Source: https://oguzerol.com/en/roas-optimization/

Google Ads

# ROAS Optimisation | Raising Return on Ad Spend

[Oğuz Erol](https://oguzerol.com/en/about-me/)  |  3 min read

ROAS is return on ad spend — the revenue returned for every unit spent. It looks like a simple metric, but most decisions built on it turn out wrong because how it is calculated is misunderstood.

## Revenue ROAS misleads

Standard ROAS is calculated on revenue and ignores margin entirely. A ROAS that looks high on a low-margin product may actually be losing money; a ROAS that looks low on a high-margin product may be profitable.

So when setting the target I first calculate the break-even point: at what ROAS level does your margin cover costs. The target sits above that. Industry averages floating around are meaningless without knowing your own cost structure.

## The reality of returns and shipping

Return rate and shipping cost are the frequently skipped items. A category with a high return rate can look like the best-performing area of the account when viewed on revenue, while actually losing money.

Similarly, in shops offering free shipping, low-basket orders drag profit down even when ROAS looks fine. When these items are not reflected in conversion value, the algorithm promotes the wrong products.

## The levers that raise return

The first lever is product selection: concentrating budget on high-margin products that convert. This requires separating product groups on the [Google Shopping](https://oguzerol.com/en/google-shopping-ads/) and [Performance Max](https://oguzerol.com/en/performance-max-ads/) side; if everything sits in one campaign, that separation is impossible.

The second is basket size: getting higher-value orders from the same ad spend raises ROAS directly. The third is [conversion rate](https://oguzerol.com/en/conversion-optimization/): every visitor lost on the page is a click you already paid for.

The fourth is cutting wasted spend. Moving non-converting searches to the [negative list](https://oguzerol.com/en/negative-keyword-management/) raises ROAS quickly, because the denominator shrinks.

## Balancing target ROAS against volume

Raising the target increases return but reduces volume — the algorithm enters fewer auctions. Setting the target too aggressively can nearly stop the campaign.

The right approach is gradual: move the target up from current performance in small steps and watch volume at each one. If your goal is growth, more sales at a lower ROAS may be right; if your goal is profit, the opposite. That is a strategic choice.

**How do we start?** First I look at your real margin structure and your current conversion value setup. We work out your break-even point and a realistic target together. You can reach me from the [contact page](https://oguzerol.com/en/contact/).

## Frequently Asked Questions

### Should I track ROAS or ROI?

ROAS only accounts for ad spend, ROI for all costs. ROAS is practical for day-to-day campaign decisions; ROI is what you need when deciding whether the business is profitable.

### How do I send margin data to Google Ads?

By bringing conversion value closer to gross profit instead of revenue. The method varies by stack, but the outcome is the same: the closer the value the algorithm sees is to real profit, the better its decisions.

### Should I start a new campaign with a target ROAS?

Usually not. A target set before data accumulates can stop the campaign from serving at all. Accumulating conversions first and moving to target return afterwards is healthier.

[Back to top ↑](https://oguzerol.com/en/roas-optimization/#icerik)

## You may also find these useful

[E-Commerce Google Ads Management | ROAS-FocusedGoogle Ads management for e-commerce: feed quality, value-based bidding, cart abandonment campaigns and measurement that shows real profitability.](https://oguzerol.com/en/e-commerce-google-ads-management/)[Google Shopping Ads | Performance Max ManagementShopping and Performance Max campaigns for your e-commerce store. Product feed, conversion tracking, and ROAS optimization, all in one place.](https://oguzerol.com/en/google-shopping-ads/)[CPA Optimization | Lowering Cost Per ConversionGoogle Ads CPA optimization: target cost-per-conversion strategy, funnel analysis, and conversion-rate improvement to sustainably lower CPA.](https://oguzerol.com/en/cpa-optimization/)

[Browse all articles →](https://oguzerol.com/en/articles/)

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Is 40 hours a week?

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