What is a good ROAS for an eCommerce brand at €1M, €5M and €20M?
ROAS targets should fall as a brand grows, not rise. Here is what a realistic blended and platform ROAS looks like at each revenue stage, and how to set yours from margin.
Short answer
A good ROAS is any ROAS above your break-even, which is 1 divided by your gross margin. At €1M revenue most brands target 3–5x blended ROAS, at €5M around 2.5–3.5x, and at €20M often 2–2.8x, because scale buys volume at a lower efficiency. The target falls as the brand grows.
Key takeaways
- Break-even ROAS = 1 ÷ gross margin. A 45% margin means you break even at roughly 2.2x.
- Blended ROAS (total revenue ÷ total ad spend) is the number to steer by; platform ROAS is a diagnostic, not a target.
- Efficiency drops as spend grows — that is normal, not failure, as long as contribution profit keeps rising.
- A rising ROAS with flat revenue usually means you are under-spending, not winning.
- Set the target from margin, repeat-purchase rate and growth appetite — never from an industry average.
Start from margin, not from a benchmark
Every ROAS conversation should begin with one calculation: divide 1 by your gross margin after cost of goods, shipping, payment fees and returns. That is the point where advertising stops costing you money. A brand with a 70% true margin breaks even near 1.4x. A brand with a 30% margin needs 3.3x just to stand still.
This is why copying someone else's ROAS target is dangerous. Two brands in the same category, with the same ad account structure and the same creative, can have break-even points that differ by 2x purely because one ships heavy goods and accepts 25% returns.
| True gross margin | Break-even ROAS | Healthy target |
|---|---|---|
| 70% | 1.4x | 2.0–2.5x |
| 60% | 1.7x | 2.4–3.0x |
| 50% | 2.0x | 2.8–3.5x |
| 40% | 2.5x | 3.5–4.5x |
| 30% | 3.3x | 4.5–6.0x |
True margin means after COGS, shipping, payment fees and expected returns — not the margin in your product sheet.
What changes between €1M, €5M and €20M
At €1M in revenue you are usually harvesting the most obvious demand: brand search, warm retargeting, a handful of proven creatives on Meta. Efficiency is high because the audience is small and pre-qualified. Blended ROAS of 3–5x is common and, frankly, easy to overrate.
At €5M you have exhausted the cheap demand. Budget now goes into prospecting, new creative angles and a second or third channel. Platform ROAS falls, blended ROAS lands nearer 2.5–3.5x, and the discipline shifts to contribution margin per order rather than headline ratio.
At €20M you are buying market share. A 2–2.8x blended ROAS at €400,000 monthly spend produces vastly more profit than a 5x at €60,000. Brands that refuse to let ROAS fall at this stage cap themselves at their current size.
| Annual revenue | Blended ROAS band | Primary constraint |
|---|---|---|
| €0.5–1M | 3.0–5.0x | Creative volume and tracking quality |
| €1–5M | 2.5–3.5x | Audience saturation on the first channel |
| €5–20M | 2.2–3.0x | New-channel learning cost |
| €20M+ | 2.0–2.8x | Incrementality and margin structure |
Blended ROAS beats platform ROAS
Platform-reported ROAS is the sum of every channel's most generous claim on the same order. Add up Meta, Google and TikTok and you will routinely find 130–160% of your actual revenue attributed. That is not fraud, it is overlapping attribution windows.
Blended ROAS — total store revenue divided by total ad spend across all channels — cannot be double-counted. Use it to decide how much to spend in total. Use platform ROAS only to decide which campaign inside a channel to scale or cut.
- Steer total budget with blended ROAS or MER
- Steer campaign decisions with platform ROAS and cost per acquisition
- Sanity-check both against contribution profit in your P&L each month
When a high ROAS is a bad result
A 9x ROAS on €4,000 of monthly spend in a category where you could profitably spend €40,000 is a missed quarter, not an achievement. The classic signature is a brand-search-heavy account: the ads harvest people who already typed your name, the ratio looks spectacular, and new customer acquisition is flat.
The test is simple. Split new-customer revenue from returning-customer revenue and calculate ROAS on new customers only. If it collapses, your ads are taking credit for demand you already had.
How we set targets at Vibe Digital
We calculate break-even ROAS from your real margin, agree a contribution-profit floor rather than a ratio, and then scale spend until that floor is reached. Across 700+ client cooperations our eCommerce accounts average +913% return on ad spend, but the number we actually manage against is euros of contribution profit per month.
Every reported figure states its attribution window and data source, so a 3.1x in month one and a 2.6x in month four can be compared honestly rather than argued about.
FAQ
Is 2x ROAS good or bad?
It depends entirely on margin. At a 70% gross margin, 2x is comfortably profitable. At a 35% margin, 2x loses money on every order. Calculate 1 ÷ gross margin first; that number is the only honest verdict on a 2x.
Why is my Meta ROAS higher than my blended ROAS?
Meta claims credit for conversions inside its attribution window, including customers who would have bought anyway or who were also touched by Google and email. Blended ROAS divides total revenue by total spend, so nothing is double-counted, which is why it is always the lower and more honest number.
Should ROAS targets differ for prospecting and retargeting?
Yes. Retargeting typically returns 4–10x because it converts existing demand, while prospecting often sits at 1.2–2.5x. Judging both against one blended target will cause you to cut the prospecting that feeds the retargeting.
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