What Is ROAS? And What Counts as a Good ROAS in NZ

What is ROAS? ROAS stands for return on ad spend: the revenue your ads generate divided by what you spent on them. If you spend $1,000 on ads and they bring in $4,000 in sales, your ROAS is 4x. A "good" ROAS depends on your margins, because ROAS measures revenue, not profit.

This guide explains how to calculate ROAS, why margin matters more than the headline number, how Meta and Google ROAS compare and how to improve it. If you want an expert team to manage your paid social for return, see our Meta ads management.

What is ROAS?

ROAS is the most common way online stores judge whether advertising is working. It answers a simple question: for every dollar spent on ads, how many dollars of revenue came back?

It is usually shown as a multiple (4x) or a ratio (4:1), and sometimes as a percentage (400%). All three mean the same thing. Ad platforms such as Meta and Google Ads calculate it for you, based on the purchases their tracking attributes to your ads.

ROAS is different from ROI (return on investment). ROI usually includes all costs, such as product costs, agency fees and shipping, and measures profit. ROAS only looks at ad spend and revenue.

How to calculate ROAS

The formula is:

ROAS = revenue from ads ÷ ad spend

A few worked examples:

• $2,000 spend, $6,000 revenue: 6,000 ÷ 2,000 = 3x
• $500 spend, $4,500 revenue: 4,500 ÷ 500 = 9x
• $3,000 spend, $2,400 revenue: 2,400 ÷ 3,000 = 0.8x (you got back less than you spent)

To use this as a simple ROAS calculator, take the revenue and spend figures from the same date range and the same attribution setting. Mixing settings is one of the most common reasons ROAS figures do not match between reports.

If you sell through Shopify, compare ad platform revenue with your store's own sales reports each month. The platforms will rarely match exactly, but a large and growing gap is a sign that tracking needs attention.

ROAS vs profit: why margin matters

A 4x ROAS can be excellent for one business and a loss for another. The difference is gross margin: the share of each sale left after the cost of the product.

To find your break-even ROAS, divide 1 by your gross margin:

• 50% margin: 1 ÷ 0.5 = 2x break-even
• 30% margin: 1 ÷ 0.3 = 3.3x break-even
• 20% margin: 1 ÷ 0.2 = 5x break-even

Below break-even, every sale from ads loses money on the first order. Above it, the ads are profitable, before other costs like shipping, fees and overheads. That is why there is no single "good ROAS" for every store in NZ. A good ROAS is one that comfortably clears your break-even point and leaves room for the other costs of running the business.

Two more things to factor in:

• Repeat purchases: if customers buy again, a lower first-order ROAS can still be very profitable over time. Customer lifetime value matters.
• New vs returning customers: ROAS from retargeting people who were already going to buy looks high but adds less. Watch how much of your revenue comes from genuinely new customers.

Meta vs Google ROAS

Meta and Google often report very different ROAS for the same store, and both can be "right".

• Google Search and Shopping capture people who are already looking for a product, so reported ROAS is often higher.
• Meta (Facebook and Instagram) mostly reaches people before they search. It creates demand that may later convert through Google, email or a direct visit.
• Attribution differs. Meta's default counts purchases within 7 days of a click or 1 day of a view. Google Ads uses its own attribution model. Both can claim credit for the same sale.

Judge them together, not in isolation. Compare total ad spend with total online revenue over time, sometimes called blended ROAS or MER (marketing efficiency ratio). If you cut Meta because its reported ROAS looks lower, Google results may fall later, because fewer people discover you in the first place.

How Proferlo grew online revenue 3x

Proferlo Furniture, a New Zealand furniture brand, achieved 3x online revenue growth after 60 days with Refined.

The work combined three things this guide keeps coming back to: strong creative, including studio photography, lifestyle film and creator-style video; Meta and Google campaigns managed together rather than as competing channels; and the store's own content and SEO, so paid traffic landed on pages that convert. Read the full Proferlo Furniture case study.

How to improve ROAS

1. Fix tracking first. Check that the Meta pixel and Conversions API, and Google's conversion tags, record purchases accurately, with the right values.
2. Refresh creative regularly. On Meta, creative is the biggest lever. Test new hooks, formats and angles, and keep the winners running.
3. Improve the landing page. A higher website conversion rate lifts ROAS without changing the ads at all. Our guide to conversion rate optimisation shows where to look.
4. Raise average order value with bundles, free shipping thresholds and relevant add-ons.
5. Cut what does not work, such as products with low margins or campaigns that consistently miss break-even.
6. Use email for repeat sales. Customers won through ads become more profitable when email brings them back.

Frequently asked questions

What is a good ROAS for ecommerce in NZ?

One that clears your break-even ROAS with room to spare. Divide 1 by your gross margin to find break-even, then aim comfortably above it.

Is a higher ROAS always better?

Not always. Very high ROAS can mean you are only reaching people who would have bought anyway. Sometimes a slightly lower ROAS at higher spend brings in more total profit.

Why does my Shopify revenue not match my ad platform ROAS?

Each platform uses its own attribution and may claim the same sale. Compare total ad spend with total store revenue for a clearer view.

Want ads that are judged on profit, not just clicks? Request a free strategy.