What is ROAS? (Return on Ad Spend Explained)

ROAS—Return on Ad Spend—measures how much revenue you generate for every dollar you spend on advertising.

It's the metric that tells you whether your user acquisition campaigns are actually profitable.

The formula:

ROAS = Total Revenue from Ads / Total Ad Spend

If you spent $10,000 on a Meta campaign and generated $30,000 in revenue from those users, your ROAS is 3x (or 300%).

In 2025, ROAS has replaced CPI as the primary metric for mobile user acquisition. The reason is simple: installs don't matter if users don't generate revenue.

Why ROAS Matters

CPI tells you what you're paying to acquire users. ROAS tells you if those users are worth it.

A $2 CPI might seem efficient, but if those users churn immediately and generate $0.50 in revenue, you're losing money.

A $10 CPI might seem expensive, but if those users generate $40 in revenue, you're 4x profitable.

ROAS is the bridge between acquisition cost and business outcomes. It's the metric that determines whether you can scale profitably or need to pause and fix your funnel.

How ROAS is Calculated

The basic formula is straightforward:

ROAS = Revenue / Ad Spend

But mobile app ROAS has important nuances:

Time-Based ROAS

Mobile apps typically track ROAS at multiple time intervals:

• Day 0 ROAS: Revenue generated on install day
• Day 3 ROAS: Revenue within 3 days of install
• Day 7 ROAS: Revenue within 7 days of install
• Day 30 ROAS: Revenue within 30 days of install

Which timeframe matters depends on your monetization model.

Ad-monetized apps (especially hyper-casual games) care most about Day 0-3 ROAS because users generate revenue immediately.

Subscription apps care more about Day 7-30 ROAS because users need time to start trials and convert to paid.

Predicted ROAS vs Actual ROAS

Because it takes time for users to generate revenue, most growth teams use predicted ROAS based on early signals.

Day 3 ROAS is a strong predictor of Day 30 ROAS. If your Day 3 ROAS is 15% and historically that cohort reaches 120% by Day 30, you can make scaling decisions before waiting 30 days.

This is how platforms like Meta and Google optimize for value: they predict long-term ROAS based on early user behavior.

ROAS vs ROI: What's the Difference?

ROAS and ROI both measure profitability, but they're not the same.

ROAS = Revenue / Ad Spend

ROI = (Revenue - Total Costs) / Total Costs

ROAS only accounts for ad spend. ROI accounts for all costs (ad spend, development, support, server costs, payment processing, etc.).

A 200% ROAS means you're generating $2 for every $1 in ad spend. But if your total costs (including non-ad expenses) are $1.50, your actual profit is only $0.50, which is a 33% ROI.

For day-to-day UA optimization, most teams focus on ROAS. For business-level profitability, ROI is what matters.

What's a Good ROAS?

There's no universal ROAS benchmark because it depends entirely on your business model and cost structure.

Here's what the data shows:

By Monetization Model

Ad-monetized apps (hyper-casual games):

• Target: 1.5x - 2x ROAS at Day 7
• Breakeven is typically 1.2x - 1.4x after accounting for non-ad costs

In-app purchase apps (games, productivity):

• Target: 1x - 1.5x ROAS at Day 7
• Target: 2x - 4x ROAS at Day 30
• High variance because revenue comes from a small % of users

Subscription apps:

• Target: 0.5x - 1x ROAS at Day 7
• Target: 1x - 2x ROAS at Day 30
• Breakeven can take 60-90 days depending on pricing

By App Type

Apps with strong retention and high LTV can operate profitably at lower ROAS because users continue generating revenue for months or years.

Apps with weak retention need higher immediate ROAS to break even quickly.

Industry Benchmarks (2025)

Based on current data, here's what growth teams are targeting:

• Day 3 ROAS: 3% - 12% (used as early indicator)
• Day 7 ROAS: 20% - 60%
• Day 30 ROAS: 100% - 200%

But these are averages. Your target depends on your unit economics, retention curves, and cost structure.

Why ROAS is Replacing CPI

In the early days of mobile UA (2010-2018), CPI was the dominant metric. Growth teams optimized for low CPI and tracked retention separately.

That approach worked when iOS 14.5 hadn't happened yet and attribution was deterministic. You could easily connect install cost to downstream revenue.

Post-ATT (App Tracking Transparency), attribution became modeled and probabilistic. Platforms needed to optimize for outcomes, not just installs.

This shift made ROAS the preferred metric because:

1. It measures actual business value: Revenue matters more than installs
2. It accounts for user quality: High-quality users justify higher acquisition costs
3. It enables better optimization: Platforms can optimize for revenue, not just volume

In 2025, Meta, Google, and TikTok all recommend optimizing for value events (purchases, subscriptions) rather than installs. ROAS is the metric that tracks whether that optimization is working.

Common ROAS Mistakes

1. Optimizing for Day 0 ROAS Only

If you're a subscription app and only look at Day 0 ROAS, you'll think every campaign is failing. Users need time to convert.

Match your ROAS window to your monetization model.

2. Ignoring Cohort-Level ROAS

Campaign-level ROAS can be misleading if different cohorts behave differently.

A campaign with 150% ROAS might have one week at 300% and another at 50%. Cohort analysis shows you which users are actually profitable.

3. Not Accounting for Organic Lift

If your paid campaigns drive brand awareness that leads to organic installs, your true ROAS is higher than platform-reported ROAS.

Incrementality testing helps measure this, but most teams ignore it and undervalue their campaigns.

4. Setting the Same ROAS Target for All Channels

Apple Search Ads users convert faster than TikTok users. Your Day 7 ROAS target should reflect these differences.

Channel-specific ROAS targets lead to better budget allocation.

How to Improve ROAS

If your ROAS is below target, here's what typically moves the needle:

1. Improve monetization

Better onboarding, pricing optimization, and engagement mechanics increase revenue per user, which directly lifts ROAS.

2. Improve retention

Users who stick around generate more revenue. A 10% improvement in Day 7 retention can lift Day 30 ROAS by 20-30%.

3. Target higher-intent users

Better creative and targeting attract users more likely to pay. This increases ROAS even if CPI goes up.

4. Optimize paywall timing

For subscription apps, showing the paywall at the right moment (not too early, not too late) can increase conversion rates by 30-50%.

5. Test new creative

Different ad creative attracts different user types. Some creative will drive higher ROAS even at the same CPI.

ROAS and Scaling

The relationship between scale and ROAS is critical.

When you increase spend, ROAS typically declines because you're reaching less relevant audiences. This is called marginal ROAS.

If your current spend is $10K/day at 200% ROAS, scaling to $20K/day might drop you to 150% ROAS. The question is whether 150% is still profitable.

Most teams scale until marginal ROAS hits their breakeven threshold, then hold spend steady.

Key Benchmarks to Remember

• Day 3 ROAS is a strong early indicator (target: 3-12%)
• Day 30 ROAS for most apps should be 100-200% to be sustainable
• Ad-monetized apps need 150-200% ROAS at Day 7
• Subscription apps can operate at 50-100% ROAS at Day 7 if retention is strong
• ROAS targets should vary by channel based on user quality

FAQs

What is ROAS in mobile marketing?

ROAS (Return on Ad Spend) measures revenue generated per dollar spent on advertising. It's calculated as Total Revenue / Total Ad Spend. A 3x ROAS (or 300%) means you earn $3 for every $1 spent on ads.

What's a good ROAS for mobile apps?

There's no universal ROAS benchmark. Some apps need 3% Day-3 ROAS, others need 12%. It depends on your monetization model, retention, and how quickly you generate revenue. Most subscription apps target 100-200% ROAS at Day 30.

Why is ROAS better than CPI?

ROAS measures actual revenue generated, while CPI only measures cost per install. ROAS tells you if campaigns are profitable. A $2 CPI could be losing money if users don't monetize, while a $10 CPI could be profitable with high LTV users.

How do I calculate ROAS?

ROAS = Revenue / Ad Spend. If you spent $5,000 and generated $15,000 in revenue, your ROAS is 3x or 300%. Most analytics platforms calculate this automatically at different time windows (Day 3, Day 7, Day 30).

What's the difference between ROAS and ROI?

ROAS = Revenue / Ad Spend. ROI = (Revenue - All Costs) / All Costs. ROAS only considers ad spend. ROI includes all business costs (servers, support, development, etc.). ROAS is used for campaign optimization; ROI measures overall profitability.

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ROAS is the metric that connects user acquisition to business outcomes. It's not just about how many users you acquire—it's about whether those users make your business money.