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ROAS (Return on Ad Spend)
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Definition
ROAS stands for Return on Ad Spend. It’s a core metric used to evaluate how much revenue is generated for every dollar spent on advertising. The formula is simple:
ROAS = Revenue from Ads / Cost of Ads
For example, if a brand spends $10,000 on ads and earns $30,000 in revenue from those ads, the ROAS is 3.0x.
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Purpose
ROAS is a key financial indicator that tells brands whether their paid media is profitable. It helps marketing and finance teams:
— Gauge campaign efficiency
— Set and adjust budget caps
— Prioritize winning channels, creatives, and products
— Align growth targets with margin constraints
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Why It’s Essential for Fashion E-Commerce
In fashion, where margins vary across products and seasons, ROAS must be interpreted with nuance. A 3.0x ROAS might be a win for one brand—or a loss for another—depending on:
— Gross margins
— Shipping & fulfillment costs
— Returns & discount rates
— Build full-funnel strategies from awareness to conversion
— CAC (Customer Acquisition Cost) tolerance
At Veicolo, we help brands define their true breakeven ROAS, then optimize campaigns to exceed it sustainably.
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Core Considerations
Blended ROAS
Measures total revenue vs. total ad spend across all platforms
Platform ROAS
Metrics reported by Meta, TikTok, Google, etc.—often inflated
MER (Marketing Efficiency Ratio)
A higher-level metric often used for financial planning
LTV-ROAS
Incorporates customer lifetime value, not just the first purchase
Attribution Windows
ROAS shifts depending on 1-day, 7-day, or 28-day tracking
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Veicolo’s Approach
We don’t chase high ROAS numbers. We chase profitable scale.
— We work with clients to set ROAS benchmarks based on their actual margins
— Our testing frameworks track ROAS across creative, audience, and offer variables
— We integrate tools like Northbeam and Triple Whale for more reliable attribution
— Our media buyers and strategists collaborate with finance to set growth caps and pacing models
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Use Cases
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