ROAS (Return on ad spend)

Worked example (made-up numbers)

You spend $300 on Reddit ads. The customers those ads brought have paid you $570 so far. ROAS is $570 ÷ $300 = 1.9: each dollar has come back as $1.90 of revenue.

A month later those customers have paid $760 in total. ROAS for the same spend is now about 2.5. For subscriptions, ROAS keeps growing as long as the customers stay, so always say “so far” or name the period.

Why the ad dashboard’s ROAS can mislead

Ad platforms work out ROAS from the conversions they can see: a signup, a checkout they tracked, sometimes a modelled guess. They can’t see the customer who signed up on your site three days later on another device, or who cancelled after the first month. Your own number, from payments in your own billing, is the one to trust.

Why it matters when you’re starting out

ROAS under 1 means a channel hasn’t yet paid back what it cost. That’s normal in the first weeks of a subscription business, but it should climb. If it stays under 1 after a few months, the channel is losing money, however many signups it brings.

ROAS measures revenue, not profit. A ROAS of 1.2 can still lose money once you count payment fees, your time and support. Pair it with CAC and LTV:CAC to see the whole picture.

How to measure it

1. Tag every ad link with UTM parameters so each visit carries the campaign.
2. Record what you spent per channel and period, from the invoice.
3. Match the customers who paid to the source of their first visit.
4. Divide their payments so far by the spend, per channel, in one currency.

In Nordva Launch

Record a channel’s spend and the Insights sources table shows return on spend per source, from what the customers traced to that source have paid in Stripe. It needs the Indie plan.