ROAS means return on advertising spend
ROAS compares the value attributed to advertising with the amount spent. If a platform reports £10,000 of sales value from £4,000 of spend, the reported ROAS is 2.5. In plain English, the platform says each £1 spent produced £2.50 in tracked sales.
Why a positive ROAS does not automatically mean profit
The £10,000 is sales value, not profit. The business may still need to pay for products, fulfilment, delivery, payment fees, staff, agency fees, refunds and overheads. A return of £2.50 for every £1 spent may be excellent for one business and unsustainable for another.
This is why AdSpend Lens asks for commercial targets such as gross margin and an acceptable customer-acquisition cost. Performance needs to be compared with what the business requires, not with a generic idea of a “good” ROAS.
Platform-reported ROAS is based on attribution
Meta and Google use attribution rules to decide which advertising interaction receives credit for a purchase. A customer may see a Meta advert, search the business on Google and purchase later. Both platforms may report some or all of that sale depending on their settings.
ROAS should therefore be described as tracked or platform-reported return. It is evidence, not absolute proof that the advertising caused every sale claimed.
Questions to ask about a ROAS figure
- Which conversion action and sales value are included?
- Does it include new customers, existing customers or both?
- What attribution window is being used?
- Are refunds and cancelled orders removed?
- Is the figure before or after agency fees and other marketing costs?
- What ROAS does our margin require us to achieve?
What AdSpend Lens should show
The main dashboard should display “return for every £1” and explain the term ROAS underneath. It should show the target, comparison period, evidence level and any warning that tracking or attribution could make the result less reliable.