The definition of Return On Advertising Spend (ROAS)
Digital advertising promises growth, but only if you know what’s working. That’s where ROAS — Return on Advertising Spend — comes in.
At its simplest, ROAS tells you how much revenue your business generates for every dollar you spend on advertising. But while the math is straightforward, the interpretation can be tricky.
Platforms like Google, Meta, and LinkedIn all measure ROAS differently, often painting an incomplete picture of how your marketing is really performing.
This page breaks down what ROAS means, how advertising platforms calculate it, why business owners should treat it with caution, and how to use it as part of a smarter approach to measuring marketing performance.
Whether you’re a New Zealand business owner, a marketing manager, or a decision-maker looking for clarity, this guide will help you cut through the noise and make sense of your advertising returns.
ROAS = Revenue ÷ Advertising Spend
Example:
If you spend $1,000 on ads and generate $5,000 in tracked revenue, your ROAS is 5:1 (or 500%).
That means every dollar spent brought in five dollars back.
ROAS vs ROI: What’s the Difference?
- ROAS looks specifically at advertising dollars in vs sales out.
- ROI (Return on Investment) takes into account broader costs (product, staff, logistics, overheads).
ROAS is more tactical — it tells you whether ads are driving revenue.
ROI is more strategic — it tells you whether the business is profitable overall.
How Advertising Platforms Assign ROAS (and Why It’s Misleading)
Every advertising platform wants to prove its worth. That’s why Google Ads, Meta (Facebook/Instagram), LinkedIn, TikTok, and others all report ROAS in their own way — usually with rules that make themselves look good.
Google Ads
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Typically uses last-click attribution (unless you change settings).
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That means if a customer clicks a Google Ad right before buying, Google gives itself all the credit — even if the customer discovered you days earlier via a Facebook ad or referral.
Meta (Facebook/Instagram)
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Uses conversion windows (e.g. 7-day click, 1-day view).
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If someone saw your ad and then bought within a week — even after clicking a Google search ad in between — Meta often counts it as their sale.
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Heavy on view-through attribution.
- If someone saw an ad while scrolling and converted later (via another channel), LinkedIn may still claim the conversion.
TikTok and Programmatic Platforms•
- Use probabilistic models and view-through windows that can inflate perceived ROAS even further.
👉 The problem: Each platform claims credit for the same sale. If you added them up, you might think you made 3–4x more revenue than you actually did.
The Multi-Touch Customer Journey
The reality is this: customers don’t buy after one click.
Here’s a New Zealand example:
- A customer scrolling Instagram at 7am sees your ad for a local home décor brand. They like the look, but don’t click.
- At lunchtime, they Google your brand name to learn more, clicking on a Google Search Ad.
- That evening, they see a retargeting display ad reminding them about your product.
- A few days later, they type your website URL add the item to the cart, but don’t finish the transaction.
- Later that evening, your email system sends them an abandoned cart email, driving them back to finally make the purchase.
Now:
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Meta says it drove the sale (they saw the Instagram ad first).
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Google says it drove the sale (they clicked the search ad).
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Your retargeting platform says it drove the sale (they re-engaged).
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Your email system says it drove the sale (they clicked through and purchased from the email).
Who’s right?
All of them, and none of them.
This is why platform-specific ROAS numbers can be dangerously misleading.
Why You Should Be Cautious with Platform ROAS
- Inflated credit: Each platform optimises attribution to prove its value.
- Short-term bias: Last-click models overvalue bottom-of-funnel campaigns and undervalue awareness.
- Chopping the wrong channels: If you cut campaigns based only on their own reported ROAS, you risk turning off the very ads that make customers aware of you in the first place.
- Example: A brand awareness video ad may show a low ROAS inside Facebook Ads Manager. But without that campaign, your search ads might suddenly stop performing because fewer people know to search for you.
The smarter approach is to see every campaign in the context of your entire funnel — not just the numbers a single platform reports.
A Smarter Way to Measure ROAS
At ROAS Performance Marketing, we encourage businesses to see ROAS as one piece of the puzzle — not the whole picture. Here’s how we do it:
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Blend the Numbers
Instead of relying on inflated platform-reported ROAS, measure total revenue vs total ad spend across all channels. This gives a truer view of overall efficiency.
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Attribution Models
Experiment with different attribution models:
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Last-click: Simple, but flawed.
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Linear: Spreads credit across all touchpoints.
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Position-based: Weighs first and last touches more heavily.
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Data-driven: Uses algorithms to assign credit more realistically.
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Funnel Role Analysis
Ask: What role does this campaign play?
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Awareness (introducing your brand)?
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Consideration (keeping you top-of-mind)?
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Conversion (closing the deal)?
Each stage matters — even if its direct ROAS looks low.
Why Work With ROAS Performance Marketing
Measuring ROAS properly isn’t easy. But that’s why our clients trust us.
- We speak business, not just marketing. We translate complex data into simple insights you can act on.
- Local expertise. We understand New Zealand market realities — from regional buying patterns to budget constraints.
- Full-funnel focus. We don’t just chase last-click wins; we build strategies that work across awareness, consideration, and conversion.
- Performance obsessed. Everything we do is about ensuring your ad spend drives real, measurable growth.
Ready for Clarity on Your ROAS?
If you’re tired of conflicting numbers from different platforms and want a clear view of what’s really working, we can help.
👉 Book a chat with us today — and let’s make your marketing spend work harder.
What is a good ROAS?
There isn’t a one-size-fits-all number — it depends heavily on your business model and profit margins.
- E-commerce: Many NZ e-commerce businesses target at least 3:1 ROAS (every $1 spent returns $3 in tracked sales). But this is just a starting point.
- High-margin services: Agencies, consultants, or subscription-based services may find 2:1 or lower still profitable because margins are higher.
- Customer Lifetime Value (LTV): A critical factor. If your average customer buys once, your required ROAS will be higher. If they come back again and again (e.g. monthly subscriptions, services, repeat retail purchases), you can afford a lower initial ROAS because the lifetime value covers the spend over time.
👉 The smart move is to set ROAS targets based not just on campaign revenue, but on profitability and Life time value (LTV).
Why is my Google Ads ROAS different to Meta?
Because they use different attribution rules and they serve different purposes in the funnel.
- Google Search Ads usually capture people with high intent (“I need a plumber in Tauranga”). These often show higher ROAS because they’re close to purchase.
- Meta Ads (Facebook/Instagram) are better at driving awareness and discovery — planting the seed long before someone is ready to buy. In-platform, they may look less efficient, but they often play a vital role in feeding search demand later.
- Retargeting campaigns (on Meta, Google Display, TikTok, etc.) often scoop up conversions at the bottom of the funnel, showing inflated ROAS because they close sales already in motion.
👉 If you only compare ROAS platform-to-platform, you’ll miss the fact that each channel has a different role in the customer journey.
Can ROAS be negative?
Yes. If you spend more on ads than the tracked revenue they generate, your ROAS drops below 1:1 (or 100%).
Example:
- Spend: $1,000
- Revenue: $500
- ROAS = 0.5:1 (or 50%) → a negative return.
But — don’t panic straight away:
- Some campaigns (like awareness campaigns) are designed to run at a short-term loss while fuelling future conversions elsewhere. If you are running a subscription service, you are better to look at customer acquisition costs over the life time value of the customer.
Look at ROAS in context of full funnel performance and lifetime value, not just isolated campaigns
Should I turn off campaigns with low ROAS?
Not necessarily. A campaign with a poor in-platform ROAS may still be:
- Building awareness (without it, your search campaigns might dry up).
- Driving remarketing pools (feeding audiences that later convert via other ads).
- Supporting brand lift (customers may search for you later because of it).
👉 Instead of killing campaigns purely on platform ROAS, ask:
- What role does this campaign play in the funnel?
- Does it indirectly drive conversions elsewhere?
- How does my blended ROAS look across all channels combined?
The danger is cutting top-of-funnel campaigns because they “look inefficient” , and then wondering why conversions disappear downstream.
Key Takeaways
- ROAS is an essential metric, but platform numbers are biased.
- Customers interact with multiple touchpoints before converting.
- Smart businesses look at blended ROAS across all channels.
- Cutting campaigns purely on platform ROAS can hurt long-term growth.
- Partnering with a digital marketing expert like ROAS Performance Marketing ensures you measure what matters — and grow smarter.
Ready for Clarity on Your ROAS?
If you’re tired of conflicting numbers from different platforms and want a clear view of what’s really working, we can help.
👉 Book an obligation free chat with us today — and let’s make your marketing spend work harder.