Getting results from Google Ads isn't just about driving traffic. It's about earning more than you spend. ROAS, or Return on Ad Spend, is one of the most important metrics for measuring the performance of your campaigns.
A strong ROAS shows that your ads are not just seen, but are also turning clicks into real revenue.
In this blog, we’ll explain what ROAS means, how to calculate it correctly, and how to track it inside Google Ads.
What is ROAS?
ROAS stands for Return on Ad Spend. It tells you how much revenue you earn for every dollar you spend on advertising. Unlike general ROI, which includes overall business costs, ROAS focuses only on direct ad performance.
Here’s what to know:
Definition: ROAS measures the effectiveness of your ad campaigns by comparing revenue generated by ads to the amount spent on ads.
Purpose: It helps determine if your ads generate enough return to justify spending.
Not the same as profit: A ROAS of 4 doesn’t mean 4x profit. It means you earned 4 times your ad spend, before factoring in product costs, shipping, or other expenses.
Understanding ROAS is essential to evaluating what’s working in your Google Ads account. Next, we’ll look at why ROAS is critical in optimizing your campaigns on Google Ads.
Why ROAS Matters for Google Ads
Google Ads runs on performance. Every dollar spent should contribute to revenue, not just impressions or clicks. That’s why ROAS is a key metric for anyone managing paid campaigns on the platform.
When ROAS is tracked properly, it helps marketers:
Identify winning campaigns: Campaigns with high ROAS are worth scaling because they generate more revenue than cost.
Spot underperformers early: Low ROAS indicates wasted spend, allowing you to pause or fix campaigns before they drain your budget.
Make budget decisions: Knowing which ad sets or keywords deliver the strongest return helps you reallocate spending confidently.
Set realistic targets: ROAS provides a clear benchmark for success based on your business model and margins.
Without ROAS, it’s hard to know what’s working. It gives paid marketers a direct line between ad spend and revenue. Next, let’s go over the simple formula used to calculate ROAS and walk through a quick example.
ROAS Calculation Formula
Calculating ROAS is straightforward. You only need two numbers: the revenue generated from your ads and the cost of those ads.
ROAS = Revenue from Ads / Cost of Ads
Here’s a quick example:
If your Google Ads campaign brings in $5,000 in revenue
And you spent $1,000 on that campaign
Then your ROAS is 5.0
That means for every $1 you spent on ads, you earned $5 in return.
A few things to keep in mind:
Use actual revenue, not projections: Only include sales that can be directly attributed to the campaign, either through Google Ads conversion tracking or connected analytics tools.
Don’t include unrelated costs: ROAS should reflect media spend only. Keep things like agency fees, platform subscriptions, and shipping costs out of the equation unless you’re calculating overall profitability.
Know your break-even point: A ROAS of 1.0 means you're earning exactly what you're spending. However, to be profitable, your ROAS needs to exceed your cost of goods, fulfillment, and any other backend expenses.
This number gives you a clear, real-time view of how efficient your ad spend is. Now, we’ll go through how to track ROAS directly inside your Google Ads account.
How to Track ROAS in Google Ads
Google Ads allows you to track ROAS directly, but only if your account is set up correctly. Without accurate tracking, you risk making decisions based on incomplete or misleading data.
Here’s how to set it up the right way:
Step 1: Set up conversion tracking
Go to Tools & Settings → Conversions in your Google Ads account.
Create conversion actions based on meaningful outcomes, like completed purchases.
Add the global site tag and event snippets to your site to ensure every conversion is recorded.
Why it matters: Without conversion tracking, Google Ads can’t measure the value of each campaign or calculate ROAS accurately.
Step 2: Assign values to conversions
For online stores, use dynamic values that reflect the actual sale amount, giving you real revenue numbers for each conversion.
Why it matters: Assigning proper values ensures that your ROAS reflects true business impact, not just action counts.
Step 3: Add the right columns to your Google Ads dashboard
In your campaign view, click “Columns” → Customize Columns → Conversions.
Add these key metrics:
Cost: Total spend per campaign or ad group.
Conversion Value: Total revenue from tracked conversions.
Conv. Value / Cost: This is your ROAS, revenue per dollar spent.
Why it matters: Viewing ROAS directly helps you monitor performance without needing external tools.
Step 4: Use reporting tools to dive deeper
Google Ads reports can break down ROAS by device, audience segment, location, and more.
Google Data Studio (now Looker Studio) allows you to build custom dashboards to monitor ROAS across time periods, products, or creative types.
Why it matters: Visual reporting gives you a clearer sense of where to scale and where to cut back.
With these steps in place, you’ll be able to see what your ad spend is delivering and make smarter decisions faster.
Once you know how to track ROAS on Google Ads, here are the most common mistakes you should avoid that lead to inaccurate ROAS.
Common Mistakes in ROAS Calculation
Even though the ROAS formula is simple, it’s easy to end up with misleading numbers if the setup isn’t handled carefully. These common mistakes can lead to wrong decisions and wasted ad spend.
Here’s what to watch out for:
Assigning incorrect conversion values
If the value attached to a conversion doesn’t match the actual revenue, your ROAS will be off.
This often happens when businesses use fixed values for purchases that vary in price.
Fix it by using dynamic values pulled from your site’s checkout or CRM whenever possible.
Tracking non-revenue actions
Counting actions like clicks on a contact page or time on site as conversions can inflate your numbers.
These actions may indicate interest, but don’t contribute directly to revenue.
Be selective, only track conversions that result in measurable income.
Ignoring attribution windows
If your attribution model doesn’t match your actual customer journey, you may over- or under-credit certain campaigns.
For example, a 7-day click window might miss longer buying cycles.
Adjust your attribution settings in Google Ads to reflect realistic decision timelines.
Combining branded and non-branded campaigns
Branded search campaigns often show high ROAS because users already know the brand.
Mixing them with non-branded campaigns can skew your averages and make weaker campaigns look better than they are.
Always evaluate them separately to get a clear view of performance.
Forgetting about margins
A high ROAS looks excellent, but if your product margins are slim, even a 4x return might not be profitable.
Know your break-even point and factor in costs like shipping, fulfillment, and returns when assessing campaign success.
Avoiding these mistakes helps you measure ROAS more accurately and build campaigns on numbers you can trust.
Let’s wrap up with a quick summary on how to improve your ROAS at scale.
Conclusion
ROAS is more than a metric; it’s the foundation for making smarter, more profitable marketing decisions. For brands using Google Ads, knowing how to calculate and track ROAS accurately is key to scaling what works and cutting what doesn’t.
If your goal is consistently hitting strong, profitable ROAS, reach out to Gomarble. We’re an AI-assisted performance marketing agency with one focus: scaling your business with profitable ads. Our AI platform and expert marketers help brands achieve benchmark-beating ROAS and sustainable growth across channels.