ROAS Explained for Ghanaian Business Owners
Return on ad spend is the number that tells you whether your adverts make money. What it means, how to calculate it, what a good ROAS is for your business, and where it misleads.
ROAS stands for return on ad spend. It's the simplest way to answer the question that matters most about adverts: is this making me money?
The formula
ROAS = revenue from adverts ÷ money spent on adverts
If you spend GH₵ 2,000 on Facebook ads and they bring GH₵ 8,000 in sales, your ROAS is 4. People write it as 4× or 400%.
What's a good ROAS?
There's no universal answer. It depends on your margin.
| Your gross margin | Break-even ROAS |
|---|---|
| 25% | 4.0× |
| 33% | 3.0× |
| 50% | 2.0× |
| 70% | 1.4× |
Break-even ROAS = 1 ÷ margin. If you keep 50% of every sale after product, packaging and delivery costs, a 2× ROAS just covers the adverts. Anything above that is profit, before other costs like staff and rent.
So a 3× ROAS is excellent for a business with 70% margins, and a loss for one with 25% margins.
Work out your target
- Calculate your gross margin.
- Find your break-even ROAS: 1 ÷ margin.
- Add room for your other costs and profit. Many businesses aim for at least 1.5 times their break-even.
Example: margin 40%. Break-even is 2.5×. A sensible target might be 3.5× to 4×.
Where ROAS misleads
It ignores repeat purchases
A customer who first buys for GH₵ 150 and then spends another GH₵ 600 over the year is worth far more than the first sale. Judging adverts only on first-order ROAS can make you cut campaigns that are actually building a profitable customer base. See customer lifetime value.
It depends on tracking
If your Pixel misses sales, or counts them twice, your ROAS is wrong. Sales that close on WhatsApp often don't show up at all. Compare Ads Manager with your real orders. See setting up the Pixel and tracking WhatsApp sales.
Retargeting looks better than it is
Retargeting campaigns show high ROAS because they reach people who were already interested. Some would have bought anyway. Judge your account as a whole, not just the best-looking campaign.
It ignores margin differences between products
A high ROAS on a low-margin product can be worth less than a lower ROAS on a high-margin one.
A better habit: blended ROAS
Once a month, divide your total revenue by your total ad spend across all channels. This "blended" number is harder to fool. If it rises while you grow spend, your adverts are working, whatever each platform claims.
Related numbers
- Cost per purchase: ad spend ÷ number of sales. Compare it with your margin per sale.
- Average order value: revenue ÷ number of orders. Raising it improves ROAS without touching adverts. See order bumps and upsells.
- Conversion rate: sales ÷ visitors. A better page improves ROAS too.
Common questions
What ROAS did SneakersINN get?
5.5× in 90 days. Read the full breakdown.
Is ROAS the same as ROI?
No. ROI includes all costs, like product, staff and fees. ROAS only looks at ad spend.
My ROAS is below break-even. Should I stop?
Not immediately. Check tracking, creative, landing page and offer first. And consider repeat purchases. See why your ads are not working.
If you'd like a clear view of what your adverts really return, see our custom dashboards.