Term
ROAS (Return on Ad Spend)
Advertising KPI: ratio of conversion revenue to ad spend. Central steering metric in e-commerce and the input for tROAS bidding.
ROAS (Return on Ad Spend) — in more detail
ROAS stands for “Return on Ad Spend” — the ratio of attributed conversion revenue to ad cost. Formula: revenue ÷ ad spend. ROAS = 4 means each €1 of advertising returns €4 of revenue. The Google Ads UI usually displays ROAS as a multiplier (4) or decimal; some German reports show it as a percentage (400 %). tROAS (Target ROAS) is the matching Smart Bidding strategy. Important: ROAS is revenue-based, not margin-based — a high ROAS on heavily discounted sale items can still be unprofitable. Precise steering therefore requires POAS (Profit on Ad Spend) or margin-weighted conversion values.
Example / In practice
A Performance Max campaign with €25,000 spend delivers €125,000 revenue → ROAS 5. At a blended gross margin of 35 %, that’s €43,750 contribution → POAS 1.75 — €18,750 profit after ad spend, before other costs.
Distinction from similar terms
KUR is the German inverse (ad spend ÷ revenue). POAS measures margin instead of revenue. ROI factors in all costs, not just advertising. iROAS isolates the incremental share.
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CPA (Cost per Acquisition)
Advertising KPI: average cost per conversion. Central efficiency metric for lead gen and performance marketing, and the steering input for tCPA bidding.
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