February 20, 2026 — Klarvoyance Team
Understanding ROAS Beyond the Basics
ROAS is the most-cited metric in performance marketing — and the most misunderstood. Here is what most brands get wrong and how to fix it.
Return on Ad Spend is the metric every brand tracks. It is simple to calculate, easy to report, and almost always misleading when used in isolation.
The standard formula is incomplete
ROAS divides revenue by ad spend. A 4x ROAS sounds impressive until you factor in COGS, shipping, returns, and the organic traffic that would have converted anyway. The number that matters is incremental ROAS — the revenue your ads actually caused, net of everything else.
Blended vs. platform ROAS
Meta and Google each claim credit for the same conversion. If you sum their reported ROAS, you get a number that does not exist in reality. Blended ROAS — total revenue divided by total ad spend across all channels — gives you the honest picture. Platform-reported ROAS is a starting point, not a source of truth.
What to track instead
The most useful performance framework combines three lenses:
- Blended ROAS for the real efficiency number
- Marginal ROAS to understand the return on your next dollar of spend
- Customer acquisition cost (CAC) payback period to measure how quickly new customers become profitable
When all three metrics point in the same direction, you have a genuine signal. When they diverge, you have a conversation worth having before scaling.
The bottom line
ROAS is not wrong. It is just not enough. The brands that scale sustainably are the ones that look beyond a single ratio and build a measurement system that accounts for incrementality, attribution overlap, and unit economics.
If your current reporting does not give you that clarity, it is worth asking why.