How to Calculate ROAS (and Why Your Number Is Probably Wrong)

ROAS, or return on ad spend, is one of the most quoted numbers in paid media. It is also one of the most misunderstood. The formula is simple. The inputs are where things go wrong, and a ROAS figure is only as good as the revenue and cost data behind it.

Quick answer: To calculate ROAS, divide the revenue attributed to your ads by the amount spent on those ads. If you spend £1,000 and attribute £4,000 of revenue, your ROAS is 4, often written as 4:1 or 400%. ROAS measures revenue, not profit, so it is not the same as marketing ROI.

How to calculate ROAS

The formula:

ROAS = revenue from ads / ad spend

Example: a campaign spends £2,500 in a month and Google Ads reports £10,000 in conversion value. ROAS is 10,000 / 2,500 = 4. Google Ads shows this as "Conv. value / cost" and expresses Target ROAS as a percentage, so a target of 400% means £4 of conversion value for every £1 spent.

For lead generation, where there is no checkout, ROAS depends on assigning values to leads. That can be useful, but only if the values reflect what leads are actually worth.

ROAS vs marketing ROI

ROAS and marketing ROI answer different questions:

• ROAS asks: how much revenue did ads generate per pound spent?
• ROI asks: how much profit did we make relative to the total investment?

A simple ROI formula is: (profit attributable to marketing minus marketing cost) / marketing cost.

The difference matters. A ROAS of 4 sounds healthy, but if your gross margin is 20%, £4,000 of revenue produces £800 of gross profit against £1,000 of ad spend. You are losing money before agency fees, tools or staff time are counted.

Break even ROAS

A useful sanity check is break even ROAS:

Break even ROAS = 1 / gross margin

At a 25% margin, break even ROAS is 4. At a 50% margin, it is 2. Anything below break even loses money on the first order, though it may still make sense if customers come back and buy again. This is why many businesses set targets based on margin and customer lifetime value, not on a generic "good ROAS" figure.

Why your ROAS number is probably wrong

The calculation is rarely the issue. The data feeding it often is. These are the problems we see most often when auditing accounts.

1. Conversions are double counted

If a purchase is tracked by both a Google Ads tag and an imported GA4 key event, and both are Primary, conversion value can be counted twice. ROAS doubles overnight with no change in sales. The same happens when a thank you page fires the tag on every reload without transaction ID de duplication. We cover this in detail in Google Ads conversion tracking not working? 9 causes and fixes.

2. Conversion values are wrong

Common mistakes include:

• Sending revenue including VAT and shipping when you want to measure product revenue.
• Static placeholder values, such as every purchase worth £1.
• Currency mismatches between site and account.
• Failing to account for refunds, cancellations and returns.

3. Brand campaigns inflate the blended figure

Brand search usually has a very high ROAS because many of those people would have found you anyway. Blending brand with non brand makes the whole account look better than the prospecting activity really is. Report them separately.

4. Attribution gives ads credit they did not fully earn

Google Ads attribution only sees the ad interactions it knows about. Data driven attribution, the default for most conversion actions, distributes credit across Google ad interactions, but it does not see your email, organic social, word of mouth or offline sales. Meta Ads will claim credit for some of the same customers. Add up the revenue each platform claims and it can exceed your actual revenue.

5. Attribution dates do not match your finance data

Google Ads reports conversions against the click date. Your accounts record revenue on the sale date. Comparing a calendar month in each will never match exactly, and recent periods will look weaker until delayed conversions arrive.

6. Consent and cookie restrictions hide conversions

In the UK and EEA, users who refuse consent cannot be tracked in the normal way. Consent Mode v2 in advanced mode allows Google to model some of these conversions, while basic mode sends no data for non consenting users. Either way, observed ROAS can understate or overstate reality depending on setup and how modelling is applied.

7. Offline and phone sales are missing

If a meaningful share of revenue comes from phone calls, quotes or sales closed later in a CRM, online ROAS will understate performance unless offline conversions are imported.

How to get a ROAS figure you can trust

1. Audit conversion actions. One Primary purchase action, counted once, with a transaction ID.
2. Validate values. Compare a sample of orders in your back office with what Google Ads recorded.
3. Decide on a revenue definition (for example, net of VAT and shipping) and apply it consistently.
4. Split brand and non brand in reporting.
5. Import offline conversions where sales close outside the website.
6. Reconcile against actual revenue. Compare total platform claimed revenue with real revenue for the period. If platforms claim far more than you made, attribution overlap is significant.
7. Use margin based targets. Set Target ROAS using break even maths, not a number you heard was "good".

Blended ROAS (or MER)

Many businesses also track a blended figure: total revenue divided by total marketing spend across all channels, sometimes called marketing efficiency ratio. It avoids attribution arguments and gives a reality check against platform reported ROAS. It will not tell you which campaign is working, but it will tell you whether marketing overall is paying its way.

Where ROAS fits in an audit

ROAS is an output, not a diagnosis. When it looks too good or too bad, the cause is usually tracking, attribution or campaign mix. That is why our Google Ads audit checklist starts with conversion tracking before looking at performance. Our Google Ads Audit and Tracking Audit + Fix validate the data first, so the ROAS you report is one you can defend.

FAQs

What is a good ROAS?

There is no universal good ROAS. It depends on your margin, repeat purchase rate and costs. Work out your break even ROAS (1 divided by gross margin) and set targets above that.

Is ROAS a percentage or a ratio?

Both are used. A ROAS of 4 can be written as 4, 4:1 or 400%. Google Ads uses percentages for Target ROAS.

Can I calculate ROAS for lead generation?

Yes, if you assign values to leads, ideally based on average lead to sale rate and deal value, or by importing actual sale values from your CRM.

Why does Google Ads ROAS differ from GA4?

They use different attribution models, reporting dates and scope. GA4 sees all channels, Google Ads only its own interactions. Some difference is normal.

Check your ROAS is real

If you are not sure your reported ROAS reflects real revenue, our Performance Clarity bundle (Tracking Audit + Fix and Google Ads Audit) costs £349, fixed fee, or the Google Ads Audit alone is £179. Get My Audit.