Business Glossary
How to Calculate ROAS UK
ROAS (Return on Ad Spend) measures revenue generated for every pound spent on advertising. It is the primary metric for evaluating whether a marketing channel generates commercial value.
The Formula
ROAS = Revenue Generated ÷ Ad Spend
Worked Example — UK SME
A UK e-commerce business spends £4,200 on Google Ads and attributes £14,700 in revenue. ROAS = 14,700 ÷ 4,200 = 3.5x. Every £1 spent returns £3.50 in revenue.
UK Benchmark
📊 Minimum ROAS of 3–4x for product businesses with 30–40% gross margins. Service businesses with higher margins can operate profitably at 2–3x. Below 2x in most sectors means the channel is likely loss-making.
Common Questions
What is the difference between ROAS and marketing ROI?
ROAS measures revenue return. ROI measures profit return. A 4x ROAS on a product with 30% gross margin gives approximately 20% marketing ROI. Always convert ROAS using your gross margin.
What is a good ROAS for UK Google Ads?
For product businesses, 4x+ is strong. 3–4x is acceptable above 35% margins. Below 3x on standard margins is marginally profitable at best.
How do I improve ROAS?
Cut lowest-ROAS campaigns and reallocate budget. Review landing page conversion rates. Test offers and pricing. Conversion optimisation usually outperforms creative changes.
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