How to Increase ROAS

ROAS, or return on ad spend, is calculated as:

ROAS = Attributed revenue ÷ Advertising spend

A 4.0x ROAS means a campaign generated $4 in attributed revenue for every $1 spent. Shopify uses the same basic definition, although platforms may calculate revenue differently depending on discounts, reversals, taxes and shipping.

Google's enhanced conversions research cited below covered 99 global conversion lift studies conducted between April 2024 and April 2025. The reported result is an average, not a guarantee.

The Fastest Way to Find Your ROAS Problem

Use this simplified formula:

ROAS = Conversion rate × Average order value ÷ Cost per click

It gives you a starting point for diagnosing the problem:

1. Fix Conversion Tracking Before Changing Campaigns

Incorrect conversion values can make every later decision look wrong.

Check that your advertising platform is receiving:

• The actual purchase value, rather than the same fixed value for every sale
• Correct transaction IDs to prevent duplicate purchases
• Refunds, cancellations and returns where possible
• Qualified leads or closed deals instead of low-value form submissions
• Separate primary conversions from secondary actions such as page views, email signups and add-to-carts

For lead generation, estimate each lead's value using the lead-to-customer rate, average customer revenue and margin. A sales-qualified lead should usually be worth more than an unqualified enquiry.

Google's value-based bidding systems use reported conversion values to decide which auctions and users to prioritize. Google reports that advertisers bidding to conversion value who implemented enhanced conversions saw an average 8% incremental ROAS in the 99 studies mentioned above. That is a reported average, not an expected result for every account.

2. Calculate Your Break-Even ROAS

A high ROAS does not automatically mean a campaign is profitable.

Use this formula:

Break-even ROAS = 1 ÷ Contribution margin

Your contribution margin should account for costs such as:

• Product or service fulfillment
• Cost of goods sold
• Payment processing
• Shipping subsidies
• Discounts
• Returns and refunds
• Sales commissions

A campaign producing 3.0x ROAS may be profitable at a 50% contribution margin but unprofitable at a 25% margin.

Calculate margin by product, campaign and customer type. Revenue alone is not enough if some products generate much less profit than others.

3. Increase Conversion Rate After the Click

If your ads generate clicks but few purchases or leads, improve the landing experience before increasing media spend.

Focus on:

• Matching the landing page to the ad message
• Showing the product, price and main benefit immediately
• Displaying delivery times, returns and payment options clearly
• Adding reviews, demonstrations or proof near the purchase decision
• Removing unnecessary form fields
• Improving mobile checkout
• Reducing surprise fees at checkout
• Making the call to action specific and visible

An ad promising "free two-day shipping" should lead to a page where the shipping terms are easy to find. When the ad promise and landing page do not match, you can end up paying for cheap clicks that do not become customers.

Test one major variable at a time, such as the offer, landing page headline, product bundle or checkout flow. Measure completed purchases or qualified leads, not clicks alone.

4. Increase Average Order Value

Increasing average order value can raise ROAS because each conversion produces more revenue.

Useful tactics include:

• Product bundles
• Quantity discounts
• Cross-sells at checkout
• Relevant add-ons
• Free shipping thresholds
• Premium versions or upgrades
• Subscriptions for repeat-use products
• Post-purchase offers

Suppose a campaign generates 100 orders at a $60 average order value. Revenue is $6,000. If those 100 orders rise to a $72 average order value, revenue becomes $7,200 without additional ad spend. ROAS increases by 20%, assuming advertising cost and attribution stay the same.

Discounts need more care. A larger order can still reduce profit if the discount, fulfillment cost or return rate increases faster than revenue.

5. Remove Low-Quality Advertising Spend

Review performance by:

• Search term
• Keyword
• Product
• Audience
• Placement
• Device
• Location
• Time of day
• New versus returning customer
• Campaign and ad group

Reduce or exclude segments that repeatedly spend without producing profitable conversions. In search campaigns, add negative keywords for irrelevant intent. In shopping campaigns, separate products with very different margins and conversion rates.

For paid social campaigns, check creative fatigue and frequency. An ad that worked well at launch may lose efficiency when the same audience sees it repeatedly.

Do not make decisions from one or two days of data. Use a period long enough to include your normal conversion delay, promotions and weekly demand pattern.

6. Improve Your Advertising Creative and Offer

Better creative can improve both click-through rate and conversion quality.

Test meaningful differences such as:

• Product demonstration versus lifestyle imagery
• Customer proof versus feature-led messaging
• Price-led offer versus benefit-led messaging
• Short-form video versus static image
• Problem-focused headline versus outcome-focused headline
• User-generated content versus polished brand content
• Specific audience angle versus general messaging

Do not test only colors or button text if the offer itself is weak. The largest gains often come from changing the reason someone should buy, rather than making small design adjustments.

A strong ad should answer three questions quickly:

1. What is being offered?
2. Why is it relevant to this person?
3. Why should the person act now?

7. Use Value-Based Bidding Correctly

Value-based bidding is useful when conversions have different economic values. One ecommerce order may be worth $40 while another is worth $400. One lead may also be much more likely to become a customer than another.

Google Ads Target ROAS bidding uses reported conversion values to pursue a specified average value per advertising dollar. Google states that setting the target too high can restrict traffic, while lowering the target can allow the system to enter more auctions and generate more conversion volume.

Use this distinction:

• Want more total revenue or conversion value? Consider a lower target ROAS or Maximize conversion value.
• Want higher efficiency? Consider a higher target ROAS, accepting that volume may fall.
• Have unreliable or insufficient value data? Fix tracking before using value-based bidding.

Google lists at least 15 conversions in the past 30 days at the conversion tracking level for Search and Shopping campaigns using Target ROAS. Treat that as a readiness guideline, not a replacement for accurate conversion values and sufficient business data.

8. Increase Customer Lifetime Value

A first purchase may not represent the full value of a customer.

Improve the economics of paid acquisition through:

• Email and SMS retention
• Replenishment reminders
• Subscriptions
• Loyalty programs
• Cross-sells after purchase
• Win-back campaigns
• Referral incentives
• Better onboarding for new customers

For subscription or repeat-purchase businesses, compare customer acquisition cost with expected contribution profit over a defined period. Do not assume future purchases will happen automatically. Use actual repeat-purchase data and account for churn.

9. Scale Using Marginal ROAS, Not Average ROAS

Average ROAS tells you how a campaign performed overall. Marginal ROAS tells you whether the next dollar of spend is productive.

Use:

Marginal ROAS = Incremental revenue ÷ Incremental advertising spend

A campaign may have a strong average ROAS because its first dollars performed well, while additional spend reaches less qualified users. Increase budgets gradually and check whether the extra spend maintains an acceptable marginal ROAS.

Do not change the budget, bidding strategy, targeting, landing page and creative at the same time. Several changes made together make it difficult to identify what improved or damaged performance.

A Practical ROAS Improvement Sequence

Follow this order:

1. Audit conversion tracking and revenue values.
2. Calculate break-even ROAS using contribution margin.
3. Identify whether the main issue is CPC, conversion rate, AOV or product margin.
4. Remove clearly unprofitable traffic and products.
5. Improve the landing page, checkout and offer.
6. Test new creative angles and value propositions.
7. Increase order value through bundles and relevant upsells.
8. Apply value-based bidding when the data is reliable.
9. Scale based on incremental revenue and marginal ROAS.

A bidding target cannot repair bad tracking, weak margins or a poor landing page. Set the target after you understand the economics of each conversion, then scale only when the next dollar of spend still makes sense.