ROAS (Return on Ad Spend)

ROAS stands for Return on Ad Spend. It is the most fundamental metric for measuring whether an advertising campaign is generating more revenue than it costs to run. The formula is simple: divide the revenue generated from an ad campaign by the total amount spent on that campaign.

ROAS = Revenue from ads / Amount spent on ads

A ROAS of 3x means you spent $100 on ads and generated $300 in revenue.

The Simple Version

ROAS answers the basic question: did this ad make money? A 1x ROAS means you broke even: revenue equaled ad spend. A 2x ROAS means you doubled your money. A 0.5x ROAS means you spent $100 and got $50 back. Not good.

What ROAS Doesn’t Tell You

ROAS measures revenue, not profit. A 3x ROAS sounds healthy, but if your product costs 80% of its sale price to make, ship, and sell, a 3x ROAS is actually unprofitable. The number you actually need is break-even ROAS, the ROAS at which your ad spend is exactly covered by profit margin, not revenue.

If your profit margin on a product is 40%, your break-even ROAS is 2.5x (100 / 40 = 2.5). Anything above 2.5x is profitable after ad spend. Anything below means ads are costing more than they contribute.

Benchmarks for TikTok Shop

Starting benchmarks for TikTok Shop VSA campaigns: aim for 2x ROAS in your first few weeks of testing. As your creative library builds and the algorithm learns which audiences convert, a well-optimized campaign can reach 3–5x. CPM and CTR tell you about top-of-funnel efficiency. CVR tells you about product page performance. ROAS tells you whether all of it adds up to something worth continuing.