All guidesAdvertising · 6 min
ROAS for marketplace sellers: what the number misses
Why a good ROAS can still be unprofitable once product cost, fees and shipping enter the calculation.
ROAS is revenue divided by ad spend
ROAS tells you how much revenue came back for each pound spent on ads. It does not tell you how much profit survived.
A seller with high product costs needs a higher ROAS than a seller with a high-margin product.
Break-even ROAS depends on margin
The thinner the margin before ads, the higher the ROAS needed to break even.
This is why copying another seller's target ROAS can be dangerous. Their costs may be completely different.
Use profit after ads as the final check
ROAS is useful for diagnosing campaigns. Profit after ads is better for deciding whether to scale.
If a campaign has acceptable ROAS but poor profit, improve price, conversion, order value or product cost before increasing spend.