In short
- ROAS measures sales per unit of ad spend, not profit.
- Break-even ROAS = 1 ÷ contribution margin.
- Take out sales that would have happened without the campaign.
What ROAS is
ROAS (return on ad spend) divides the sales attributed to a campaign by what you spent on it. A ROAS of 4 means €4 of sales were attributed to each euro of advertising. It is easy to measure, but it does not tell you whether the campaign makes money.
What matters is the margin
Part of each sale goes on product cost, shipping, fees and other variable costs. What is left is the contribution, and that is what pays for the advertising. That is why the ROAS you need depends on your margin:
Break-even ROAS = 1 ÷ contribution margin
- With a 20% margin, you need a ROAS of 5 to avoid losing money.
- With a 50% margin, a ROAS of 2 is enough.
A worked example
| Ad spend · attributed sales | €1,000 · €4,000 |
| ROAS | 4 |
| With a 20% margin | €800 contribution: you lose €200 |
| With a 30% margin | €1,200 contribution: you gain €200 |
The same campaign, with the same ROAS, makes or loses money depending on the margin of what you sell.
Sales that would have happened anyway
Platforms credit the campaign with sales that might have happened without it, for example from regular customers. If only 75% of the sales in the example are new, with a 30% margin the real contribution is €900 and the campaign loses €100.
Work it out with your numbers
The calculator gives you your campaign's real result, the break-even ROAS for your margin and the sales you would need to cover it.