“Our ROAS is 4, is that good?” It’s one of the questions we hear most in diagnoses — and the honest answer is: it depends. A ROAS of 4 can be excellent for a store with a 50% margin and a loss for one working at 20%. The number only makes sense when compared with the business’s margin.

What ROAS measures (and what it doesn’t)

ROAS, short for Return on Ad Spend, is the revenue attributed to campaigns divided by the amount invested in them. If you invested R$ 10k and the platforms attributed R$ 40k in sales, ROAS is 4.

The problem is that revenue isn’t profit. That turnover still has to cover cost of goods, taxes, shipping, payment fees, marketplace commission and returns. ROAS ignores all of that — which is why it needs a benchmark.

The break-even ROAS math

The break-even point is the ROAS at which the margin on sales exactly pays for the media investment. The formula is simple:

Break-even ROAS = 1 ÷ contribution margin

With a 25% contribution margin, the minimum ROAS is 1 ÷ 0.25 = 4. At 40%, it’s 2.5. Below that number, every sale the campaign generates costs more than it leaves in the bank.

Contribution margin is what’s left of each unit of currency sold after variable costs: product, sales taxes, subsidized shipping, payment fees and commissions. Fixed costs such as rent and payroll don’t go in here.

How to read the result

If your current ROAS came out well above break-even, the campaign has room to grow: you can test more budget and watch whether the return holds. If it’s on the edge, any rise in cost per click wipes out the profit — the focus should be efficiency before scale. And if it came out below, the campaign is buying sales at a loss.

When to accept below-break-even ROAS on purpose

There are situations where running below break-even is a conscious decision: products with a high repurchase rate, where profit comes on the second or third purchase; launches, where the goal is to build a customer base; and brand campaigns, which feed the others. What can’t happen is for it to go unnoticed.

The three mistakes that distort ROAS

ROAS is still a good thermometer — as long as you know your business’s minimum temperature. With break-even worked out, the budget conversation stops being opinion and becomes math.

How to calculate your store’s contribution margin

The calculator depends on a number many companies don’t have at their fingertips: contribution margin. It’s the percentage left from each sale after all variable costs. A practical way to get there:

1. Start from the selling price

   Use the period’s real average ticket, with discounts and coupons already applied.

2. Subtract the cost of goods

   Cost of buying or making the goods sold.

3. Subtract sales taxes

   The percentage varies with your tax regime; confirm with your accountant.

4. Subtract shipping, packaging and fees

   Subsidized shipping, packaging, payment fees, advance fees and marketplace commission.

5. Account for returns

   Apply the average return and exchange rate, which reduces effective revenue.

If R$ 75 is left from a R$ 250 ticket after all that, contribution margin is 30% and break-even ROAS is 3.33. That’s the number the campaign needs to beat.

Break-even ROAS by product line

Stores with products at different margins should have different ROAS targets. An accessory with a 60% margin pays off at ROAS 1.7; electronics at 15% need ROAS 6.7. When everything runs in one campaign with a single target, the algorithm tends to sell more of what’s easy to sell — not always what’s profitable.

The examples are illustrative: each category’s real margin depends on the operation. The point is to split campaigns or product groups by margin band and set ROAS targets that fit each one.

ROAS, ROI and MER: which metric to use

• ROAS measures the revenue generated per unit of currency spent on ads, by campaign or channel. It’s the day-to-day optimization metric.
• ROI looks at profit, not revenue: (profit − investment) ÷ investment. It’s the metric for deciding whether the investment is worth it.
• MER (Marketing Efficiency Ratio) divides the company’s total revenue by total marketing spend, without relying on each platform’s attribution. It’s a reality check for when the platform dashboards add up to more sales than the bank records.

In Manáry’s paid media management, ROAS guides campaign optimization, but budget decisions look at margin, MER and what the CRM or ERP confirms as a sale.

Frequently asked questions