Return on Ad Spend (ROAS)

While ROI (Return on Investment) looks at the overall profitability of an investment (including overhead, etc.), ROAS focuses specifically on the effectiveness of your ad budget.

Formula: Revenue from Ads / Cost of Ads. If you spend $1,000 on ads and generate $5,000 in revenue, your ROAS is 5:1 (or 500%). Knowing this number allows you to scale confidently—if you know putting $1 in gets $5 out, you put in as many dollars as possible.