Definition
ROAS divides the revenue attributed to a campaign by the cost of running it. A 4x ROAS means every 1 spent on ads returned 4 in revenue. It is the headline efficiency metric for paid media, but it hides margin - a 4x ROAS on a 15% margin product loses money, which is why we always read ROAS next to CAC and contribution margin.
Why it matters
ROAS tells you if the channel scales, not if the business profits. We report it blended (all spend) and marginal (last rupee) - the marginal number decides budget moves.
Formula
Revenue from ads / Ad spend
Benchmarks
3-5x is typical for D2C; high-margin D2C sustains 2x+, low-margin needs 4x+
All glossary terms