Unit economics
Revenue attributed to advertising divided by the advertising spend — a channel efficiency ratio, not a profitability one.
Also called Return on ad spend · ДРР · ROMI
Formula
ROAS = Attributed revenue ÷ Ad spend
- Attributed revenue
- whatever the platform's attribution model credits to the campaign
Break-even ROAS = 1 ÷ Contribution margin. At a 32 % contribution margin, a campaign needs ROAS above 3.1 merely to avoid losing money.
ROAS is denominated in revenue, so it is blind to the cost of what was sold. Two campaigns at identical ROAS can be one profitable and one ruinous if they sell different products, and no amount of optimisation inside the platform will surface that.
It is also self-reported by the party being evaluated. The platform decides what it is responsible for, and every platform's model credits itself generously.
- Contribution margin
- 32 %
- Reported ROAS
- 2.8
- Break-even ROAS
- 1 ÷ 0.32 = 3.1
A campaign reporting 2.8 against a 3.1 break-even is losing money on every order while the dashboard shows a positive return. Nothing in the ad account will say so.
Teams inherit a target — 4, or 5 — with no memory of where it came from, and defend it after the product mix has changed enough to move break-even. Recompute break-even ROAS whenever margin moves, and set the target from it rather than from habit.
The definitions are the easy part. Whether the figure on your dashboard was computed this way is a different question, and usually the more expensive one.