What Is a Good ROAS? Benchmarks by Industry & Channel

"What's a good ROAS?"

It is the most common question we get from ecommerce founders. And every time, the answer is the same: it depends on your margins.

A 4x ROAS means nothing in isolation. It could mean you are printing money. It could mean you are bleeding cash on every order. The number alone does not tell you which one.

Most benchmarks you will find online give you a single number — "aim for 4x" — and leave it at that. That advice has cost brands thousands of dollars in wasted ad spend because it ignores the only variable that actually matters: how much profit is left after you fulfil the order.

This post will give you the benchmarks. But more importantly, it will give you the framework to know whether those benchmarks are even relevant to your business.

Why ROAS Benchmarks Are Misleading

ROAS stands for Return on Ad Spend. The formula is simple:

ROAS = Revenue / Ad Spend

A 4x ROAS means you generated $4 in revenue for every $1 spent on ads. Sounds great. But revenue is not profit.

Consider two brands, both running at a 4x ROAS with $10,000 in monthly ad spend:

• Brand A sells supplements with a 75% contribution margin. They spend $10,000 on ads, generate $40,000 in revenue, and keep $30,000 in gross profit. After ad spend, that is $20,000 in contribution profit. Highly profitable.

• Brand B sells furniture with a 25% contribution margin. Same $10,000 in ad spend, same $40,000 in revenue, but only $10,000 in gross profit. After ad spend, they break even. Zero profit from that acquisition spend.

Same ROAS. Completely different outcome. This is why chasing a benchmark number without understanding your own unit economics is dangerous.

The brand with thin margins needs a much higher ROAS to be profitable. The brand with fat margins can afford a lower ROAS and still scale aggressively. Benchmarks ignore this entirely.

How to Calculate Your Break-Even ROAS

Before you look at any benchmark, you need to know one number: your contribution margin (CM1). This is the percentage of revenue left after you subtract the cost of goods sold, shipping, packaging, payment processing fees, and any other variable costs tied directly to fulfilling an order.

CM1% = (Revenue - Variable Costs) / Revenue

Once you have that, your break-even ROAS is straightforward:

Break-Even ROAS = 1 / CM1%

Here is what that looks like in practice:

• 80% CM1: Break-even ROAS = 1.25x

• 70% CM1: Break-even ROAS = 1.43x

• 60% CM1: Break-even ROAS = 1.67x

• 50% CM1: Break-even ROAS = 2.0x

• 40% CM1: Break-even ROAS = 2.5x

• 30% CM1: Break-even ROAS = 3.33x

• 20% CM1: Break-even ROAS = 5.0x

Anything above your break-even ROAS is profit. Anything below is a loss on that transaction.

This is the number you should pin to your wall — not some industry average. A 2x ROAS on a 70% margin product generates real profit. A 5x ROAS on a 20% margin product just barely keeps you alive. The margin determines the target. For a top-level view of overall marketing efficiency, pair ROAS with MER and your allowable MER, not the channel and not the industry.

A Quick Note on Contribution Margin

Most brands overestimate their margins. They forget to include payment gateway fees (typically 1.5–3%), pick and pack costs, returns and refunds, or platform fees. Be honest with the number. An optimistic margin estimate leads to an optimistic ROAS target, which leads to unprofitable scaling. Get the real number from your financials, not a rough estimate in your head.

ROAS Benchmarks by Channel

With that caveat firmly in place, here are the ranges we typically see across channels for Australian ecommerce brands. These are useful as context — not as targets.

Google Search (Brand)

Typical ROAS: 8x–20x+

Brand search captures people who already know you. ROAS here should be high. If it is not, you likely have a landing page or pricing problem. This is not an acquisition channel — it is a conversion channel for existing demand.

Google Search (Non-Brand)

Typical ROAS: 3x–8x

High-intent users actively searching for your product category. This is where you capture demand that already exists. ROAS is typically higher here than on social channels because the user is further down the funnel.

Google Shopping

Typical ROAS: 3x–6x

Product-level ads shown to users with purchase intent. Performance varies wildly by product price point and competition. Lower-priced products tend to see lower ROAS because the click cost is similar but the order value is smaller.

Google Performance Max

Typical ROAS: 2x–5x

PMax blends Search, Shopping, Display, YouTube, and Discovery into one campaign. The blended ROAS is typically lower than pure Search or Shopping because it includes upper-funnel placements. The trade-off is broader reach and (in theory) incremental demand generation. Be cautious — PMax loves to cannibalise brand search traffic and inflate its own reported ROAS.

Meta Ads (Top of Funnel)

Typical ROAS: 1.5x–4x

Meta prospecting is demand creation, not demand capture. You are interrupting someone scrolling through their feed. Expecting the same ROAS as Google Search is a fundamental misunderstanding of what the channel does. A lower ROAS here is acceptable if it is feeding a healthy retargeting funnel and driving new customer acquisition.

Meta Ads (Retargeting)

Typical ROAS: 5x–15x

High ROAS, but be careful attributing too much value here. Many of these users would have converted anyway. Retargeting ROAS always looks impressive. The real question is incrementality.

TikTok Ads

Typical ROAS: 1x–3x

Still maturing as an advertising platform in Australia. Creative burns out fast, attribution is murkier, and the audience skews younger. Brands that win here typically have a low price point, strong visual appeal, and a relentless creative pipeline. Do not judge TikTok on last-click ROAS alone — its influence is often felt in branded search lifts and organic traffic increases.

ROAS Benchmarks by Industry

Industry benchmarks are even more unreliable than channel benchmarks because they flatten the enormous variation in margin structures within each vertical. Two fashion brands can have completely different COGS depending on whether they manufacture in-house or dropship. Still, for context:

Fashion and Apparel

Typical blended ROAS: 3x–5x

Margins vary hugely. Own-label brands with direct manufacturing often sit at 65–75% CM1. Resellers and dropshippers might be at 30–40%. Returns are the silent killer — a 20% return rate destroys your effective margin.

Beauty and Skincare

Typical blended ROAS: 3x–6x

Generally strong margins (60–80% CM1) on small, lightweight products. Replenishment cycles are short, which means the lifetime value argument for accepting lower first-purchase ROAS is legitimate here.

Supplements and Wellness

Typical blended ROAS: 2.5x–5x

Some of the highest margins in ecommerce (70–85% CM1). The challenge is differentiation and trust. Brands with strong subscriptions can afford lower acquisition ROAS because they know the second and third orders are coming.

Food and Beverage

Typical blended ROAS: 2x–4x

Lower margins (30–50% CM1), heavier products with higher shipping costs, and perishability constraints. ROAS targets need to be higher here relative to other categories, but AOV is often lower, which makes it harder.

Home and Furniture

Typical blended ROAS: 2x–4x

Higher AOV but longer consideration cycles and lower purchase frequency. Margins sit at 40–60% typically. The challenge is that customers rarely buy a second time within the same year, so you cannot rely on LTV to justify lower first-purchase ROAS.

Why POAS Is the Better Question

If ROAS measures revenue return, POAS (Profit on Ad Spend) measures what actually matters: the profit generated per dollar of ad spend.

POAS = Gross Profit / Ad Spend

POAS accounts for the margin on each product. A $100 order on a 70% margin product contributes $70 in gross profit. A $100 order on a 30% margin product contributes $30. ROAS treats both as equal. POAS does not.

This matters enormously when you sell products at different price points and margins. Your ad platform optimises for revenue (or conversions) by default. It does not know or care that the product it is pushing has a 15% margin while the one it is ignoring has a 70% margin. POAS-based optimisation fixes this by feeding profit data back into your campaigns.

We have written a detailed breakdown of how ROAS and POAS compare and when to use each. If you are still optimising purely on ROAS, that post is worth reading next.

The short version: a 1x POAS means you broke even after ad spend and COGS. Anything above 1x is genuine profit. No margin calculation required — the metric already accounts for it.

The Real Framework: Margins First, Targets Second

Here is the process we use with every ecommerce brand we work with:

• Step 1: Calculate your true CM1 per product (or at minimum, per product category). Include every variable cost. Do not guess.

• Step 2: Calculate your break-even ROAS using the formula above. This is your floor — the minimum ROAS where you are not losing money on ad spend.

• Step 3: Set your target ROAS above break-even based on your required profit margin and fixed cost coverage. If your fixed overheads are $20,000/month, your ad spend needs to generate enough contribution profit above break-even to cover that.

• Step 4: Apply different targets to different channels. Your ad budget should come from your P&L, not a gut feel. Google Search should be held to a higher standard than Meta prospecting. Do not hold every channel to the same blended target.

• Step 5: Move toward POAS-based reporting and optimisation as soon as your data infrastructure allows it. Feed margin data into your ad platforms so they can optimise for profit, not just revenue.

Benchmarks give you a sense of what is normal. They tell you if you are wildly off course. But they should never be your target. Your target comes from your own financials.

A brand with 75% margins and a 2.5x ROAS is in a far stronger position than a brand with 25% margins and a 6x ROAS. The first brand has room to scale. The second is barely surviving.

Stop asking "what is a good ROAS?" Start asking "what ROAS do I need to be profitable?" The answer is in your margins. Everything else is context.