Definition
What is Break-Even ROAS?
The minimum return on ad spend needed to cover the cost of running an ad campaign.
Break-even ROAS is the revenue-to-ad-spend ratio at which a campaign neither makes nor loses money on a gross margin basis. Spending below this threshold destroys margin; spending above it is profitable. It is determined by gross margin — the lower the margin, the higher the ROAS required.
Formula
Break-Even ROAS = 1 ÷ Gross MarginExample
A product with 40% gross margin requires a break-even ROAS of 1 ÷ 0.40 = 2.5×. Every $1 of ad spend must generate at least $2.50 in revenue.