What is a good ROAS? Every owner who runs ads asks it, and the honest answer is a question back: what is your margin?
A ROAS that makes one business rich bankrupts another. The number only means something next to what you keep from each sale, and under cash on delivery, next to what you actually collect.
What Is Considered a Good ROAS for a Business?
ROAS, return on ad spend, is the revenue your ads bring divided by what you spent on them. Google’s own example sets a target ROAS of 500% for $5 in sales for every $1 in ad spend, which most people write simply as a ROAS of 5.
The figure measures revenue, not profit. That is why no single ROAS counts as good for everyone.
Same ROAS, Different Profit for Each Business
Take two stores, each spending EGP 10,000 on ads and each bringing EGP 40,000 in sales: a ROAS of 4.
The first keeps a 50% margin, so its sales leave EGP 20,000 before ads and EGP 10,000 after them. The second keeps a 20% margin: EGP 8,000 before ads, and a loss of EGP 2,000 after them. Same ROAS, opposite results.
How Profit Margin Sets Your Minimum ROAS
Your margin decides the lowest ROAS at which ads stop losing money. Everything above that line is profit; everything below it is a cost.
Break-Even ROAS in One Simple Line
Break-even ROAS is 1 divided by your margin. At a 25% margin, you need a ROAS of 4 just to cover the ads.
Target ROAS Equals Break-Even Plus Profit
Break-even is the floor, not the goal. Decide what share of revenue you want left after ads, then let the ads have only what remains of the margin.
At a 40% margin, if you want 10% of revenue left after ads, the ads can take 30%. That means a target ROAS of about 3.3: EGP 3.3 in sales for every EGP 1 of ad spend.
What Is a Good ROAS Number Under Cash on Delivery?
Under cash on delivery, the ROAS on your dashboard counts orders, not money collected. The number you need is the one that survives the courier.
Platform Revenue vs. Delivered Revenue
The ad platform records the order value when the shopper submits the order. If the parcel is refused or returned, that revenue never arrives, but the platform keeps counting it.
Your sales records show what was delivered and kept. That is the revenue your margin applies to.
Adjusting ROAS for Refused Orders
Say a campaign spends EGP 25,000 and the platform reports EGP 100,000 in sales: a ROAS of 4. If a fifth of that value is refused or returned, delivered revenue is EGP 80,000, and the real ROAS is 3.2.
At a 25% margin, the dashboard says break-even. The delivered numbers say the campaign loses money, before even counting the shipping paid on the refused parcels.
When a Low ROAS Is Still a Good Decision
A ROAS below break-even isn’t always a mistake. Two situations can justify it, as long as they are chosen on purpose.
New Customers With Strong Repeat Purchases
A first order that loses money can still pay if the customer comes back. When new buyers order again within months, the second and third orders carry no ad cost.
The decision rests on repeat data, not hope. Our analysis of customer lifetime value shows how to weigh the first order against the ones that follow.
Launch Campaigns and Seasonal Campaigns
A launch buys attention for a product nobody knows yet. A seasonal campaign may accept a lower ROAS to win customers in the weeks when they are buying.
Both need an end date and a later measure. Without them, a planned loss becomes a permanent one.
When a High ROAS Hides a Problem
A high ROAS can look like success while the business pays for sales it already had.
Retargeting and Branded Search Inflating ROAS
Retargeting reaches people who already visited, and branded search reaches people already typing your name. Both show high ROAS, because many of those buyers were coming anyway.
The ad gets credit for the sale. The question is how many of those sales it actually added.
A ROAS That Collapses When You Scale
A small campaign aimed at your warmest audience can show a ROAS of 8. Double the budget, and the extra money reaches colder people who buy less.
The ROAS of the next EGP 1,000 matters more than the average of the last month. Raise budgets in steps and watch the return on each step.
Tracking ROAS Properly Is a Daily Burden: Why Hand It to Specialists
The platform’s ROAS updates by the hour. The real one takes work to build.
Platform Numbers, Profit Margin and Refused Orders Need Constant Reconciling
Revenue from the ad account has to be matched to delivered orders, product margins and returns, campaign by campaign. Without that, the target ROAS rests on a number nobody checked.
A High ROAS on Screen Can Hide a Campaign That Loses Money
A campaign can show a strong ROAS while refused orders, thin margins and repeat buyers turn its real result negative. The budget keeps flowing to it because the screen looks good.
How Brand Brew Takes ROAS Off Your Hands
We set your target from your margin and run your campaigns against the real return.
We Set Your Target ROAS From Your Profit Margin Before the Budget
We start from your margins by product and the profit you need after ads. The target ROAS follows from those numbers, and so does the budget.
A Specialist Team Runs the Campaigns Against That Target
Our team runs the campaigns, bids and audiences to that target, not to the platform’s default. See our Google Ads services.
We Read the Real Return, Not the Platform Number, and Adjust on It
We match ad revenue to delivered sales and margins every week. See our data analysis services, and for the wider view of return on the whole budget, our breakdown of marketing ROI.
Is a 7 ROAS good?
A ROAS of 7 breaks even at a margin of about 14.3%, so it is profitable for any business whose margin is above that. Check that it holds after refused orders and that it isn’t coming mainly from retargeting or branded search.
Is a 3.8 ROAS good?
A ROAS of 3.8 breaks even at a margin of about 26.3%. Above that margin it makes money; below it, every sale loses money after ads.
Is a 2.2 ROAS good?
A ROAS of 2.2 breaks even at a margin of about 45.5%. It works for high-margin products, or for a launch with strong repeat purchase, but not for a thin-margin store.
Is 1.6 ROAS good?
A ROAS of 1.6 needs a margin of about 62.5% just to break even. Below that margin it loses money, unless the customers it brings come back often enough to pay for the first order.
Start by Finding the ROAS That Fits Your Margin
Your margins already set the ROAS you need. The question is whether your campaigns are measured against it.
Send us your margins and your last month’s ad results, and we’ll show you your break-even ROAS and your real one.
