Spending money on ads is easy, but making sure that money brings in good returns? That’s where it gets tricky. That’s why marketers rely on a simple but powerful number: ROAS, or Return on Ad Spend. It shows how much money you make for every dollar you spend on advertising.
But here’s the thing—not every business should expect the same ROAS. A clothing store, for example, won’t have the same goals as a software company. That’s why looking at ROAS benchmarks by industry can help you figure out what’s normal, what’s great, and what needs fixing.
In this blog, we’ll explain why ROAS benchmarks matter, how they help you improve your marketing strategy, and how to use them to make smarter decisions with your ad budget.
What is ROAS?
ROAS is a metric that measures the revenue generated for every dollar spent on advertising. It helps marketers evaluate the performance of their advertising campaigns.
The formula for calculating ROAS is simple:
ROAS = Revenue from Ads ÷ Cost of Ads
For example, if your campaign generated $10,000 in revenue and you spent $2,000 on ads, your ROAS would be 5:1, meaning you earned $5 for every $1 spent on ads.
You can use ROAS to check how well your ads are working on platforms like Google, Facebook, Instagram, and more.
Why ROAS Benchmarks Matter
When you spend money on ads, it’s important to know if that money is bringing in the right results. That’s where ROAS benchmarks come in—they help you understand what kind of returns are normal for your type of business.
Here are some of the reasons why ROAS benchmarks are essential for your marketing strategy:
1. Helps You Set Realistic Goals
Not every business can expect the same results from ads.
For example, an online store might get a better ROAS than a software company focused on brand awareness.
Looking at ROAS benchmarks by industry helps you see what others in your space are achieving. That way, you won’t aim too high or too low. You’ll know what’s realistic and worth aiming for.
2. Shows If Your Campaigns Are Working
ROAS benchmarks also act as an indicator of how effective your advertising campaigns are. By comparing your ROAS with industry benchmarks, you can see if your campaigns are underperforming or delivering strong results.
Let’s say the average ROAS in your industry is 4:1, but you’re only getting 2:1. That’s a sign something needs fixing—maybe your ads, your targeting, or your landing page.
Comparing your results with industry standards helps you see if your campaigns are strong or need improvement.
3. Helps You Spend Your Budget Wisely
Knowing what a good ROAS looks like helps you decide where to put your money.
If you’re beating the industry average, that campaign is likely a winner—so you can invest more in it.
But if your ROAS is below the benchmark, it may be smarter to stop that campaign or test a different approach. This way, you make sure every dollar counts.
4. Helps Choose the Right Ad Platforms
Not all platforms perform the same for every business.Some platforms like Google Ads may have higher conversion rates than others like Facebook or Instagram, depending on your target audience. ROAS benchmarks by industry can help you decide where to invest your marketing budget.
For example, beauty brands may do better on Instagram, while B2B companies might get better results on LinkedIn.
When you compare your ROAS by platform and industry, you can figure out where your ads are working best—and focus your efforts there.
5. Identifies Underperforming Campaigns
ROAS benchmarks make it easy to see which campaigns are falling behind.
If one campaign is way below the industry average, it’s a clear red flag. You’ll know it’s time to fix the ad, change the copy, or improve your landing page.
The faster you catch it, the less money you waste.
6. Keeps You Improving Over Time
ROAS benchmarks don’t just give you a snapshot of your performance—they also encourage a mindset of continuous improvement. By tracking your ROAS regularly and comparing it to industry standards, you can see how you’re improving.
It pushes you to keep testing, learning, and getting better results from your ads.
7. Boosts Your Overall ROI
At the end of the day, you want your ads to bring in more money than they cost.
Using ROAS benchmarks helps you make sure your campaigns are doing just that. If your ROAS is above the industry average, you’re in a good place.
And by adjusting your strategy based on those numbers, you’ll keep improving your return on investment over time.
ROAS Benchmarks by Industry
As mentioned earlier, not all industries perform the same when it comes to return on ad spend (ROAS). Understanding the average ROAS in your industry helps you set realistic goals, track performance, and make smarter decisions with your ad budget.
Here’s a quick look at typical ROAS benchmarks across various industries:
E-commerce
ROAS Benchmark: 4:1 to 10:1
E-commerce businesses often see strong returns, but results can vary based on product type, pricing, and strategy. A 4:1 ROAS means you earn ₹4 for every ₹1 spent on ads, which is a solid starting point.
Retail
ROAS Benchmark: 3:1 to 5:1
Retailers, especially those with both online and offline stores, usually aim for this range. Factors like product margins and seasonal promotions can impact performance.
SaaS (Software as a Service)
ROAS Benchmark: 2:1 to 5:1
SaaS companies focus on long-term customer value, so their ROAS may be lower upfront. However, recurring revenue from subscriptions justifies this approach.
Finance & Insurance
ROAS Benchmark: 2:1 to 8:1
These industries often work with high-value clients, so even a lower ROAS can be acceptable. Campaigns targeting long-term policies or investment plans can push ROAS higher.
Real Estate
ROAS Benchmark: 7:1 to 10:1
Real estate involves big-ticket sales, which allows for higher advertising spend. A higher ROAS is expected here due to the high revenue from each successful transaction.
Education
ROAS Benchmark: 3:1 to 6:1
Whether it’s online courses, certifications, or tutoring services, education companies can achieve a solid ROAS by targeting the right audience and offering high-value content.
Travel & Hospitality
ROAS Benchmark: 2:1 to 4:1
This industry sees seasonal changes. ROAS may be lower during off-seasons and higher during peak travel periods when demand spikes.
Keep in mind, these are just general benchmarks. Your actual ROAS may differ based on your business type, audience, and where you advertise. Use these numbers as a guide, but always track your own results and improve based on what works best for you.
Conclusion
ROAS is a critical metric that every digital marketer should monitor closely. However, the importance of ROAS benchmarks by industry cannot be overstated. They provide valuable insights that help you set realistic goals, assess campaign performance, and make informed decisions about where to allocate your budget.
By understanding how your ROAS compares to industry standards, you can refine your marketing strategy, optimize campaigns for better returns, and grow your business. So, don’t just aim for a positive ROAS—keep improving it to grow your business faster.
Sky Bloom INC