An acceptable return on ad spend ratio is different for each business. In order to determine what a good ROAS goal is, a company has to determine what their budget and profit margins are. Some companies can thrive with a low ROAS and others may need a higher ROAS in order to stay in business.

As an example of how to calculate return on ad spend, assume a company decides to spend $2,000 on an advertising campaign. That company generates $10,000 from those ads. $10,000 divided by $2,000 equals $5. This means their ROAS ration is 5:1.

Calculating return on ad spend helps a company determine how successful their advertising efforts were for a certain campaign. It can help them understand where they should place their ads as well as how much they should be spending on them.