How to increase your ROAS
What even is ROAS?
Okay, let’s talk ROAS, it might sound fancy but is actually pretty simple. If you don’t know already, it stands for Return on Ad Spend, and it’s basically the holy grail of figuring out if your ads are pulling their weight (but it’s not to be looked at in isolation - more on that later).
For every £1 you spend on ads, how much money are you making back?
Now what you get and what you want to get are 2 totally different things. Some businesses typically see £2 for every £1 spent, but a “good” ROAS usually sits somewhere between 4 and 5. But…it really is different for every business. That’s why understanding, optimising, and calculating ROAS correctly can be a total game changer for your business.
And…a higher ROAS isn’t always better - keep reading and I’ll explain. But first…
Why should you care about ROAS?
It keeps your ads honest
You know those ads you thought were performing really well? ROAS will tell you the truth. It shows you what’s working and what’s just eating up your ad budget, so you’re not left throwing money into campaigns that aren’t delivering. If you simply run ads without really looking at the figures I can bet that you’ve almost certainly had a cash flow problem.
It helps you spend smarter
ROAS and lifetime customer value (LCV) = one very powerful combo. By tracking these metrics across all your campaigns, you’ll know exactly where to put your money for maximum impact. Spoiler alert: it’s probably not that ad you’ve been stubbornly clinging to for months.
It makes you look like a pro
When you’re nailing your ROAS, you’re not just running ads, you’re running them with purpose. It shows you’re strategic, efficient, and on top of your marketing game. Plus, it gives you the confidence to scale your winning campaigns without worrying you’ll burn cash.
How to calculate ROAS
Here’s the formula:
ROAS = Revenue generated from Ads ÷ Ad Spend
For example:
You spend £500 on ads a month
Those ads generate £2,000 in revenue that month
Your ROAS = £2,000 ÷ £500 = 4 (or 400%).
The higher the ROAS, the better your ads are performing in theory and the more profit you’re generating with each sale. If it’s repeatedly too low, it’s time to rethink your ads strategy.
What does a good ROAS look like?
This is the mistake I see brands make all the time so listen up. As a founder you 100% need to know what your breakeven ROAS is and also what your LCV is. Most ad agencies won’t talk to you about this in detail but it’s what actually matters.
Another thing to be mindful of is who your ads are targeted at. Your Meta ads should be targeting people who have never purchased in the main. This is the part of the funnel they serve. Your social and email content is what does the heavy lifting for your returning customer…not your ads!
If you’re selling product at a 50% margin then a ROAS of 3 means:
£1.50 product cost
£1 to run the ad
50p profit.
Now, if you have a customer that doesn't really come back, you need to acknowledge that 50p is what you’ll be making for every pound you spend on ads if you can maintain a ROAS of 3 or you lower your product cost and increase your margin.
This puts ALL the pressure on you to continually recruit a new customer at a much higher ROAS otherwise your profit is minimal, unless you can drive some really decent volume.
Compare this to a business in the same position but who has a customer that comes back 1.5 times a year. If they have an average order value of £30 then they’re actually getting £45 off each customer over the ‘lifetime’. This means they can afford to spend more to recruit the customer for the first sale.
How to increase your ROAS
Why your ads might be flopping
If you’re not suffering from what I’ve just covered then it could be one of the following. And even so, these are key things to watch.
Poor audience targeting: Your ads are being shown to people who aren’t interested or ready to buy - also known as unqualified traffic.
Low click-through rate (CTR): Your ad creative isn’t grabbing attention or enticing clicks.
Low conversion rate: People are clicking on your ads but not buying, often due to friction in the buying process. This is pretty common so I’m going to cover the solution to this.
You need to fix what happens after somebody clicks. It’s all about conversion optimisation. And what most people never consider, is that, if you improve your conversion then your ROAS will go up. It’s a win win.
What is conversion optimisation, and why does it matter?
Conversion optimisation is all about making the path from clicking on an ad to completing a purchase as smooth as possible. It doesn’t just help your ads, it helps maximise the value of all your site traffic.
More conversions: Remove obstacles so more people who click on your ads become paying customers. I cover this is a lot of detail in the Membership.
Higher average order value (AOV): Optimise product and landing pages to encourage larger purchases, as well as basket cross sells.
Reduced cart abandonment: Address pain points and anxieties during checkout to keep customers from dropping off before completing their orders.
How to Increase ROAS with Optimisation
Audit and improve landing pages - Your landing pages need to match the promise of your ads. If someone clicks an ad expecting a deal or a specific product, make sure that’s exactly what they see when they land on your site.
Keep pages fast, clean, and mobile friendly (I see this mistake all the time).
Highlight key benefits and provide a clear call to action (e.g., "Buy Now" or "Add to Cart").
Test variations to see which layout or messaging converts better.
If you’ve never used landing pages for your ads then it can be a game changer.
Smooth out the checkout process - The fewer steps between “Add to Cart” and “Thank You for Your Purchase,” the better in most cases. This isn’t always the case, especially if you’re selling high AOV products. But generally most businesses benefit from simplifying their checkout.
Offer guest checkout (don’t force account creation).
Reducing form fields to the essentials.
Displaying trust signals like secure payment icons and return policies.
Target the right audience - Revisit your ad targeting to ensure you’re reaching the right people. Use audience segmentation and retargeting to focus on high intent shoppers, like those who have browsed your site but haven’t purchased yet. Also be mindful of your LCV and your strategy to reach cold traffic.
Reduce cart abandonment
Use abandoned cart emails to remind customers of their unfinished purchases.
Offer incentives like free shipping or discounts to nudge hesitant shoppers toward completing their orders.
Increase average order value (AOV)
Upsell or cross-sell complementary products on product pages or in the cart.
Offer discounts for bundling or buying more (e.g., “Buy 2, Get 10% Off”).
Highlight free shipping thresholds (e.g., “Spend £50 more for free delivery”).
You can literally double your ROAS by focusing on website and checkout optimisation. It’s not uncommon for businesses to think PPC (pay per click) and Meta ads don’t work for them, only to see a huge turnaround once their site is fine tuned for conversions.
2 things to watch out for…
A higher ROAS isn’t always good - Most people are trying to achieve a higher ROAS all the time but in actual fact this isn’t how to look at it. As long as your ROAS is profitable and all your figures stack up, you should be pushing harder and allowing your ROAS to drop slightly. This allows you to recruit more people into your business each day, week, month and with this you’ll see faster growth.
Don’t cap your spend - If you’re doing this then you’re essentially limiting your growth. As long as you’re obtaining a profitable ROAS you should be continuing to spend. Be putting a budget in place you’re stopping more people buying. However, you can ONLY be confident of this once you really know your figures.
Get better results from your Ad spend
So, if you want to boost your ROAS, here’s your roadmap:
Calculate your current ROAS: Know where you stand and make sure you’re very sure of your product margins.
Set a target ROAS: What’s your goal? Use your costs and desired profit margins to determine this. Don’t forget to focus this on new customer recruitment.
Don’t cap your spend: You should be continuing to spend whilst your figures stack up.
Watch out for a high ROAS: If your ROAS is quite high it’s likely you aren’t spending enough to recruit faster.
Audit and optimise your site: Make sure every click has a clear and seamless path to conversion.
That’s it on ROAS, I hope that gives you something to thing about next time you’re looking at your ads. And if you’re reading this and you run ads without really knowing your figures then please stop immediately before you run into trouble!