What is ROAS?
Return on Ad Spend
Definition
ROAS (Return on Ad Spend) measures revenue earned per rupee of ad spend: revenue ÷ ad cost. A ROAS of 4 (often written 4:1 or 400%) means every ₹1 of ads returned ₹4 of revenue. It's the headline efficiency metric for e-commerce and lead-value campaigns.
ROAS is not profit: a 4× ROAS on a product with 20% margin loses money once you count goods and delivery. The number you must know is your break-even ROAS = 1 ÷ profit margin. At a 40% margin, break-even is 2.5 — anything above that is profitable growth.
It also behaves differently at different scales: pushing spend up usually pushes ROAS down as you exhaust the cheapest buyers. The right question is rarely "how high is ROAS" but "what's the most I can spend while staying above break-even".
Example
₹1,00,000 of Meta ads produce ₹3,80,000 in orders → ROAS 3.8. With a 35% margin, break-even ROAS is 2.86, so the campaign is profitable — and may have room to scale even if ROAS dips to 3.2.
Why it matters
It converts ad reporting into a business decision. Agencies love quoting big ROAS numbers; owners should always pair it with margin to see actual profit.
Whatever clears your break-even with room to spare — that depends on margin. E-commerce at healthy margins often targets 3–5×; high-ticket services can be profitable at apparently low ROAS because each sale is large.
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