Return on ad spend (ROAS) is revenue generated divided by advertising spend, expressed as a ratio (4:1) or a multiple ($4 for every $1 spent). It is used to evaluate the efficiency of paid campaigns at the channel, campaign, ad set, or creative level, and reported either on a same-day attribution basis or against a longer-tail cohort window. It is the headline number on most paid-acquisition dashboards and the most-misread metric in marketing finance.
The first thing to understand about ROAS is that it is a revenue ratio, not a profit ratio. ROI is profit-over-cost; ROAS is revenue-over-ad-cost and ignores cost of goods, fulfillment, payment fees, and every other margin component. A "4:1 ROAS" sounds great until you disco...