100 × 100%	400%
1,000,000 KRW	5,000,000 KRW	500 ÷ 100 × 100%	500%

Many platform screens show a multiplier such as 2.46 or 4.0 instead of a percentage. Multiply that value by 100 to get percentage ROAS (2.46 is 246%, 4.0 is 400%).

What ROAS is good: judge it by breakeven ROAS

Google's help page gives no benchmark number for target ROAS. It tells you to refer to your actual ROAS over the last few weeks. So you have to calculate a good number yourself. Breakeven ROAS is the ROAS at which profit after ad spend is exactly 0. You get it with 1 ÷ margin rate. Here, margin rate is the share of revenue left as profit before ad spend is deducted.

Take an assumed example. A product sells for 10,000 won. After product cost, shipping and payment fees, 2,500 won is left, so the margin rate is 25%. Breakeven ROAS is 1 ÷ 0.25 = 4, or 400%. If you spend 2,500 won on ads and earn 10,000 won in revenue, profit is 0. ROAS must be above 400% for the ads to make a profit.

Margin rate	Breakeven ROAS
50%	200%
25%	400%
20%	500%
10%	1,000%

At the same ROAS of 300%, a product with a 50% margin makes a profit and a product with a 20% margin loses money. This is why you should not aim for another shop's ROAS or an industry average.

The difference between ROAS and ROI

ROI (return on investment) is the ratio of profit left to money spent. ROAS is the ratio of revenue to ad spend. Even with a high ROAS, ROI can be negative if product cost or shipping is large.

Item	ROAS	ROI
What it looks at	Revenue	Profit
Inputs	Revenue from ads, ad spend	Revenue, product cost, ad spend and all other costs
What it tells you	Revenue efficiency against ad spend	Money actually left over

Ad dashboards show only ROAS directly. If you compare it with a breakeven ROAS that you calculated with your product cost included, you can tell whether you are profitable without calculating ROI separately.

Checking ROAS in Google Ads and setting target ROAS

In its conversion tracking help page, Google Ads defines conversion value per cost as total conversion value ÷ total cost of all ad interactions. If you read revenue as conversion value and ad spend as cost, this is the same formula as ROAS. Multiply it by 100 to get percentage ROAS. Column names in the performance table may look different depending on your account language and screen settings.

Target ROAS is a bidding strategy in which you set this value as the goal and Google's AI automatically adjusts the bid for each search. In the Korean help pages it is labeled "target ROAS" in Korean. The conditions stated in Google's help page are below.

Item	Guidance from Google's help page
Conversion data (Search and Shopping)	At least 15 conversions in the past 30 days
Conversion data (Display)	At least 15 conversions with valid conversion value in the last 30 days
Starting target value	Refer to the value Google recommends based on your actual ROAS over the last few weeks
If you lower the target	Conversions may increase
If you raise the target	Conversion value may increase, but the traffic your ads can get may be limited
After you change the target	It takes 1 to 2 conversion cycles to reach the new target

Do not set the target value lower than the breakeven ROAS you calculated earlier. If you set a target ROAS of 300% on a product with a breakeven ROAS of 400%, the ads lose money even when Google hits the target. Change the target in small steps rather than one big jump, and after each change wait until 1 to 2 conversion cycles have passed before judging results.

Checking purchase ROAS in Meta Ads

Meta Ads Manager has a purchase ROAS metric. The Meta Business Help Center explains that it is calculated by dividing purchase conversion value by the total amount spent. It is based on information received from your connected Meta Business Tools. When data is incomplete, statistical modeling estimates some events and values. In some cases, such as results for ads delivered on devices with iOS 14 or later, this metric may not be calculated.

Google and Meta count revenue with different tools. Google uses the conversion value received by your ad account. Meta uses purchase information from your connected business tools. If you run both channels for one product, do not add the ROAS values from each screen or compare them side by side. Instead, check them against the settled revenue in your store admin, with refunds and cancellations removed, divided by ad spend.

Common mistakes when reading ROAS

• Reading ROAS as a profit rate. A ROAS of 300% means revenue is 3 times ad spend, and profit depends on the margin rate. Calculate breakeven ROAS first and compare.
• Setting a target ROAS with little conversion data. For Search and Shopping campaigns, first meet the condition in Google's help page of at least 15 conversions in the past 30 days.
• Judging results a few days after raising target ROAS. According to Google's help page, it takes 1 to 2 conversion cycles to reach the new target, so watch results through that period.

ROAS frequently asked questions

Should I turn off ads if ROAS is below 100%?
Revenue is lower than ad spend, so looking at the ads alone, you lose money. But if the product relies on later revenue, such as repeat purchases after the first order, include that revenue and recalculate breakeven.

How is ROAS different from CPA?
CPA is the ad spend needed to get one conversion. ROAS is revenue against ad spend. When product prices vary, CPA alone cannot tell you about profit, so look at ROAS as well.

Should I include VAT in the ROAS calculation?
Either way works as long as ad spend and revenue use the same basis. If only one side includes VAT, ROAS comes out higher or lower than the real figure.

Before you open your ad report, calculate your product's margin rate first, and note down the breakeven ROAS you get from 1 ÷ margin rate.

Google and Meta help pages do not show a revision date or an effective date. This article reflects what was checked on October 3, 2026, and admin screens and conditions may change.