ROAS (Return On Ad Spend)

Return on ad spend, almost always written as ROAS and pronounced "rose," is the ratio of revenue produced by an advertising campaign to the amount spent on that campaign. A ROAS of 4 — sometimes written as 4:1, 400%, or "$4 returned per $1 spent" — means that for every dollar of ad spend the business attributed one dollar of cost and four dollars of revenue. The metric is expressed as a multiple, never as a dollar amount.

ROAS sits at the top of the marketing-finance stack and is the most-cited number in agency reporting because it is the easiest to communicate. It is also the most-misunderstood. ROAS is a top-line revenue ratio. It says nothing about gross margin, operating margin, or whether the business made any money. A landscaper with a 6× ROAS on a $40,000 ad spend produced $240,000 in revenue from those ads — but if the cost of goods on that revenue was $180,000, the ad-attributable contribution margin is $60,000, against $40,000 spent. The campaign was profitable, but at a 1.5× contribution-margin multiple rather than the headline 6× ROAS.

For Calgary home-service contractors, healthy ROAS benchmarks depend on gross margin. Trades with high COGS — roofing, plumbing repairs with significant material content — need ROAS above 4× to clear the labour and material cost from the ad-attributable revenue. Trades with lower COGS — lawn care, snow removal, painting where labour dominates — can run sustainable businesses on ROAS as low as 2.5× because more of each ad-driven dollar drops to contribution. Door-hanger campaigns in Calgary typically report ROAS between 5× and 12× depending on close rate and average ticket; paid search ROAS on the same trades tends to land between 2× and 5×.

The metric has well-known attribution failure modes. It assumes the campaign reporting can correctly assign revenue to the ad source, which is straightforward for last-click Google Ads tracking but increasingly hard for any channel with long dwell time. A door-hanger drop in November that produces a phone call in late January will be attributed to "word of mouth" or "the homeowner doesn't remember" unless the hanger carried a unique tracking phone number or printed promo code. Most operators correct for this by using channel-specific phone numbers, vanity URLs, or coupon codes that survive months of dwell.

ROAS also obscures fixed-cost dynamics. A small ad campaign with a 10× ROAS that produced $50,000 of revenue may be worse — in absolute dollars — than a larger campaign with a 4× ROAS that produced $400,000. Operators making channel-mix decisions should always look at both ROAS and absolute contribution dollars, because the metric is a ratio and ratios can favour small experiments over the larger campaigns that actually move the business.

A common related metric is MER (marketing efficiency ratio), which divides total business revenue by total marketing spend across every channel. MER is the right blended number when channels are interacting heavily and per-channel ROAS attribution is no longer trustworthy.