What Is a Good ROAS? Making the Most of Your Ad Budget

TL;DR – What Is a Good ROAS?

1. ROAS (Return on Ad Spend) measures how much revenue you generate for every dollar spent on ads. It’s a key metric for evaluating ad performance.

2. How to calculate ROAS: Revenue ÷ Ad spend (e.g. $5,000 ÷ $2,500 = 2.0 ROAS or $2 return per $1 spent).

3. What’s considered a good ROAS? It varies by platform:

   • Google Ads: 2:1

   • Amazon Ads: 6.28:1

   • Facebook Ads: 4–10:1 (some even hit 80:1)

4. A general benchmark for success is 4:1 (earning $4 for every $1 spent), though this depends on your margins and industry.

5. To improve ROAS: Use targeted keywords, create compelling landing pages, and track ad-specific data like clicks, impressions, and conversions.

Digital ads are among the most powerful online marketing tactics available. When done correctly, these ads are highly effective in generating organic trafficOrganic search traffic (sometimes called natural or unpaid search) is the traffic that's driven to a website because of unpaid placement on a search engine results page. with both speed and volume. However, the use of online advertising platforms is not cheap. A lot of money is on the line, and it can go to waste if you’re not careful.

That is why it is critical you keep an eye on your return on ad spend (ROAS). This metric gives an insight into the performance of your ad campaigns, allowing you to analyze if your return on investment (ROI) is making the endeavor worthwhile or not. This guide will explain what ROAS is in marketing, what a good ROAS is, and how to improve ROAS.

What Is ROAS?

When a marketer sees that acronym for the first time, that is usually the first question that pops into their mind. So, what is ROAS in marketing terms, exactly? Once you see the name in full – return on ad spend – you get a clearer idea. This is a PPC metric where you see how much money is being generated for every dollar you spend, whether this is for a single ad or across an entire campaign.

Read more: Top 25 KPIs You Should Be Reporting On & Why

Essentially, you use ROAS to measure your advertising campaigns and see if they’re working or not. A high ROAS target is the aim. With this, it demonstrates you are getting more out of every dollar you spend on digital ads.

How to Calculate ROAS

Google Ads, Facebook Ads, Amazon Ads – regardless of the platform, the ROAS marketing formula remains the same. Further good news: it’s also easy to calculate. It is a case of taking the revenue generated by your ad campaign and dividing it by the campaign’s total cost.

Say you are using Google Ads. Here’s an example of a ROAS formula, Google Ads style:

Through Google Ads, you manage to sell 100 units of a $50 product. This means the revenue generated is $5,000 in total. Now, imagine you spent $2,500 on your Google Ads campaign. With these numbers, you can calculate the ROAS via the following formula:

ROAS = $5,000 / $2,500

The result: your ROAS is 2 for this particular ad campaign. That means for every $1 you spent on ads, you received $2 in return.

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What Is a Good ROAS?

When working out what’s a good ROAS, you first have to consider the platform. Different platforms have different average ROAS scores, and this has to be factored into any PPC audit you conduct. Let us go over three of the main platforms to demonstrate this in action.

·         What is a good ROAS for Google Ads?

The average Google Ads ROAS is 2:1 or 200%. This means when looking at ROAS, Google Ads will generate $2 for every $1 spent on average.

·         What is a good ROAS on Amazon?

Well, the average jumps up significantly compared to Google Ads. According to Jungle Scout, you receive $6.28 for each $1 you spend on average for Sponsored Brand campaigns.

·         What is a good ROAS for Facebook ads?

The average ROAS for Facebook Ads is around the 4-10x mark, according to Databox. However, approximately 5% of marketers have maximized the platform to get an impressive 80x return on their ad spend.

So, what is good ROAS in general? The general thought process is that if you’re receiving a 4:1 average, where for every dollar spent, you’re getting $4 in revenue, that is the mark of a successful ad campaign. However, various factors – including profit margins, cost-per-click (CPC) average, and your industry – can influence what is deemed an effective ROAS score.

How to Improve ROAS

In the same way you can craft compelling copy or use link building services to improve your backlink profile, there are ways to improve your ROAS and squeeze more out of your ad campaigns. Here are some tips to keep in mind:

·         Incorporate the right keywords

Just as our Managed SEO campaigns place emphasis on keywords, this is also applicable to your ads. Without the right use of keywords, your ads won’t reach the audience most relevant to your business and what you’re selling. This is where long-tail keywords, where you can be specific and focus on search terms with higher purchasing intent, can make a big difference.

·         Create high-quality landing pages

Your ads can only do so much of the work. Even if you manage to generate clicks, this doesn’t mean these leads will end up as sales. Your landing page has to be persuasive to get potential customers to convert. For a high-quality landing page, first start with an SEO audit to ensure everything is working behind the scenes. Then it’s about creating eye-catching copy – think bullet point lists, CTAs that jump out, testimonials, etc. – to grab and retain the attention of visitors.

·         Track the right data

To learn more about your backlinks, you perform a backlink analysis. Well, in the same vein, it’s also important to analyze the stats behind your ad campaigns. However, you want to focus specifically on data around your ads. What are ROAS data points to follow? Basically, you want to track the data which deals directly with your ad campaigns. That includes impressions, clicks, demographics, and so on.

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Conclusion

With this guide, you now know the ROAS meaning in marketing terms. You understand the difference between the Google ROAS average and Amazon ROAS average. You also have some helpful tips to improve your ROAS. Now, it’s time to put that information into action. If you need help in that regard, don’t hesitate to receive expertise – and proven results – from our PPC agency.