ROAS (return on ad spend)
ROAS is tracked revenue divided by ad spend, as reported by the ad platform: a 5x ROAS means five dollars of tracked revenue per dollar spent. It measures channel efficiency, not business health — revenue is not profit, and platforms count generously.
Two words in the definition do the damage. “Revenue”, because margin decides whether a given multiple makes money: at a thirty percent gross margin, a 3x ROAS loses money before any other cost. And “tracked”, because the platform decides which conversions it takes credit for, and platforms are generous with themselves.
Brand-search clicks and retargeting inflate ROAS most: people who already decided to buy get counted as advertising wins. Summing every platform's claimed revenue usually exceeds what the business actually banked, because each platform claims the same customer.
Used honestly, ROAS is a week-to-week trend signal within one channel. The number that answers “is the marketing working” is blended: total revenue against total marketing spend, read next to margin. That is how our paid-media reporting is built.