What Is a Good ROAS and How to Improve Yours
Spending money on ads and not sure if you're actually winning? You're not alone.
I talk to Brisbane business owners every week who are pouring cash into Google Ads or Meta Ads with zero clue whether their numbers are good, average, or downright embarrassing. That's the ROAS problem. Everyone throws the term around. Almost no one explains what a "good" number actually looks like for your business.
So let's fix that. In this post, I'll break down what ROAS really means, what counts as good in 2025, and the exact levers you can pull to improve yours. No fluff. Just the stuff that moves the needle.
What Is ROAS, Really?
ROAS stands for Return on Ad Spend. It's the revenue you generate for every dollar you put into paid advertising.
Here's the formula: Revenue from ads divided by ad spend. Spend $1,000 on Google Ads and generate $4,000 in sales? That's a 4:1 ROAS, or 400%.
Simple, right? Here's where it gets tricky. A "good" ROAS depends entirely on your margins, your industry, and what you're actually trying to achieve.
I've seen businesses celebrate a 2:1 ROAS because their margins are huge. I've seen other businesses lose money at a 5:1 ROAS because their costs are that tight. Context is everything.
ROAS vs ROI: What's the Difference?
Quick clarification because people mix these up constantly.
ROAS looks purely at revenue against ad spend. ROI (Return on Investment) factors in your total costs, including product costs, shipping, staff time, and overheads.
You can have a fantastic ROAS and still lose money if your ROI is negative. That's why I always tell clients: don't just chase ROAS. Chase profitable ROAS.
What Is a Good ROAS in 2025?
Here's the honest answer. There's no universal magic number. But let me give you some real benchmarks to work with.
For most ecommerce businesses, a ROAS of 4:1 (or 400%) is considered solid. That means for every dollar spent, you're pulling in four dollars of revenue.
For service-based businesses with higher margins, like agencies, clinics, or trades, even a 2:1 or 3:1 ROAS can be genuinely profitable. Your cost per acquisition matters more than the raw ratio.
For low-margin retail, you might need 6:1 or higher just to break even after product costs, shipping, and overheads are factored in.
The Break-Even ROAS Formula
Want to know your actual break-even point? Here's a quick way to calculate it.
Break-even ROAS = 1 divided by your profit margin (expressed as a decimal).
So if your profit margin is 25%, your break-even ROAS is 4:1. Anything below that and you're losing money on every sale, even if the "ROAS" number looks decent on paper.
This is why I push clients to stop obsessing over hitting a specific ratio and start calculating their own break-even point first. It changes everything about how you read your ad reports.
Industry Benchmarks Worth Knowing
Rough numbers I see across different sectors:
- Ecommerce/retail: 4:1 to 6:1
- Professional services (law, finance, consulting): 3:1 to 5:1
- Hospitality and local trades: 2:1 to 4:1
- SaaS and subscription businesses: often measured over customer lifetime, not just first purchase
These are guides, not gospel. Your business, your margins, your rules.
Why Your ROAS Might Be Underperforming
If your ROAS is sitting lower than you'd like, it's usually one (or more) of these culprits.
Your Targeting Is Too Broad
Spraying ads across a huge audience feels efficient. It's actually the fastest way to burn budget on people who will never buy.
I've worked with Brisbane businesses that were running Google Ads nationally when 90% of their customers came from within 15 kilometres. Tightening the geography alone improved their ROAS by over 30%.
If you haven't nailed down your local targeting yet, our local SEO guide for Brisbane businesses is worth a read. The same targeting logic applies to paid ads.
Your Landing Page Is Working Against You
You can have the best ad copy in the world. If the landing page loads slowly or looks like it's from 2015, people bounce before they convert.
Google found that pages taking longer than three seconds to load lose more than half of mobile visitors. Half. Gone. Before they even see your offer.
This is exactly why we talk so much about mobile-first websites for Brisbane businesses. Your ad spend is only as good as the page it sends people to.
You're Not Tracking Conversions Properly
This one's sneaky. If your conversion tracking is broken or incomplete, your ROAS numbers are lying to you.
I've seen accounts reporting a "poor" ROAS that were actually performing brilliantly, they just weren't tracking phone calls, form fills, or in-store visits properly. Fix the tracking before you touch the budget.
Your Offer Isn't Compelling Enough
Sometimes the ads are fine. The targeting is fine. The problem is the offer itself doesn't give people a reason to act now.
Ask yourself honestly: if you saw this ad as a stranger, would you click? Would you buy? If you're hesitating, so is your audience.
How to Improve Your ROAS: The Real Levers
Alright, let's get practical. Here's what actually moves ROAS in the right direction.
1. Tighten Your Audience Targeting
Stop trying to reach everyone. Start reaching the right people.
Use lookalike audiences based on your best customers. Layer in location targeting if you're a local Brisbane business. Exclude people who've already converted so you're not wasting spend on repeat impressions.
2. Test Your Ad Creative Relentlessly
The ad that worked six months ago is probably fatigued now. Audiences get tired of seeing the same creative.
Run at least three to five creative variations at any given time. Kill the underperformers fast. Double down on winners.
3. Optimise for the Right Conversion Event
If you're optimising for clicks instead of purchases, you're training the algorithm to find clickers, not buyers. Make sure your campaigns are set up to optimise for the outcome you actually want.
This sounds basic. I still see accounts set up wrong constantly.
4. Fix Your Funnel, Not Just Your Ads
Sometimes the biggest ROAS gains don't come from the ad platform at all. They come from what happens after the click.
A faster, clearer, mobile-optimised landing page can lift conversion rates by 20% or more without touching your ad spend. If your site needs work, it might be time to look at whether a custom website versus a template is holding you back.
5. Use Retargeting to Capture Warm Leads
Not everyone buys on the first visit. Retargeting ads to people who've already shown interest typically produce a much higher ROAS than cold traffic campaigns.
It's cheaper to convert someone who already knows you than to win a total stranger's trust from scratch.
6. Diversify Beyond a Single Channel
Relying purely on one platform is risky. If Google Ads and Meta Ads are both part of your mix, you're spreading risk and often finding cheaper conversions on the channel that suits your audience best.
Not sure which platform suits your business? Have a read of Google Ads vs Facebook Ads: Which Is Better for a proper breakdown.
7. Think Beyond Traditional Search
The way people find businesses is shifting. AI-powered search and generative engines are changing how customers discover brands before they ever click an ad.
If you haven't looked into GEO marketing yet, now's a good time. Being visible in AI-generated answers can lower how much you need to rely on paid ads altogether.
Should You Focus on ROAS or Something Else Entirely?
Here's a question worth sitting with: is ROAS even the right metric for every campaign?
If you're running brand awareness campaigns, ROAS isn't really the point. You're building recognition, not chasing immediate sales.
If you're running direct response campaigns for immediate purchases, ROAS is exactly the metric you should be watching like a hawk.
Matching your metric to your campaign goal matters more than obsessing over one universal number. We break this down further in our piece on SEO vs Google Ads: Which Should You Invest In, because sometimes the answer isn't "spend more on ads" at all.
Bringing It All Together
A good ROAS isn't a fixed number you copy from a blog post (including this one). It's the number that keeps your business profitable after every real cost is accounted for.
Calculate your break-even point. Track conversions properly. Fix your landing pages. Test your creative. Then, and only then, start comparing yourself to industry benchmarks.
If you're spending on Google Ads or Meta Ads and genuinely don't know whether your numbers are good, that's a conversation worth having. At Salt Agency, we run performance marketing for Brisbane businesses every single day, and we'd rather show you the real numbers than guess.
Grab a free marketing audit and let's see exactly where your ROAS stands.
FAQ
What's a good ROAS for a small business?
Most small businesses should aim for at least 3:1 to 4:1, but the real target depends on your profit margin. Calculate your break-even ROAS first, then set your goal above that.
Is a higher ROAS always better?
Not necessarily. A high ROAS with a tiny ad budget might mean you're leaving growth opportunities on the table. Sometimes a slightly lower ROAS with a bigger budget generates more total profit.
How often should I check my ROAS?
Weekly at minimum for active campaigns. Daily if you're testing new creative or targeting changes. Don't make big decisions off one or two days of data though, let campaigns run long enough to gather statistically useful results.
Can SEO help improve my overall ROAS?
Indirectly, yes. Strong organic visibility reduces how much you need to rely on paid clicks for the same amount of traffic, which lifts your blended return across all channels.
What's the difference between ROAS and ROI?
ROAS only measures revenue against ad spend. ROI factors in all your costs, including product, staff, and overheads. Always check both before calling a campaign a success.
References
- Google, "Find out how you stack up to new industry benchmarks for mobile page speed," Think with Google.
- HubSpot, "State of Marketing Report."
- Meta for Business, "Measuring Return on Ad Spend."
- WordStream, "Google Ads Benchmarks by Industry."
