— Glossary
ROAS
Return On Ad Spend — revenue divided by ad spend.
If you spend $1 and close $5, ROAS is 5x. Service businesses should target 5–10x ROAS minimum once the system is dialed.
ROAS — Return On Ad Spend — measures revenue generated per dollar spent on ads. Unlike CPA which focuses on cost per customer, ROAS centers on the top-line return: $5 ROAS means $5 in revenue for every $1 spent. For service companies, compute ROAS both at campaign level and by service line. Beware of simple revenue figures; use attributable revenue (paid invoices linked back to the ad source) and subtract refunds or canceled jobs that were never completed. Gross ROAS is useful for quick checks, but net ROAS (after direct job costs) gives a clearer picture of profitability. Since many service businesses have long-term revenue from warranties, recurring maintenance, and referrals, include projected downstream revenue for a truer lifetime ROAS. Also segment ROAS by customer type—one-time small jobs inflate revenue without lasting value, while high-LTV contracts shift ROAS calculus. Optimize for ROAS with targeted creatives, bid adjustments for high-intent keywords, and landing pages that increase close-rate. Don’t treat ROAS in isolation: it must be balanced against lead volume and growth goals.
- A roofing campaign spends $10,000 and attributes $60,000 in invoices, producing a 6x ROAS.
- An HVAC ad shows 2x ROAS on small tune-ups but 8x when including maintenance contract renewals over two years.
- A marine restoration campaign computes ROAS based on completed paid restorations, excluding canceled jobs, shifting reported ROAS from 4x to 3x.
Reporting ROAS using gross invoiced totals for all leads without excluding cancellations or including downstream revenue: it paints an inaccurate profit picture.
— ROAS in practice
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