Your ROAS target is a profit decision, not a marketing one
A 4× ROAS can lose money and a 2× ROAS can be very profitable. It all depends on margin — and most accounts set targets without knowing theirs.
We often hear "we need a ROAS of 4". When we ask where 4 came from, the answer is usually that it sounded good, or a previous agency suggested it. That's a risky way to set the single number that controls your bidding.
Start with break-even
Break-even ROAS is 1 divided by your margin after product costs, shipping, fees and returns. With a 40% margin, break-even is 2.5: every €1 of ad spend needs €2.50 in revenue just to cover itself. With a 25% margin, it's 4. Below that, every sale loses money.
Then decide what you want
- Profit now: set the target comfortably above break-even and accept lower volume.
- Growth: go closer to break-even to win more customers, if repeat purchases make up the difference later.
- Mixed: different targets for different product groups — high-margin items can afford a lower ROAS than low-margin ones.
This is why we split Shopping and PMax campaigns by margin, not just by category. One target across products with 20% and 60% margins means you're overpaying for some and underinvesting in others.
Tell us your margins and we'll tell you what ROAS actually means for your business. It's the first question in every review.
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