R

What is RoAS?

Definition, examples, and more

Definition

Return on Ad Spend - This is usually measured as a percentage or ratio. For example, you may have 120% return on ad spend or 3x return on ad spend depending on the time period you're looking at. It's measured by taking how much you spent on acquiring a new user compared to the revenue that user generated. You generally want to measure this by acquisition channel or by time period. But usually both.

How to Calculate

ROAS = Revenue Generated from Ad Spend / Total Ad Spend. Can be expressed as a ratio (3.5x) or percentage (350%). Always specify the time window: 30-day ROAS, 90-day ROAS, 12-month ROAS.

Example

A fitness app spends $10,000 on Apple Search Ads and generates $35,000 in subscriber revenue within 6 months. 6-month ROAS = $35,000 / $10,000 = 3.5x (or 350%). At 12 months, cumulative revenue reaches $52,000, pushing ROAS to 5.2x.

Why RoAS Matters

ROAS determines which campaigns to scale and which to kill. A meditation app found their TikTok campaigns showed 1.2x ROAS at 30 days (barely breaking even) but 4.5x at 12 months because TikTok users had unexpectedly high retention. Without measuring long-horizon ROAS, they would have cut their most profitable channel.

Frequently Asked Questions

What is a good ROAS for subscription apps?

At 30 days, 0.5-1.5x is normal (you are still in payback). At 12 months, 2-4x is healthy. Above 4x means you should scale aggressively. Below 1x at 12 months means the channel is unprofitable.

Should I measure ROAS on gross or net revenue?

Net revenue (after platform fees) for true profitability analysis. Gross ROAS inflates results by 30-40%. A campaign showing 3x gross ROAS is actually ~2.1x net — a meaningful difference for budget decisions.

How do I improve ROAS?

Optimize for subscriber quality (not just installs), improve trial-to-paid conversion, reduce churn to extend LTV, and shift budget to channels with highest long-term ROAS. Better onboarding improves ROAS across all channels simultaneously.

Category
Subscription App Terminology
Related Area
Mobile App Growth & Monetization

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