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Performance

ROAS (Return on Ad Spend)

Also known as: return on ad spend

Definition

ROAS is revenue attributed to advertising divided by the advertising spend that produced it. It measures channel efficiency but ignores margin, returns and organic demand.

ROAS is the most quoted and least useful metric in paid media. It reports revenue rather than profit, so a 4× ROAS on a product with a 20% margin is a loss. It also relies on platform attribution, which counts conversions the platform believes it caused — and every platform believes it caused most of them.

Use ROAS as a directional signal within a single channel over time, never to compare channels or to judge overall performance. Blended MER and contribution margin are the honest versions of the same question.

Formula

ROAS = Attributed revenue ÷ Ad spend

More in Performance

Attribution window

An attribution window is the period after an ad interaction during which a resulting conversion is credited to that ad — commonly 1, 7 or 28 days for clicks and 1 day for views.

CAC (Customer Acquisition Cost)

CAC is the total sales and marketing cost required to acquire one new paying customer over a given period, including media spend, agency fees, tooling and salaries.

Cohort analysis

Cohort analysis groups customers by a shared starting characteristic — usually acquisition month — and tracks their behaviour over time, revealing retention and value patterns that blended averages hide.

Consent mode

Consent mode is a mechanism that adjusts how analytics and advertising tags behave based on a user's consent choices, allowing modelled measurement when tracking consent is withheld.

Contribution margin

Contribution margin is revenue minus all variable costs — cost of goods, shipping, payment fees, returns and marketing — showing what each sale actually contributes toward fixed costs and profit.

Conversion rate

Conversion rate is the percentage of visitors or sessions that complete a defined action — a purchase, form submission or booking — within a measurement period.

All 87 terms
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