Understanding ROAS (Return on Ad Spend): What’s a Good Benchmark?

When running paid advertising campaigns, one of the most important metrics to track is ROAS (Return on Ad Spend). While the term may sound technical, the concept is straightforward: it simply measures how much revenue you earn for every dollar you spend on advertising.

In this guide, we’ll break down:

• What ROAS means and how to calculate it
  
• Why tracking conversion value is essential
  
• Average ROAS benchmarks by industry
  
• Real client examples and lessons learned
  

What is ROAS?

ROAS stands for Return on Advertising Spend. It tells you how much revenue you get back for each advertising dollar.

For example:

• If you spend $500 on ads and generate $1,000 in revenue, your ROAS is 2.0 (or 200%).
  
• That means every $1 in ad spend brings back $2 in revenue.
  

The formula is:

ROAS=Revenue from AdsAd SpendROAS = \frac{\text{Revenue from Ads}}{\text{Ad Spend}}ROAS=Ad SpendRevenue from Ads​

Why Tracking Conversion Value Matters

To calculate ROAS in Google Ads, you need to do more than track conversions—you also need to track the value of those conversions.

Many advertisers stop at counting leads, clicks, or form submissions without tying them back to actual revenue. That makes it impossible to know whether campaigns are profitable.

Some ways to track conversion value include:

• E-commerce tracking – Automatically pass order values into Google Ads.
  
• Lead value tracking – Assign revenue estimates to leads (or import actual revenue from your CRM).
  

Without this data, you’re only seeing half the picture.

What Is a Good ROAS? Industry Averages

So, what counts as a “good” ROAS? Let’s look at some benchmarks.

• Google’s research: On average, businesses make $2 in revenue for every $1 spent on Google Ads (a ROAS of 2.0).
  
• Sales & Orders (via Nielsen study): Average ROAS across industries is 2.87, with specific verticals ranging from 2.59 to 3.71.
  
• Meldium.com:
  
  • 2.0 ROAS = acceptable baseline
    
  • 3.0 ROAS = solid performance
    
  • 10.0 ROAS = excellent, though rare
    
• From experience, a 3.0 or higher is a healthy benchmark for many advertisers.

Real Client Examples

Here are some real-world ROAS results from Google Ads clients actively tracking conversion value:

1. Awning Manufacturer/Wholesaler
   • Ad spend: ~$700
   • Revenue: ~$7,500
   • ROAS: 10.0 (exceptional results, consistently between 5–10).
2. Coaching/Info Business
   • Ad spend: $2,000
   • Revenue: ~$3,600
   • ROAS: 1.78 (average, sometimes just above 2.0).
3. E-commerce (Coffee Grinders & Espresso Machines)
   • Ad spend: $1,750
   • Revenue: $5,700
   • ROAS: 3.26–3.66 (strong performance).
4. Industrial Equipment (Large Saws)
   • Ad spend: $1,200
   • Revenue: $3,100
   • ROAS: 2.68 (last month 1.74, showing improvement).

Key Takeaways

• 2.0 ROAS is the average, but not always sustainable for profitability.
• 3.0 or higher is generally a good target.
• Tracking conversion value is crucial—without it, you can’t measure true ad effectiveness.
• ROAS doesn’t account for costs like product margins or overhead, so it should be analyzed alongside profit.

Ready to Maximize Your ROAS?

Understanding and improving your ROAS can be the difference between just running ads and running a profitable campaign. If you want expert help in managing and optimizing your Google Ads campaigns, let’s connect.

👉 Contact Web Eminence to see if we’re a good fit for working together.