ROAS is attributed revenue divided by advertising spend. It compares one defined measurement, but does not by itself measure profit or prove that advertising caused the sales.
Match periods and attribution definitions
Use revenue and spend from the same period and attribution model. Mixing last-click revenue with another dashboard’s spend can make a neat ratio misleading. The calculation does not reconcile ad accounts, deduplicate conversions or identify sales that would have happened without advertising.
Find contribution break-even
At a 40% contribution margin before advertising, each 1 of revenue leaves 0.40 to cover ads. Break-even ROAS is 1/0.40 = 2.5. Above that value modeled contribution after ads is positive, but fixed overhead and attribution error can still change the business result.
Inspect the funnel
The funnel worksheet links visits, leads, sales and revenue. Conversion rates generate expected counts, which may be fractional. Change one assumption at a time to see the driver of the result. Constant conversion rates and a high historical ROAS are not guarantees of future demand.
Worked example
Scroll the table horizontally on small screens to see every column.
| Revenue | Ad spend | ROAS | Contribution before ads | After ads |
|---|---|---|---|---|
| 5,000 | 1,000 | 5× | 40% = 2,000 | 1,000 |
This does not include fixed overhead or establish that all attributed sales were incremental.
Sources and checks
Examples are illustrative and can be checked with the linked tools. Read each tool’s assumptions before applying its result. How we verify methods.