Your ads returned $3,000 more than they cost. Whether that is profit depends on your margins; check your break-even ROAS below.
Any campaign below 2.2x loses money. Above it, every extra dollar of revenue adds real profit.
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ROAS (return on ad spend) is revenue from ads divided by ad spend. Spend $1,000 and generate $4,000 in attributed revenue and your ROAS is 4.0x, or 400%. A 4:1 ratio is the most commonly cited target for e-commerce, but the only number that decides whether your campaign makes money is your break-even ROAS, which is 1 divided by your profit margin. The calculator above gives you both in seconds.
The widely used rule of thumb, popularized by Nielsen research on advertising effectiveness, is that a 4:1 revenue-to-spend ratio marks a healthy campaign, with anything under 3:1 needing work and 5:1 or better considered strong. That benchmark is a starting point, not a verdict, because profitability depends entirely on margin:
Run the second section of the calculator with your real cost of goods and fees. If your campaigns sit below that break-even line, you are buying revenue at a loss no matter how impressive the ROAS looks in your ads dashboard.
ROAS measures gross revenue against ad spend only. ROI measures profit against total cost, including product costs, fulfillment, fees and the salaries or agency fees behind the campaign. A 4x ROAS can mean a strongly positive ROI on a 60% margin product or a negative ROI on a 20% margin one. Use ROAS to compare campaigns inside an ad account, and ROI to decide whether the channel deserves budget at all.
One more lever worth knowing: your blended ROAS (total revenue divided by total ad spend) improves as organic traffic grows, because SEO traffic has no per-click cost. When we ran SEO for Software Testing Stuff, a software-testing site, organic visits grew by more than 10,000 a month, which meant a growing share of traffic arrived with zero ad spend attached. If your break-even ROAS leaves little room to scale paid ads, building the free channel alongside them is often the fastest path to better unit economics. Request a free SEO audit and we will show you where that organic revenue is hiding.
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