Start with break-even
ROAS equals revenue from ads divided by ad cost. Your break-even ROAS is the point where gross profit from those sales just covers the ad cost.
| Gross margin | Break-even ROAS | A healthier target |
|---|---|---|
| 30% | 3.3 | 5 or more |
| 50% | 2.0 | 3 or more |
| 70% | 1.4 | 2 or more |
The targets in the last column are rules of thumb that leave room for other costs, like management and overhead. Set your own from your full cost picture.
Why ROAS varies so much
- Margins. High-margin services stay profitable at a lower ROAS.
- Repeat business. Customers who come back raise lifetime ROAS.
- Campaign type. Brand searches look strong, but many buyers would find you anyway.
- Tracking. Untracked calls and offline sales make ROAS look worse.
Measure it on real revenue
For lead-based businesses, revenue happens after the call. Send closed job values back to Google Ads, and ROAS will reflect real money. Without that, any ROAS figure is an estimate.
Good example. An HVAC company imports installed system values into Google Ads. It finds that its replacement campaigns earn a ROAS of 6, while repair campaigns earn 2 but bring future replacements.
Bad example. A company compares its ROAS to a national average it found online and cuts a campaign that was profitable for its margins.
Look beyond one number
A campaign with lower ROAS can still be worth it if it brings new customers who return. Judge ROAS alongside cost per new customer and lifetime value.
Read what ROAS is. Our PPC management ties ROAS to the revenue in your CRM wherever it can.