What is ROAS?
Revenue generated per dollar of ad spend. ROAS of 2x means $2 of revenue per $1 spent. Healthy day-7 ROAS for a UGC ad in DTC is 2x or higher. 1.2-2x is worth investigating. Below 1x means the ad is unprofitable at current unit economics.
ROAS is a lagging indicator and noisy at low spend. At $30 spent on a single ad, ROAS is too noisy to trust as a kill signal — funnel metrics (3-second view rate, CTR, add-to-cart rate) are the leading indicators. Use ROAS to validate winners at day 7+ once $200+ has been spent on the ad, not to pick winners on day 3 of testing. ROAS is also affected by attribution windows: a 7-day click attribution window will show different ROAS than a 1-day click window for the same campaign.
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