← Back to blog

What Is ROAS and Why It's the One Number That Actually Matters

5 min read

You spent 10,000 lei on ads last month. What did they bring back? If the honest answer sounds like “reach was up and people liked the posts,” there’s a hole in your boat and nobody has told you yet. ROAS, return on ad spend, is the number that answers the question directly: how many lei come in for every leu that goes out. It’s the first thing you should ask anyone who touches your ad budget. Everything else is context.

What is ROAS? Definition and napkin math

ROAS = revenue generated by your ads divided by what you spent on them. That’s the whole formula.

A worked example: you spend 5,000 lei on Google Ads in a month. Those ads drive 20,000 lei in sales. ROAS = 20,000 / 5,000 = 4, or 400% if you prefer percentages. Every leu you put in brought four back.

One catch, and it matters: ROAS measures revenue, not profit. That 20,000 lei is not what you earned, it’s what you billed. The distinction sounds pedantic. It’s exactly where most businesses fool themselves, and we’ll come back to it in a minute.

ROAS vs ROI vs CTR vs “engagement”

Agency reports love to blur these together, so let’s separate them:

  • ROAS: ad revenue / ad cost. Answers “is this sales machine working?”
  • ROI: profit / total investment, including product costs, logistics, salaries, the agency fee. Answers “am I actually making money?”
  • CTR (click-through rate): the share of people who saw the ad and clicked. Says something about the ad, nothing about the money.
  • Engagement, reach, impressions, likes: decoration. Useful for diagnosis, useless for budget decisions.

An account can have a spectacular CTR and a disastrous ROAS: ads that attract clicks from people who never buy. So the right end-of-month question isn’t “how much reach did we get?” It’s “what was our ROAS, and against what threshold?”

What counts as a good ROAS? Ask your margin, not a benchmark

The question we hear most: “is a ROAS of 3 good?” Honest answer: no idea until we see your margin.

The math is simple. Your break-even ROAS, the point where you stop losing money, is 1 divided by your gross margin:

  • 25% margin (typical physical-product ecommerce): break-even at ROAS 4. A ROAS of 3 means you lose money on every sale.
  • 50% margin: break-even at 2. A ROAS of 3 is healthy profit.
  • 70% margin (services, events, courses): break-even at 1.43. A ROAS of 3 is excellent.

Same number, three completely different verdicts. Anyone promising you a “guaranteed ROAS of 10” without asking about your margin is selling you a story, not a strategy.

How to measure ROAS without lying to yourself

The number is only as good as the data behind it. Three things to check:

  1. Conversion tracking. If your site doesn’t pass order values correctly to Google or Meta, the ROAS in the platform is fiction. Fixing this takes about a day and changes everything.
  2. Attribution windows. “7-day click” and “30-day click plus 1-day view” produce very different numbers on the same account. Never compare months measured with different settings.
  3. A source of truth. Ad platforms always flatter themselves a little. Cross-check them against your invoicing or CRM. Small gaps are normal; a 40% gap is an alarm bell.

The number that changes decisions, not just reports

Why do we keep hammering on this? Because beyond the definition, this is what ROAS really is: the one metric in your account that tells you what to do next, not just what happened.

When we took over the ad account of MINA, a museum in Iași, the budget stayed the same and so did the product. What changed was how the numbers were read and acted on: within 4 months, ROAS doubled on the same account and the cost per ticket dropped by roughly 70%. Their Museums Night campaign passed a ROAS of 12. At Le Petit, an events client, account-wide ROAS sits above 5.5 with more than 3,000 tickets sold. We’re not quoting these to flex. The point is the mechanism: same market, same product, different results, because decisions followed the right metric.

What to do when ROAS is below break-even

Wrong reaction number one: shut everything down. Wrong reaction number two: pour in more budget “so the algorithm can learn.” The right order:

  1. Check the tracking first. Half the “bad ROAS” cases we see in audits are actually unmeasured conversions.
  2. Cut with a scalpel, not an axe. Almost every account has campaigns above and below break-even. Move budget, don’t nuke it.
  3. Look at the landing page. If the ads bring the right people and the page doesn’t convert, the problem isn’t in the ad account.
  4. Rerun the offer and margin math. Sometimes the numbers can’t work at the current price, and no campaign setting fixes that.
  5. Only then judge the platform. Maybe the channel is wrong for your product. But that’s the last conclusion, not the first.

ROAS isn’t a line in a monthly report. It’s the compass budgets should move by. If your agency sends you a PDF full of reach and impressions and you have to dig for the money, ask yourself who benefits from the fog.

Want to know your account’s real ROAS and where your break-even actually sits? Let’s talk - the first call is an hour of honest diagnosis, not a pitch.