ROAS, or return on ad spend, is the revenue your ads bring in divided by what you spent on them. A ROAS of 3 means 3 euros of revenue for every euro of ads.
A higher ROAS is not automatically better, and the same ROAS can be a profit for one store and a loss for another. So before you try to raise it, work out the number you actually need. Then work through the levers that move it, starting with the ones that cost you the least.
Measure it right first
Know your break-even ROAS
Your break-even ROAS is the ROAS at which your ads stop losing money. It depends on what each sale leaves you before advertising.
Take an example. Say a product sells for 50 euros. It costs 15 euros to make, 7 euros to ship, payment fees take 3% of the price (1.50 euros) and packaging and other costs add 1.50 euros.
That leaves a margin before ads of 50 minus 15, 7, 1.50 and 1.50, which is 25 euros.
Break-even ROAS is the price divided by that margin: 50 divided by 25 gives 2.0. Below a ROAS of 2.0 this product loses money on every ad-driven sale. Put the other way, the most you can pay in ads for one sale is 25 euros.
You can run your own numbers in the break-even ROAS calculator. Do it per product: a store with very different margins across its catalog has a different break-even ROAS for each product.
Check what you are measuring
The ROAS in an ad platform's dashboard is the platform's view of which sales it caused. Different platforms can claim the same order, and the attribution window changes the number. Compare platform ROAS with your store's own orders regularly.
A simple cross-check is to divide your total revenue by your total ad spend over the same period, across every channel. If that number falls while a platform reports a rising ROAS, trust the store.
Finally, judge ROAS per campaign or per product, and over enough days to smooth out noise. An account average can hide a winner that pays for a loser.
The formula that shows the levers
For ads you pay per click, ROAS breaks down into three parts:
ROAS = conversion rate × average order value ÷ cost per click
Each click costs you the cost per click. A share of clicks turns into orders (your conversion rate), and each order brings in your average order value. So every lever you can pull either cuts the cost of a click, raises the share of clicks that buy, or raises what each order is worth.
Here is a worked example. Say you spend 1,200 euros at 0.50 euros per click, which buys 2,400 clicks. At a 2% conversion rate that is 48 orders, and at 50 euros each that is 2,400 euros of revenue: a ROAS of 2.0, exactly break-even for the product above.
| Scenario (example) | Cost per click | Conversion rate | Order value | Orders | Revenue | ROAS | Profit after ads |
|---|---|---|---|---|---|---|---|
| Starting point | 0.50 | 2.0% | 50 | 48 | 2,400 | 2.0 | 0 |
| Better landing page | 0.50 | 2.5% | 50 | 60 | 3,000 | 2.5 | 300 |
| Plus an add-on offer | 0.50 | 2.5% | 60 | 60 | 3,600 | 3.0 | 702 |
| Plus a stronger hook | 0.40 | 2.5% | 60 | 75 | 4,500 | 3.75 | 1,177.50 |
How the profit works out: at the starting point, 48 orders at 25 euros of margin is 1,200 euros, which only covers the 1,200 of ads. With 60 orders, the margin is 1,500 and the profit 300.
For the add-on row, say the average order rises from 50 to 60 euros and the extra 10 euros costs 3 euros in product plus 0.30 in fees. Each order now leaves 25 plus 6.70, so 31.70 euros. Sixty orders leave 1,902 euros, or 702 after ads.
In the last row, a stronger hook lifts the click-through rate so each click costs 0.40, the same budget buys 3,000 clicks, and 75 orders leave 2,377.50 euros, or 1,177.50 after ads.
Lever 1: creative and hooks
Your creative decides who stops scrolling and who clicks. On platforms where you pay for impressions, a higher click-through rate means a lower cost per click: at a cost of 10 euros per thousand impressions, a 2% click-through rate works out to 0.50 per click, and 2.5% to 0.40.
The opening matters most. Test the first line of copy and the first seconds of video before you test colors or buttons. Try new angles, not just new edits: a problem-led ad, a result-led ad and a review-led ad reach different people.
Refresh creative before performance drops. When the same people see an ad too often, the click-through rate falls and costs rise. Keep a steady flow of new ads so you always have a replacement ready.
Lever 2: the offer
The offer is what makes someone buy now instead of later. Discounts work, but they cost margin and raise your break-even ROAS. In the example above, 10% off brings the price to 45 euros and fees to 1.35, so the margin falls to 20.15 euros and break-even ROAS rises from 2.0 to about 2.23.
Offers that protect margin are often better: a bundle at a slightly lower price per unit, free shipping above a threshold, a gift with purchase, or a longer guarantee. Test them against a straight discount and compare profit, not just ROAS.
Lever 3: landing page and conversion rate
A better page raises your conversion rate without touching your ad costs, which is why it is often the cheapest lever. Check these first:
- Message match. The page repeats the promise and the offer of the ad that sent the visitor.
- Speed on mobile. Check how much of your ad traffic comes from phones and test the page on one. A slow page loses buyers before it loads.
- The essentials above the fold. Product, price, offer, reviews and the button, without scrolling.
- Shipping and returns. Clear delivery times and costs near the button remove a common reason to leave.
- The right destination. Send product ads to the product page, not the homepage.
Lever 4: average order value
Raising your average order value means each paid click is worth more. Common ways to do it:
- Bundles. Group products that are used together, at a price that rewards buying the set.
- Quantity breaks. A lower price per unit for two or three, for products people use up.
- Upsells and cross-sells. A better version on the product page, or a matching item in the cart or after checkout.
- A free shipping threshold. Set it a little above your current average order so shoppers add one more item.
Remember that the extra items have costs too. Work out the margin on the bigger order, as in the add-on example, before you call it a win.
Lever 5: audience and placement
Who sees your ads, and where, changes both cost and conversion rate. Exclude recent buyers from prospecting campaigns so you don't pay to reach people who just ordered. Keep retargeting budgets in proportion: they often show a high ROAS because many of those visitors would have bought anyway.
Review results by country and placement once you have enough data, and cut the ones that stay below break-even. Give changes time to settle before you judge them. A single bad day is noise.
Lever 6: retention and email
ROAS only counts the revenue of the order the ad brought in. If customers come back, the first order is not the whole story. A customer who buys three times over two years makes a lower first-order ROAS acceptable.
Estimate what a customer is worth with the customer lifetime value calculator, then work on the things that bring people back: a welcome series, post-purchase emails, replenishment reminders and win-back campaigns. Our guide to Shopify email flows covers the ones to set up first.
Where to start
- Fix measurement and know your break-even ROAS for each product.
- Fix the landing page, since it is cheap and helps every campaign.
- Test new hooks and angles every week.
- Test offers that protect margin against plain discounts.
- Add a bundle or an upsell to lift order value.
- Trim audiences, countries and placements that stay below break-even.
- Build the email flows that bring customers back.
How SellWinners helps you find creative and offer ideas
The hardest part of improving ROAS is knowing what to test next. SellWinners shows you what other brands in your niche are running, and what they keep running.
- Find angles that last. Open the Ads page in the app and search your niche in the Ads Library. Set Status to active, Days running to at least 30, and sort by reach. Open an ad to read its copy, its video transcript and its hook. The Google and TikTok tabs cover those platforms too.
- Study your competitors' tests. Add three to five competitors to the Brand Tracker (Trackers in the app) and read their hooks, headlines, ad texts and landing pages, plus the ads that are scaling and the creative tests they launch.
- See how brands build offers. In the Email Library (Emails in the app), filter by promotion type or by an event such as Black Friday to see how brands present bundles, free shipping and discounts.
- Benchmark products and prices. Shop Analytics shows a competitor's best sellers and product list, which helps you plan bundles and price points.
Save the ideas you want to test to a board in the app so your team works from the same list. Boards are on paid plans; see the plans and their prices.
Key takeaways
- Work out your break-even ROAS per product before setting any target.
- ROAS equals conversion rate times order value divided by cost per click: every lever moves one of those three.
- Landing page fixes and new hooks are usually the cheapest gains.
- Discounts raise your break-even ROAS. Bundles and thresholds often protect margin better.
- Count repeat purchases: retention makes a lower first-order ROAS acceptable.