ROAS (Return on Ad Spend)
ROAS shows how much revenue each unit of ad spend produced — ad revenue divided by ad cost — and it is the standard yardstick for judging live commerce ad efficiency.
How is it calculated?
Revenue attributed to the ad divided by what you spent. Spend 1,000 and make 5,000 and ROAS is 500%. The caveat is that it's a revenue measure — cost of goods and fees aren't in it.
How does it differ from ROI?
ROAS is based on revenue, ROI on profit. High ROAS on a thin margin can still lose money, so it's safer to compute a minimum target ROAS from your margin rate up front.
Frequently Asked Questions
Q. How should ROAS be measured for a broadcast?
Decide first whether you count only revenue during the stream or also a window afterwards — live keeps converting through replays and search after it ends.
Q. ROAS looks high but there's no profit. Why?
Usually heavy discounting, or cost of goods and shipping not being accounted for. ROAS is an efficiency measure, not a profitability one.