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11 min read
It is perhaps the most frequently asked question in digital marketing, and for good reason. Marketers are under constant pressure to justify their budgets and prove their value.
Jamayal Tanweer
Brand Growth & Conversion Strategy Advisor
Last Updated
December 9, 2025
The Question: "What is good ROAS?" It is perhaps most frequently asked question in digital marketing, and for good reason. Marketers are under constant pressure to justify budgets and prove value.
The Problem: Relying solely on generic benchmarks is like navigating ship using only star chart from different ocean. It provides general direction, but it ignores local currents, weather, and specific capabilities of your own vessel.
The Truth: "Good" ROAS is highly contextual. It is influenced by your industry, profit margins, business model, and channels you advertise on. Furthermore, most published benchmarks are built on same flawed, incomplete data that plagues digital advertising ecosystem.
The Solution: This guide provides latest industry and platform ROAS benchmarks, but more importantly, teaches you how to use them correctly. We show you how to calculate single most important benchmark: your own break-even point.
Before we look at single number, we must establish golden rule:
ROAS benchmarks are meaningless without context.
A 3:1 ROAS might be phenomenal for high-margin SaaS company but disastrous for low-margin ecommerce retailer.
1. Profit Margins (Most Critical Factor)
Your profit margin is percentage of revenue left after all costs (Cost of Goods Sold, operations, etc.) are accounted for.
Example:
Business with 70% profit margin can thrive on 2:1 ROAS
Business with 20% margin needs at least 5:1 ROAS just to break even
2. Business Model & Sales Cycle
B2C Ecommerce: Selling $50 product expects quick return and needs high ROAS on each transaction.
B2B Software: With $50,000 annual contract has much longer sales cycle. ROAS might look low in first month but becomes enormous when viewed through lens of Customer Lifetime Value (CLV).
3. Campaign Objective
Not all campaigns are designed for immediate sales.
Top-of-Funnel Brand Awareness: Might have very low or even negative ROAS, but its goal is to fill retargeting pool for later, high-ROAS conversion campaigns.
Judging both by same ROAS benchmark would be strategic error.
4. Channel & Platform
Google Search: User searching for "buy red running shoes size 10" has extremely high purchase intent. ROAS on branded search campaigns is naturally high.
TikTok: User scrolling has discovery intent. ROAS may be lower, but platform is essential for introducing brand to new audiences.
5. Market Maturity & Competition
New, Uncontested Market: Click costs are low and ROAS can be incredibly high.
Mature, Competitive Market: Brands must bid aggressively to win customers, which naturally suppresses average ROAS.
Instead of starting with external benchmarks, begin with your own internal truth: your break-even point.
Your Break-Even ROAS is point at which your advertising efforts are paying for themselves, but not yet generating profit.
Any ROAS above this number is profit.
Break-Even ROAS = 1 / Profit Margin
Your profit margin is percentage of revenue left after accounting for cost of goods sold (COGS) and any other variable costs.
Profit Margin = (Revenue - COGS) / Revenue
Software company sells subscription for $200 per month.
Variable costs: Server usage and third-party integrations = $40 per customer per month
Calculation:
Profit Margin: ($200 - $40) / $200 = $160 / $200 = 0.80 or 80%
Break-Even ROAS: 1 / 0.80 = 1.25
This means SaaS company needs to achieve ROAS of just 1.25:1 to break even on ad spend.
A 3:1 ROAS would be wildly profitable for them.
Ecommerce store sells physical product for $100.
Costs:
Cost of Goods Sold (COGS): $55
Shipping & Fulfillment: $15
Transaction Fees: $5
Total Variable Costs: $75
Calculation:
Profit Margin: ($100 - $75) / $100 = $25 / $100 = 0.25 or 25%
Break-Even ROAS: 1 / 0.25 = 4
This ecommerce business needs to achieve 4:1 ROAS just to cover costs and break even.
A 3:1 ROAS, which was highly profitable for SaaS company, would be losing them money on every sale.
Business Type Profit Margin Break-Even ROAS Target ROAS (for Profit)
High-Margin SaaS 80% 1.25:1 2:1 to 4:1+
Low-Margin Ecommerce 25% 4:1 5:1 to 8:1+
Knowing your Break-Even ROAS is empowering. It becomes your internal benchmark, your true North Star, against which all external benchmarks can be judged.
With crucial context of your own break-even point established, we can now explore general industry benchmarks.
Disclaimer: These numbers are averages compiled from various industry reports. They are influenced by countless variables and, as we will discuss, are based on potentially flawed data. Use them as directional compass, not absolute map.
Industry Average ROAS (General) Key Considerations & Context
Retail & Ecommerce 4:1 to 6:1 Varies wildly. High-end fashion with large margins can accept lower ROAS. Dropshippers with thin margins need very high ROAS (8:1+).
B2B / SaaS 3:1 to 5:1 Initial ROAS can seem low. True return is measured in Customer Lifetime Value (CLV). A 2:1 ROAS on lead that becomes $100k/year client is exceptional.
Finance & Insurance 6:1 to 9:1 High competition and click costs, but also very high customer lifetime value (e.g., mortgages, insurance policies). Trust and authority are key.
Healthcare 3:1 to 4:1 Highly regulated advertising landscape. Focus often on lead generation (appointments) rather than direct sales. Patient value can be very high over time.
Legal 5:1 to 7:1 Extremely high cost per click, especially for competitive practice areas like personal injury. However, value of single case can be enormous.
Real Estate 7:1 to 10:1+ Ad costs can be high, but commission from single transaction (sale or rental) is substantial, leading to high potential ROAS.
Travel & Hospitality 4:1 to 6:1 Highly seasonal and competitive. Margins can be thin. ROAS often impacted by brand loyalty and direct bookings vs. third-party aggregators.
Platform where you run ads has massive impact on expected ROAS, largely due to user intent.
Platform Average ROAS Strengths & Considerations
Google Search 5:1 to 8:1 High Intent. Users actively searching for solution. Branded search terms often yield highest ROAS (10:1+). Non-brand terms more competitive.
Google Shopping 4:1 to 7:1 High Commercial Intent. Users visually comparing products to buy. Highly effective for ecommerce, but requires optimized product feed.
Meta (Facebook/Instagram) 3:1 to 5:1 Discovery & Demand Generation. ROAS can be lower on prospecting campaigns but crucial for filling funnel. Retargeting campaigns on Meta often have very high ROAS (8:1+).
LinkedIn Ads 2:1 to 4:1 B2B Targeting. CPCs are highest, so initial ROAS often lowest. Success measured by lead quality and downstream revenue, not immediate sales.
Amazon Ads 3:1 to 6:1 Point of Purchase. Users on platform with explicit intent to buy. ROAS critical for product ranking and visibility on Amazon search results.
Smart strategy involves using these platforms together.
Example:
Use Meta to introduce user to your brand (low initial ROAS)
Then capture their high-intent purchase on Google Search (high ROAS)
Cross-channel attribution black hole can prevent you from seeing this synergy.
Now for most important caveat of all.
What if benchmarks themselves, and your own data you are comparing against them, are built on lie?
Quote from Avinash Kaushik, Digital Marketing Evangelist:
"The goal is to have furious debate about data, and methodology, and assumptions... Data is not puke-it-out-and-you-are-done process."
Kaushik's point is that data requires rigorous scrutiny.
"Garbage In, Garbage Out" crisis, caused by ad blockers, tracking prevention, and bot traffic, pollutes entire ecosystem, making true "apples to apples" comparison impossible.
When user on Safari (with ITP) or Chrome (with ad blocker) clicks your ad and converts, tracking pixel often fails to fire.
That revenue is never attributed to your campaign.
The Impact:
Your calculated ROAS is artificially deflated.
You might be struggling to hit 3:1 ROAS, thinking you are underperforming 4:1 industry benchmark.
In reality, your true ROAS might be 5:1, but you simply cannot see hidden revenue.
You are beating benchmark without even knowing it.
Sophisticated bots click your ads, draining budget on traffic that will never convert.
This fraudulent activity inflates "Cost" side of your ROAS equation.
The Impact:
You are comparing your performance, which is being dragged down by fraud, against industry average that is also being dragged down by fraud.
It is flawed comparison from start.
To truly benchmark, you need to know your ROAS based on spend directed only at real humans.
This is where data integrity platform becomes essential.
By implementing first-party analytics solution like DataCops, you solve both problems simultaneously:
1. You See True Revenue
First-party tracking captures conversions lost to ITP and ad blockers
Gives you accurate "Revenue" numerator
2. You See True Cost
Advanced fraud and bot detection filters out non-human traffic
Gives you accurate "Cost" denominator based on effective ad spend
Only when you have your True ROAS (based on complete, clean data) can you meaningfully compare it to industry benchmarks and make confident strategic decisions.
Step 1: Calculate Your Break-Even ROAS
Use formula: Break-Even ROAS = 1 / Profit Margin
This is your truth. It dictates your survival and profitability, tailored perfectly to your business financial structure.
Step 2: Use Industry Benchmarks as Compass
Once you know break-even point, use industry and platform benchmarks to ask better questions.
Example: "Average for my industry is 6:1, and my break-even is 4:1. We are currently at 5:1. We are profitable, but there is room to improve. Where is gap?"
Step 3: Build on Foundation of Truth
None of this analysis matters if your data is wrong.
Prioritize data integrity. Invest in solution that gives you complete and accurate picture of performance.
Without it, you are navigating in fog.
1. Context determines good ROAS Profit margins, business model, campaign objective, channel, competition all matter.
2. Break-even ROAS is most important benchmark Calculate: 1 / Profit Margin. This is your survival threshold.
3. Industry benchmarks vary widely Retail/Ecommerce: 4:1 to 6:1. B2B/SaaS: 3:1 to 5:1. Finance: 6:1 to 9:1.
4. Platform intent affects ROAS Google Search (high intent): 5:1 to 8:1. Meta (discovery): 3:1 to 5:1. LinkedIn (B2B): 2:1 to 4:1.
5. Flawed data makes benchmarks meaningless Under-reported revenue and inflated costs from blockers and bots corrupt comparison.
6. First-party tracking reveals true ROAS Captures conversions lost to ITP and ad blockers for accurate revenue.
7. Bot filtering reveals true cost Eliminates fraudulent clicks to show effective ad spend on real humans.
8. True ROAS enables meaningful comparison Only with complete, clean data can you benchmark confidently.
If you want to understand if your ROAS is truly good:
Step 1: Calculate Break-Even ROAS
Determine profit margin: (Revenue - COGS) / Revenue
Calculate break-even: 1 / Profit Margin
Set target ROAS above break-even for profitability
Step 2: Audit Data Quality
Compare ad platform revenue to actual backend sales
Calculate gap percentage
Identify if problem is under-reported revenue or inflated costs
Step 3: Fix Data Foundation
Implement first-party tracking (DataCops) to bypass blockers
Enable bot filtering for accurate cost calculation
Get True ROAS based on complete, clean data
Step 4: Compare to Industry Benchmarks
Use industry and platform benchmarks as directional compass
Ask: "Where is gap between my current ROAS and benchmark?"
Identify optimization opportunities
Step 5: Optimize Strategically
If above break-even but below benchmark: opportunity to improve
If at or above benchmark: maintain and scale
If below break-even: urgent need to optimize or pause campaigns
Tools: DataCops provides first-party data collection that captures all conversions (bypassing ad blockers), filters bot traffic (showing true cost), and delivers True ROAS calculation. Only with accurate data can you meaningfully compare to industry benchmarks and make confident decisions.
The bottom line: Industry ROAS benchmarks are not finish line. They are starting point. Your path to profitability begins with looking inward, not outward. Calculate break-even ROAS, use industry benchmarks as compass, and build on foundation of truth. Stop chasing generic numbers. Start by understanding your own profitability, scrutinizing your data, and using benchmarks as what they are meant to be: one tool of many in journey toward sustainable, profitable growth.
About DataCops: First-party analytics platform that reveals True ROAS by capturing all conversions (bypassing ad blockers for accurate revenue), filtering bot traffic (showing effective ad spend), and enabling meaningful comparison to industry benchmarks. Transforms flawed data into confident decision-making.