What Is ROAS and How Do You Calculate It?

ROAS (return on ad spend) measures how much revenue a business earns for every dollar spent on advertising. The formula is ROAS = Ad Revenue ÷ Ad Spend, expressed as a ratio (4:1) or a percentage (400%). A ROAS of 4 means every $1 spent on ads returned $4 in attributed sales.

By Matias Valdivieso, Director, Vanta Designs. Updated: July 2026.

Key takeaways

• ROAS equals ad revenue divided by ad spend, shown as a ratio (4:1) or a percentage (400%).
• Google Ads defines its Target ROAS bidding strategy with the formula Conversion Value ÷ Cost x 100%, illustrating it with a 500% target ROAS example (Google Ads Help Center, accessed July 2026).
• Meta calculates website purchase ROAS as purchase conversion value divided by amount spent, based on data from the Meta Pixel or Conversions API (Meta Business Help Center, accessed July 2026).
• Most businesses target a ROAS between 3:1 and 5:1, though the acceptable threshold varies by margin and industry (HubSpot, accessed July 2026).
• 96.6% of Chilean households report having their own paid internet access, confirming that most Chilean SMBs are now competing for attention in measurable digital channels (Subtel, November 2025).

What Is ROAS?

ROAS compares the revenue a specific ad campaign generates against the money spent on that same campaign. Unlike ROI (return on investment), which subtracts every business cost before calculating profitability, ROAS looks only at ad revenue versus ad spend, without netting out product cost, fulfillment, or payroll. That makes it a fast way to compare performance across channels such as Google Ads, Meta Ads, or TikTok Ads, or between campaigns inside the same platform. Google Ads builds its automated Target ROAS bidding strategy directly on this metric: Smart Bidding adjusts bids to try to hit a return target the advertiser sets (Google Ads Help Center, accessed July 2026).

How Do You Calculate ROAS?

The formula is: ROAS = Ad Revenue ÷ Ad Spend. The result can be shown as a ratio (4:1) or a percentage by multiplying by 100. Google Ads illustrates the calculation with this official example: $5 in sales divided by $1 in ad spend, times 100%, equals a 500% target ROAS (Google Ads Help Center, accessed July 2026). Applying the same logic to a Chilean SMB budget in Chilean pesos: if a business spends $500,000 CLP on Meta Ads in a month and those campaigns generate $2,000,000 CLP in attributed sales, ROAS is 2,000,000 ÷ 500,000 = 4, or 400%. This is a Vanta Designs illustrative example, not a market average.

How Do Google Ads and Meta Ads Calculate ROAS?

Each platform defines ROAS from the conversion data it can track. Google Ads uses reported conversion value, often passed from Google Analytics 4 or native conversion tracking, divided by click cost. Meta calculates website purchase ROAS as the purchase conversion value recorded by the Meta Pixel or the Conversions API, divided by the total amount spent on those campaigns (Meta Business Help Center, accessed July 2026). In both cases, ROAS accuracy depends directly on the technical tracking implementation on the site: if the pixel or the GA4 tag misses purchases, reported ROAS understates the campaign's real contribution to the business.

Platform	How it measures conversion value
Google Ads	Conversion value (GA4 or native conversion tag) ÷ cost
Meta Ads	Purchase value via Meta Pixel or Conversions API ÷ amount spent

What Is a Good ROAS?

There is no universally good ROAS; it depends on an SMB's margin and how much revenue survives after paying for product, fulfillment, and operations. As a general reference, HubSpot notes that most businesses target a ROAS between 3:1 and 5:1, meaning $3 to $5 in revenue for every $1 spent on advertising, though the acceptable threshold varies by industry and profit margin (HubSpot, accessed July 2026). A 4:1 ROAS at a 20% margin can still lose money, while the same 4:1 at a 60%-margin services business is comfortably profitable. Before setting a ROAS target, a Chilean SMB should calculate its real gross margin first; if that number is unclear, it is a good conversation to start with our team.

ROAS or CPA: Which Metric Should You Check First?

ROAS and CPA (cost per acquisition) answer different questions: ROAS shows revenue efficiency per dollar spent, while CPA shows how much it costs to acquire one new customer. HubSpot recommends marketing teams analyze both metrics together rather than picking one, since each reveals a different side of campaign performance (HubSpot, accessed July 2026). An SMB just starting to invest in Google Ads or Meta Ads usually prioritizes CPA to control the cost of building its first customer base, while an established business with repeat purchase history can prioritize ROAS to maximize total revenue from its ad budget.

Why Does ROAS Matter for Chilean SMBs?

Chile's e-commerce sector keeps growing fast enough that measuring the return of every digital channel is not optional: the Retail E-Commerce Index rose 19.4% year-on-year and has grown 16.3% so far this year, according to Chile's Instituto Nacional de Estadísticas (INE, April 2026). At the same time, 96.6% of Chilean households report having their own paid internet access, per Subtel's Twelfth Survey on Internet Access and Use (Subtel, November 2025). With a digital market that keeps expanding and a population that is overwhelmingly online, every peso of ad budget is competing for the same attention; tracking ROAS by campaign, not just total spend, is what tells a Chilean SMB which channel to reinvest in and which to pause. That cycle of measurement and budget reallocation is the core of performance marketing management.

Frequently asked questions

Are ROAS and ROI the same thing?
No. ROAS compares ad revenue against ad spend only, without subtracting other business costs. ROI subtracts all costs, including product cost and operations, before calculating true profitability.

What ROAS do I need to avoid losing money?
It depends on your gross margin. At a 25% margin, you need a minimum ROAS of 4:1 just to cover the cost of goods sold; below that point, every sale generated by advertising loses money before any other operating cost is counted.

Can I directly compare Google Ads ROAS with Meta Ads ROAS?
With caution. Both platforms calculate ROAS with the same base formula (conversion revenue divided by spend), but they use different attribution systems, so the same customer can show up as attributed on both platforms, inflating a combined ROAS if the two are simply added without adjustment.

How often should I check my campaigns' ROAS?
For most SMBs, a weekly review is enough to catch campaigns drifting away from target, except during high-spend periods such as seasonal campaigns, when checking every two to three days is worth the extra effort.

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Sources: Google Ads Help Center, Target ROAS bidding documentation, accessed July 2026 · Meta Business Help Center, Purchases ROAS documentation, accessed July 2026 · HubSpot, Return on Ad Spend glossary, accessed July 2026 · Instituto Nacional de Estadísticas (INE), Chile, April 2026 · Subsecretaría de Telecomunicaciones (Subtel), Chile, XII Encuesta Acceso y Uso Internet, November 2025.