Return on Ad Spend (ROAS) is the revenue generated for every dollar spent on advertising, calculated by dividing the revenue attributed to a campaign by the amount spent on that campaign.
Also written as ROAS.
ROAS is the quickest read on whether an ad campaign is working. A ROAS of 1 means you made back exactly what you spent, before costs, so anything close to that is usually losing money.
For a small business, the ROAS you need depends on your margins. A business with a 70 percent margin can survive a lower ROAS than one running on 25 percent, so there is no universal target.
ROAS only counts revenue you can attribute to the ad. If your tracking is incomplete, ROAS will understate the truth and you may cut a campaign that is actually profitable.
An electrician spends 1,000 dollars on Google Ads in a month. The calls and form fills from those ads turn into 6,000 dollars of booked work.
ROAS is 6,000 divided by 1,000, which is 6, often written as 6:1. Every dollar of ad spend returned six dollars of revenue.
Whether 6:1 is good depends on the job margin. On 40 percent margin, that 6,000 dollars of revenue is 2,400 dollars of profit against 1,000 dollars of spend, so the campaign is clearly worth running and probably worth scaling.
In-House runs the advertising agent against connected ad accounts, tracking ROAS per campaign and shifting budget toward what returns, with spend changes routed to you for approval.