ROAS — Return on Ad Spend — is the metric every eCommerce business tracks but few truly understand. The formula looks simple: divide the revenue generated by your ads by the cost of those ads. Spend $1,000, generate $4,000 in sales, that's a 4x ROAS.
The problem isn't the calculation. It's everything around it.
The benchmark problem
Most Australian business owners have heard that "a good ROAS is 4x" — and leave it there. But 4x ROAS for a fashion brand with 70% gross margins is completely different to 4x ROAS for an electronics retailer running on 15% margins. The number means nothing without context.
Here's a more useful starting point for Australian businesses:
eCommerce (general): 3-5x is sustainable. Below 2x, you're likely losing money. Above 7x, you're probably under-investing and leaving growth on the table.
High-margin products (cosmetics, supplements, digital products): 3x can be excellent. 8x+ is achievable.
Low-margin products (electronics, hardware): 6-8x minimum just to break even on ad spend after COGS.
Your benchmark isn't an industry average — it's a number derived from your own gross margin.
The attribution problem
This is where things get messy. Most Australian SMEs are looking at platform-reported ROAS — the number Facebook, Google, or TikTok tells them. That number is almost always wrong, and almost always higher than reality.
Why? Because every platform takes credit for every conversion it can possibly claim. A customer clicks a Facebook ad on Monday, a Google Shopping ad on Wednesday, and buys on Friday. Facebook says it drove the sale. Google says it drove the sale. Your Shopify dashboard says it drove the sale. In reality, all three contributed — but you're probably attributing the full sale to whichever platform your analytics happen to record last.
The result: your Facebook ROAS looks like 6x. Your Google ROAS looks like 4x. But your total revenue doesn't justify both of those numbers simultaneously.
For Australian eCommerce businesses spending more than $3,000/month on ads, proper attribution tracking isn't optional — it's the difference between scaling a profitable channel and scaling a money-losing one while thinking you're winning.
The platform ROAS trap
Different ad platforms have different attribution windows, different conversion event definitions, and different amounts of iOS14.5+ signal loss. Comparing your Meta ROAS directly to your Google ROAS is comparing apples to oranges.
Meta (Facebook/Instagram) uses a default 7-day click, 1-day view attribution window. Google uses last-click by default. Neither is "true" ROAS — they're both approximations with different methodologies.
The only reliable way to compare across platforms is to use a third-party attribution tool that sits above all platforms and tracks the actual customer journey.
What a healthy ROAS actually looks like
Before you benchmark against industry averages, calculate your breakeven ROAS. Here's the formula:
Breakeven ROAS = 1 ÷ Gross Margin
If your gross margin is 40%, your breakeven ROAS is 2.5x. Below that, you're losing money on every ad-driven sale even before overheads. Above that, you're contributing to profit.
A target ROAS that gives you a healthy contribution margin after ad spend is typically 1.5-2x your breakeven ROAS. For a 40% margin business, that means targeting 3.75-5x ROAS.
Three things to check right now
1. Is your tracking actually working?
Open Google Analytics and look at your channel attribution report. If "Direct" traffic is unusually high (over 30% of conversions), you probably have tracking gaps — sales being attributed to Direct because the original source wasn't captured.
2. Are you using the same attribution window on all platforms?
Standardise on 7-day click attribution across all platforms you're comparing. Don't compare Meta's 7-day click ROAS to Google's last-click ROAS.
3. What's your blended ROAS?
Total revenue from all paid channels ÷ total ad spend across all channels. This number is harder to manipulate and gives a more honest picture of your paid media performance overall.
Use our free calculator
We built the ProjxAI ROAS Calculator specifically for Australian businesses. It takes your actual inputs — spend by platform, revenue attributed to ads, your industry — and tells you whether you're above or below benchmark, calculates your revenue gap, and gives you specific recommendations based on your result.
It takes two minutes and the results are free. Try the ROAS Calculator →