Paid Media
ROAS (Return on Ad Spend)
Quick definition
Revenue generated divided by ad spend. A 4x ROAS means $4 in revenue for every $1 spent.
What it actually means
ROAS is the headline paid-media metric, but is misleading on its own. Healthy ROAS varies by margin: a 70% margin DTC product can scale at 2x ROAS profitably; a 35% margin product needs 3-4x ROAS minimum. ROAS is also distorted by attribution model — last-click ROAS in Meta Ads Manager typically over-credits paid by 30-50% vs incrementality-tested ROAS. Sophisticated brands target MER (Marketing Efficiency Ratio = total revenue / total marketing spend) or contribution margin instead of platform-reported ROAS.
Related terms
MER (Marketing Efficiency Ratio)
Total revenue divided by total marketing spend across all channels. The cleanest profitability proxy at the business level.
CAPI (Meta Conversions API)
Server-side event tracking from your store to Meta, replacing browser pixel events lost to iOS privacy changes and ad blockers.
CAC (Customer Acquisition Cost)
Total marketing spend divided by new customers acquired in the same period.