Free Return on Ad Spend calculator with clear step-by-step results.
Reports three versions of the same campaign. Headline ROAS is revenue over spend and ignores margin entirely. Profit on ad spend applies gross margin and is the figure that determines whether the campaign made money. Lifetime-adjusted ROAS credits new customers with their expected repeat revenue.
Return on ad spend
ROAS = attributed revenue / ad spend
Profit on ad spend
POAS = attributed revenue x gross margin / ad spend
A 4x ROAS on 20% margins loses money once you count anything beyond cost of goods, while 2x on 70% margins is comfortably profitable. ROAS alone cannot distinguish them.
Only if it comes from cohort data. Applying an optimistic multiple to justify current spend is the most common way advertising budgets outrun their returns.