What is ROAS? And How to Optimize It for eCommerce

Imagine lighting a £50 note on fire every time someone clicks your ad but doesn’t convert. Painful, right?

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That’s essentially what happens when you don’t track or optimize your Return on Ad Spend (ROAS). You’re spending, but not always earning. ROAS is one of the most important eCommerce performance metrics, and yet, many brands either miscalculate it or obsess over the wrong benchmarks.

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In this article, we’ll break down exactly what ROAS is, how to calculate it, what counts as a “good ROAS” in 2025, and most importantly, how to optimize it for profit.

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Let’s dig in.

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What Is Return on Ad Spend (ROAS)?

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ROAS stands for Return on Ad Spend. It tells you how much revenue your business earns for every pound (or dollar, or euro) spent on advertising.

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It’s a simple ratio:

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If you spend £1 on ads and make £4 in sales from those ads, your ROAS is 4.0

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At face value, ROAS seems like a no-brainer performance metric, but it’s only part of the profitability picture. Unlike Return on Investment (ROI), ROAS doesn’t account for your profit margins, shipping costs, or customer service overheads. It's a revenue measure, not a profit one.

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Still, as a high-level view of ad effectiveness, ROAS is a key metric to track, especially when optimized at the channel, campaign, or even SKU level (more on that later).

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ROAS Formula: How to Calculate ROAS

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Let’s get technical. The formula for calculating ROAS is:

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For example:

Let’s say you spent £5,000 on a Meta Ads campaign and generated £20,000 in sales directly attributed to those ads. Your ROAS would be:

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£20,000 ÷ £5,000 = 4.0

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This means for every £1 spent, you earned £4 back.

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Important note: You should only count attributed revenue - sales that clearly came from the ad spend in question. Mixing in organic or returning customer revenue will inflate your ROAS and give you a false sense of performance.

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What Is a Good ROAS in 2025?

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The answer is it depends. But let’s get specific.

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Here's what the averages and targets look like across the industry

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Rule of thumb: For eCommerce brands with 60–70% gross margins, a 3.0x ROAS is often breakeven. Anything higher contributes to profit.

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But be careful: chasing a “good” ROAS can lead to under-investing in brand-building or retention campaigns. In many cases, lower ROAS campaigns with long-term payback (like new customer acquisition) are critical to scaling sustainably.

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ROAS Calculator With Conjura

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Most platforms show you a ROAS number. But they don’t tell you if it’s actually making you money.

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That’s where Conjura is different.

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Our platform calculates ROAS using first-party data, not just what Meta or Google say happened. That means you get a clearer picture of actual campaign performance, not inflated platform metrics.

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Here’s how it works:

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Channel-Agnostic Attribution

We unify performance across Meta, Google, TikTok, Amazon, Shopify (and more), so ROAS reflects total ad impact - no double counting, no blind spots.

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SKU-Level Precision

We don’t just stop at campaign-level ROAS. Conjura shows ROAS per product, so you can identify which SKUs are ad efficient and which are profit killers.

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Breakeven ROAS Benchmarking

We calculate your true breakeven ROAS based on your cost of goods sold (COGS), fulfilment, and customer acquisition costs. 

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Contribution Profit Overlay

Even better, Conjura layers ROAS with Contribution Profit, giving you a richer view of whether a campaign is profitable after factoring in product costs, refunds, and discounts.

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You might see a campaign with a 3.5x ROAS, but once returns and COGS are factored in, it could be losing money. Conjura surfaces that automatically.

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The result? You can confidently scale the campaigns, audiences, and products that drive real, bankable profit, not just top-line revenue.

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Why ROAS Alone Can Mislead You

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Here’s the problem with ROAS: it’s blind to context.

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Let’s say you run two campaigns:

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• Campaign A has a ROAS of 6.0
  
  
• Campaign B has a ROAS of 2.5
  
  

Which is better?

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You might say Campaign A, until you learn that it was promoting a low-margin product with high returns, while Campaign B sold high-margin bestsellers with great LTV.

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ROAS doesn’t factor in:

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• Product margins
  
  
• Fulfilment & logistics costs
  
  
• Creative production costs
  
  
• Customer return rates
  
  
• Long-term value (LTV) of acquired customers
  
  

That’s why we always recommend pairing ROAS with Contribution Profit and SKU-level attribution, two areas where Conjura goes deeper than other analytics platforms. When you evaluate ROAS in context, you make smarter decisions about where to spend next.

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Eight Proven Ways to Improve ROAS for eCommerce

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Ready to optimize? Here are eight tactical, data-backed methods to increase your ROAS and bottom line:

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1. Refine Your Audiences

Use exclusions to avoid retargeting buyers who’ve already converted. Build lookalikes from high-LTV cohorts, not just one-time purchasers.

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2. Combat Creative Fatigue

Refresh your ad creatives every 2–3 weeks. Run A/B tests across formats, headlines, and visuals. Stale ads = expensive clicks.

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3. Test Offers and Price Anchoring

Split-test bundles, discounts, or tiered pricing. A 10% off promo might tank margins, but a 2-for-1 may increase AOV and conversion.

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4. Check Your Attribution Model

Meta might over-credit sales. Use Conjura or post-purchase surveys to validate whether your “top-performing” campaigns are actually driving incremental value.

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5. Optimize at the SKU Level

Stop treating all products equally. Use tools like Conjura’s Expanded Product Table to see which SKUs drive profitable ROAS and which waste ad budget.

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6. Improve Landing Page Speed

Your ad might be 🔥 but if your site takes 6 seconds to load, bounce rates will wreck your ROAS. Aim for sub-2 seconds mobile load.

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7. Boost LTV Through Retention

Higher LTV = more room to spend on acquisition. Use email, SMS, and loyalty programs to drive second purchases and higher lifetime ROAS.

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8. Re-Allocate Budget Dynamically

Don’t “set and forget” your ad budgets. Use weekly ROAS and profit heatmaps to shift spend to campaigns or products with the highest contribution margin.

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Common ROAS Calculation Mistakes

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Even experienced marketers can fudge their ROAS figures, sometimes by accident, sometimes to make reports look prettier (we won’t tell). Here are a few common pitfalls to avoid:

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• Counting refunded or cancelled orders as revenue
  If the order didn’t stick, neither does the ROAS. Back those numbers out.
  
  
• Mixing currencies
  Ad spend in USD and revenue in GBP? Make sure everything’s converted before calculating.
  
  
• Ignoring creative and production costs
  That “cheap” ad campaign isn’t so cheap if you spent £10k on video shoots. ROAS only tells part of the story.
  
  
• Only relying on platform-reported data
  Meta and Google often claim more conversions than they actually drive. Always triangulate with first-party data and post-purchase surveys.
  
  
• Using last-click attribution blindly
  Last-click doesn’t account for top-of-funnel brand ads that plant the seed. A customer’s path to purchase is rarely linear.
  
  

Avoid these traps and your ROAS will become a far more reliable compass, not just a vanity metric.

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Kick off your ROAS journey with Conjura

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Understanding ROAS is one thing, but acting on it every day is what drives real results. That’s where Conjura steps in. Our platform brings together all your eCommerce and marketing data, ad spend, revenue, SKU-level margins and retention performance into a single, actionable view. 

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You’ll see which campaigns truly drive profit, optimize spend at the product level, and spot low-performing ads before they eat into your margins. Best of all, you don’t need a data science team to make it work. Conjura delivers daily, plain-English insights you can act on immediately!

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Ready to see your real ROAS and turn insight into profit? Book a Conjura demo today.

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