ROAS vs ROI — Key Difference
ROAS divides revenue by ad spend only — it doesn't subtract product costs, salaries, or overhead. A 4× ROAS sounds great, but on a product with 20% gross margin, you're losing money (break-even ROAS would be 5×). ROAS is an optimisation metric, not a profit metric.
ROI = (Revenue − Total Costs) ÷ Total Costs. ROAS = Revenue ÷ Ad Spend. Use ROAS for campaign-level decisions (which ad sets to scale or kill). Use ROI when you need to factor in all costs and compare advertising against other investment types.
Break-Even ROAS
Break-even ROAS = 1 ÷ Gross Margin. At 75% gross margin, break-even is 1.33×. At 50% gross margin, break-even is 2×. At 25% gross margin, break-even is 4×. This is why the same ROAS can be profitable for one business and disastrous for another.
ROAS Benchmarks by Channel
Benchmarks vary widely by channel and industry. Google Search typically delivers higher ROAS (purchase intent is high) than display or brand awareness campaigns (which generate future revenue not captured in immediate ROAS).
For SaaS, ROAS attribution is complex — a customer may click a Google Ad, read 3 blog posts, and convert via direct traffic 6 months later. Multi-touch attribution models give a more accurate picture than last-click.
4:1
Industry average ROAS for Google Ads
2–3×
Typical ROAS for paid social (Meta/LinkedIn)
1/GM
Formula for your break-even ROAS
10×+
ROAS target for some direct response brands