What Is a Good ROAS for Google Ads in 2025? Benchmarks, and Real Examples

Return on ad spend (ROAS) gets thrown around a lot, usually as a single “make-or-break” number. In reality, good ROAS is contextual: industry, business model (SaaS vs eCommerce vs marketplace), margin structure, and where the campaign sits in your funnel all change the target.

This article clarifies the definitions, shows you how to calculate ROAS properly (with worked examples), compares ROAS to ROI, and shares the best, current benchmarks we can rely on.

But let’s start by looking at some important definitions…

What is ROAS?

Return on ad spend: revenue attributed to ads divided by ad spend. In Google Ads you can bid to a target ROAS if you pass reliable conversion values. Source: Google Help

How is ROAS calculated?

ROAS = Attributed Revenue ÷ Ad Spend

Be precise with the revenue definition (net sales for DTC; net take-rate for marketplaces; closed-won or modelled LTV for SaaS).

Why do people measure ROAS instead of ROI?

ROAS is fast and channel-level; it helps marketers optimise bids and budgets day-to-day. ROI is broader and slower, mixing in overhead and gross margin for better board-level investment decisions. Which one should you use? Use both. ROAS for optimisation, ROI for capital allocation.

When should I use ROI instead?

• When margin pressure is high (low AOV, high COGS, expensive fulfilment).
• When creative/people/tools costs materially change the economics.
• When you need to justify your total marketing efficiency to finance.

GMV vs revenue vs net profit. How do they affect ROAS/ROI?

• GMV: top-line order value; great for scale snapshots but inflates ROAS if used as “revenue.”
• Revenue: what your business actually earns (e.g., net sales or platform fees).
• Net profit: revenue minus COGS, fulfilment, salaries, tools, and media.
• Set your conversion value to match the revenue you keep, and calculate ROI on profit, not GMV.

The ROAS formula (and two traps to avoid)

The basic formula for working out ROAS is:

ROAS = Attributed Revenue ÷ Ad Spend

Two common pitfalls:

1. Using the wrong “revenue”
   • eCommerce brand? Use net sales (after discounts/returns), not GMV as GMV inflates ROAS.
   • Marketplace? Use your take-rate (commission) or net revenue, not the buyer’s gross order value.
2. Mixing ROAS with ROI
   • ROAS ignores overheads and cost of goods. ROI includes them. If margins are thin or ops costs high, a “great” ROAS can still mean negative profit.

What counts as a “good” ROAS in 2025?

Short answer: it depends, but credible cross-industry data points can help you triangulate:

• DTC / ecommerce: Many sources cite 2:1–4:1 as a common range for profitable acquisition on paid media, with variability by AOV and margin. Triple Whale reported a 2024 median ROAS around 2.04 across brands on its platform; other round-ups echo 2–4× as a typical “good” range, not a rule, a range. Source: Triple Whale
• B2B SaaS (paid media): ROAS tends to be lower and more volatile (longer cycles, lead-to-revenue lag, freemium pricing, and expansion-driven LTV). Varos shows ~1.55 ROAS on Google Ads for B2B SaaS in its panel (context: specific month snapshots). The implication: judge against LTV/CAC and payback, not ecommerce-style ROAS thresholds. Source: Varos

Takeaway:

• DTC brands with healthy margins often target 3–5× at steady-state;
• B2B SaaS often lives with ~1–2× “pipeline ROAS” in-platform while banking on LTV to justify spend;
• Marketplaces prioritise profit-on-take-rate rather than GMV-based ROAS.

ROAS vs ROI: when to use which

• Use ROAS to optimise media and compare channels/campaigns in near real-time (especially with tROAS bidding). It moves fast and stays inside the ad stack.
• Use ROI to assess true profitability and budget allocation across marketing and beyond (creative, sales, ops). ROI is slower to compute, but it is the only way to know whether the business is actually making money.

If your leadership team is pushing for profit discipline, use profit-adjusted conversion values in Google Ads (for tROAS) and keep a CFO-grade ROI model outside the platforms.

Real-world ROAS examples (with the right maths)

1) eCommerce (DTC) example

• AOV £120, gross margin 55%, returns 10%, shipping & fulfilment £8 per order.
• Month’s ad spend: £20,000. Orders from ads: 600.

Step 1: Net sales

• Gross revenue: 600 × £120 = £72,000
• Returns (10%): £7,200 → Net sales £64,800

Step 2: Contribution to profit (for ROI sense-check)

• COGS (45% of £64,800): £29,160
• Shipping/fulfilment: 600 × £8 = £4,800
• Gross profit before ads: £64,800 − £29,160 − £4,800 = £30,840

ROAS = £64,800 ÷ £20,000 = 3.24×

ROI (media-only) = (£30,840 − £20,000) ÷ £20,000 = +54.2%

Why it matters: quoting a 3.24× ROAS is fine, but the 54% profit uplift is what finance cares about.

2) Marketplace example (GMV trap avoided)

• GMV from ad-driven orders: £250,000; platform take-rate 12%; ad spend £40,000; processing/ops cost 2% of GMV.

Correct revenue basis = Net platform revenue, not GMV:

• Net revenue: 12% × £250,000 = £30,000
• Ops expense: 2% × £250,000 = £5,000 → Gross profit before ads £25,000
• ROAS (right way) = £30,000 ÷ £40,000 = 0.75× (not 6.25× if you naively used GMV)
• ROI = (£25,000 − £40,000) ÷ £40,000 = −37.5%

Takeaway: GMV-based ROAS looks heroic but loses money once you use the platform’s real economics.

3) B2B SaaS example (pipeline-to-revenue lag)

• Ad spend £30,000 → 200 MQLs → 40 SQLs → 10 Opps → 2 Wins.
• ACV £25k; Gross Margin 80%; Sales cycle 120 days; only one of the two wins closes this month.

This month’s in-platform ROAS (if you value closed-won only):

• Revenue recognised this month: £25,000
• ROAS = £25,000 ÷ £30,000 = 0.83×

But the second deal closes next quarter, adding another £25,000 and likely expansion later. Pure ROAS makes this look “bad” now; payback and LTV/CAC show the real picture.

How to set a smart ROAS target (by model)

1. DTC / eCommerce
   • Start with unit economics: target profit-positive ROAS at your blended return/discount rate and COGS.
   • If you run new customer acquisition, expect lower ROAS than on repeat/brand.
   • Feed net conversion values (post-refund where possible) to tROAS.
2. B2B SaaS
   • Optimise for qualified pipeline value first, not just MQLs.
   • Align with LTV/CAC and acceptable payback (e.g. <12 months).
   • Consider interim goals (e.g. pipeline ROAS) and roll to ROI quarterly when deals mature.
3. Marketplaces
   • Build conversion values on net take-rate (plus fees) after cancellations/returns.
   • Never set tROAS off GMV. It will over-bid.

Practical setup tips in Google Ads (so ROAS reflects reality)

1. Pass the right value
   • For eCommerce, send order value after discounts; if possible, adjust for VAT/returns via server-side updates.
   • For marketplaces, send net take-rate value, not GMV.
   • For SaaS, pass pipeline or predicted LTV as conversion value using offline conversion imports and be explicit in dashboards about time-to-revenue.
2. Pick the right bid strategy
   • If you can trust values, use Maximise conversion value with a target ROAS. Without reliable values, start with Maximise conversions or tCPA and graduate later.
3. Consider profit-based bidding
   • If you can compute gross profit per order, use profit as the conversion value. This aligns bidding with real money. (Google’s tROAS framework supports value-based optimisation; apps can even optimise to ad-revenue tROAS.)
4. Mind the funnel
   • Prospecting usually runs lower ROAS than retargeting/brand. Build your reporting to segment by intent so you don’t penalise top-of-funnel activity that creates tomorrow’s pipeline.

A simple way to align ROAS with profit goals

Step 1: Calculate Break-Even ROAS (BER)

Your Break-Even ROAS (BER) is the minimum return on ad spend you need just to cover your costs. In other words, the point where you’re not losing money, but not making any profit either.

BER = Revenue ÷ Spend (where Profit = 0)

Or more simply:

BER = 1 ÷ Gross Margin After Variable Costs

For example, if your average gross margin after returns, fulfilment, and transaction fees is 40%, then:

BER = 1 ÷ 0.4 = 2.5×

That means you’d need £2.50 in revenue for every £1 spent on ads just to break even. Anything above that is profit; anything below that means you’re losing money.

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Step 2: Set your target ROAS above BER to achieve your desired profit margin or payback period.

If your BER is 2.5× and you want 20% profit per order, you’d target roughly 3× ROAS.

Step 3: Feed that target back into Google Ads (as revenue or profit per conversion) and use Target ROAS (tROAS) bidding to automate toward that efficiency.

Final thought: “Good ROAS” is a milestone, not the finish line

Benchmarks help you sanity-check your numbers, but your margin structure and cash-flow targets decide what “good” means. For 2025, here’s a practical stance:

• Use ROAS to steer daily bidding and creative tests.
• Use ROI (and payback/LTV) to steer ppc budgets and ppc strategy.
• Model with net revenue (or profit), not GMV.

And lastly, expect ROAS and ROI to fall as you scale spend; efficiency always declines once you’ve captured your highest-intent audience. That’s normal. The red flag is when you’re spending more but not increasing total revenue or pipeline proportionally. If overall growth stalls while efficiency drops, you’ve crossed from healthy scaling into diminishing returns.

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