ROAS (Return on Ad Spend)

What is ROAS?

ROAS is the gross revenue an advertising dollar returns, and it is the most quoted and most misleading number in performance marketing, because it stops at revenue and never touches margin, retention, or blended cost.

The formula and a worked example

ROAS = revenue from ads ÷ ad spend. Work an example with round, illustrative numbers. A campaign spends $10,000 and drives $30,000 in revenue, a clean 3× ROAS that looks like a winner on the dashboard. Now bring in cost of goods: at 50% COGS on a $150 GLP-1 first order, that 3× is only 1.5× on gross profit, and once intake, pharmacy, and payment costs are added the first order can merely break even. The revenue line never moved, but the profit story is completely different.

Why ROAS misleads on its own

ROAS answers a demand question (how much revenue does a dollar pull in?) not a business question (how much profit does it leave behind?). The gap opens the moment margins vary across the products a campaign can promote, which for supplement and telehealth catalogs is almost always. Told to maximize revenue, the platform will happily scale your cheapest, lowest-margin offer while blended ROAS holds and blended profit erodes.

Reported ROAS is inflated too

Even as a demand signal, platform-reported ROAS overstates itself, because each channel claims conversions inside its own attribution window and counts view-through and assisted sales it did not solely cause. When a patient sees a Meta ad, a Google ad, and an email before subscribing, all three can book the same order, so summed platform ROAS routinely exceeds real revenue. That is exactly the double-counting the marketing efficiency ratio removes and that incrementality tests correct, which is why ROAS belongs to the tactical layer and never to the spend-ceiling decision.

Why it matters for health and DTC brands

Industry benchmark data put health and wellness ROAS around 2.12 in 2026 (down 15.6% year over year), which means top-line ROAS in health is often below the point where a first order pays for itself. That is fine for subscription telehealth as long as rebills repay the gap, so the better decision rule is to judge campaigns on CAC payback and LTV:CAC and tolerate a first-order ROAS below break-even when the subscription reliably earns it back. Use ROAS for the tactical layer (comparing ad sets and creatives inside a platform), then bring in POAS for margin and marketing efficiency ratio (MER) for the whole account. See where a campaign really lands with the POAS calculator.

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