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What is ROAS in Google Ads? Good question. So ROAS is Hasanul return on ad spend. Every time you give a dollar or a pound or whichever currency you have to Google how much are you getting back then you need to work out what is a breakeven ROAS the bare minimum where you it is not costing you money to run ads and what is a profitable ROAS and what I mean by this in simple terms what you want to do is let's say you are selling a product. Right? This costs you a pound as the cost of goods which we call cogs.
Then you say okay my acquisition cost to acquire a customer is one pound. So you know that to sell one item. It is costing you two. That's your minimum ROAS now obviously you will have other expenses. Rent, rates, electricity, staff and all of that. So your break-even needs to be the bare minimum where you can start scaling the campaigns without costing you any money or you also need to add an agency fee of freelancers who’s what you are working on your account.
That is what we call ROAS. So to work out your profitability what I would recommend you do is you look at your profit and loss and see how much of your expenses are on marketing and advertising compared to your turnover. So, you don’t want it more than ideally over 15% maximum 20% in your PNL. So, ROAS is as simple as that return on ad spend. Some companies we are working with, need a minimum of 1 to 8. That means every time they spend $1 on Google Ads, they need $8 back to be profitable. Some of the companies need 22X or 3X and that's what these are the terms which you will find people talking about is to you know 2X or 3X or 300% is all the same. So that's what we mean by ROAS.
