Return On Ad Spend (ROAS)

What is Return On Ad Spend (ROAS)?

Return on Ad Spend (ROAS) is a key performance metric that measures the revenue generated by an advertising campaign relative to the amount of money spent on that campaign. It’s a core indicator of marketing efficiency and profitability.

In Connected TV (CTV) advertising, ROAS helps advertisers understand not just whether their ads are being seen—but whether they’re actually driving valuable outcomes, such as purchases, subscriptions, app installs, or other conversions. As CTV becomes an increasingly data-driven channel, ROAS has emerged as one of the most important metrics for assessing campaign performance and scaling media investment intelligently.

How is ROAS calculated?

The formula for calculating ROAS is:

ROAS = Revenue Generated from Ads / Cost of Ads

Here’s a breakdown of the two components in the CTV context:

• Revenue Generated from Ads: This includes all measurable revenue that can be attributed to a CTV campaign. Depending on the advertiser’s goals, this could include ecommerce purchases, subscription sign-ups, in-app purchases, or other monetized user actions.
• Cost of Ads: This represents the total spend on the CTV campaign. It typically includes media buying costs (e.g., CPMs for ad placements), creative development, data fees, and third-party attribution or measurement services.

For example, if an advertiser spends $10,000 on a CTV campaign and earns $50,000 in attributed sales, the ROAS would be:

ROAS = $50,000 / $10,000 = 5.0

This means that for every $1 spent, the advertiser earned $5 in revenue.

What does ROAS tell advertisers?

ROAS provides a direct view into the financial return of a campaign. It answers the core question: Is my advertising spend actually delivering revenue?

• A ROAS greater than 1.0 indicates that the campaign is profitable—generating more revenue than it costs.
• A ROAS of 1.0 means the campaign is breaking even.
• A ROAS below 1.0 suggests that the campaign is underperforming and may need to be optimized or reconsidered.

For performance-driven marketers, particularly in CTV, ROAS is a more meaningful metric than simple impressions or reach. It ensures that attention is translating into outcomes, not just awareness.

Why is ROAS critical in CTV advertising?

CTV has evolved from a brand-awareness channel into a high-performing direct response platform. With advances in attribution, viewer targeting, and campaign optimization, advertisers can now track user journeys from the big screen to conversion—unlocking the full potential of ROAS-driven strategies.

ROAS is especially valuable in the CTV space because it:

• Aligns spend with outcomes: Ensures advertisers invest in placements and audiences that generate measurable revenue.
• Supports automated optimization: ROAS can be used as a guiding metric to adjust bids, creative rotation, or audience segments in real time.
• Provides a basis for scaling: Once a campaign reaches a profitable ROAS, advertisers can confidently increase budgets without sacrificing efficiency.
• Eliminates guesswork: With verified attribution models, ROAS gives advertisers the data they need to make informed decisions about budget allocation and campaign structure.

How does ROAS compare to ROI?

While ROAS and ROI (Return on Investment) are related, they measure slightly different things:

• ROAS is a campaign-level metric focused exclusively on advertising spend and revenue.
• ROI includes broader costs—such as overhead, product costs, and fulfillment—and measures overall profitability.

For marketers, ROAS is the more actionable metric in day-to-day campaign management. It tells you how well your ad spend is working, not just how profitable the business is overall.

What’s needed to measure ROAS accurately?

To calculate ROAS effectively in CTV, advertisers need:

• Reliable attribution: Deterministic or probabilistic tracking to link CTV ad views with downstream conversions.
• Cross-device visibility: The ability to connect big-screen impressions with actions taken on mobile, web, or app environments.
• Granular analytics: Access to campaign-level data that includes cost breakdowns and user-level behavior signals.

Modern ad platforms use AI-driven optimization engines that learn which audiences, placements, or creatives are most likely to drive high ROAS—and automatically steer campaigns in that direction.

Final thoughts

In the age of performance marketing, ROAS is the gold standard for measuring advertising efficiency. It offers clear, financial insight into what’s working, what’s not, and where to scale.

For CTV advertisers—whether promoting an app, product, or service—ROAS is the metric that ties the entire funnel together. It ensures that high-quality ad impressions lead to meaningful business outcomes and empowers advertisers to make confident, data-driven investment decisions.