End of the month. You open Ads Manager: €1,500 spent, a ROAS of 0. No sales attributed. The temptation is immediate: switch everything off.
Three months later, a couple signs for a €9,000 pergola. They had contacted you through the Facebook form back in September. Meta will never know, and your dashboard will keep showing 0.
For a local business selling projects worth several thousand euros, ROAS is a useful metric, provided you calculate it yourself. The one the platform displays measures something else.
ROAS in one line
ROAS stands for Return On Ad Spend. The formula is a single division:
ROAS = revenue generated by advertising ÷ ad spend
A ROAS of 5 means every euro given to Meta or Google produced 5 euros of revenue. A ROAS of 1 means advertising brought in exactly what it cost in revenue, so it lost you money as soon as you count materials, installation and time.
That is the metric's core limitation: it talks about revenue, not profit. This matters again when it comes to setting a target.
Why the platform's ROAS misleads you on a long sales cycle
ROAS was designed for e-commerce. Someone clicks, buys within the hour, the pixel records the sale and its value. The loop closes by itself.
A conservatory, pool or custom joinery business does not work that way, for three reasons.
The sale does not happen on the website. It closes after a call, a site visit, a quote, sometimes a follow-up. None of that goes through the pixel. The platform sees a submitted form, not a signed contract.
The attribution window is too short. By default, Meta credits a conversion to an ad if it happens within 7 days of a click or on the same day as a view. On a €15,000 project, the time between the first enquiry and the signature is counted in weeks, often months. The signature lands long after the window has closed.
The value is unknown at the time of contact. Even if you report a conversion on the form, you do not yet know whether the enquiry will be worth €0, €6,000 or €30,000. Any value entered at that stage is an arbitrary average.
The error runs both ways. The displayed ROAS can be zero while the campaign is paying off, or flattering if you assigned a made-up value to every form. Either way, it is not something to base decisions on.
The real calculation: signed revenue, tied back to the original enquiry
The reliable method is to think in cohorts, meaning groups of enquiries that arrived in the same month.
- Record the source of every enquiry as soon as it arrives: Meta, Google, word of mouth, trade show. A simple spreadsheet is enough; a CRM does the same thing more comfortably.
- Record the month it arrived. A September enquiry stays a September enquiry, even if it signs in January.
- Log each signature on its original row, with the amount actually signed, excluding VAT.
- Divide the cohort's signed revenue by the budget spent that month.
This cohort ROAS changes over time. After one month it is often low. After three or six months, it reflects the reality of your sales cycle. That is the figure to compare with your target, not the one in Ads Manager.
One detail matters: use the signed amount, not the value of quotes sent. A quote is not a sale, and a ROAS calculated on quotes will always be too optimistic.
A worked example, with hypothetical figures
The figures below are made up to illustrate the method. They are neither client results nor a forecast.
Picture a pergola installer who spends €1,500 in September. The month produces 20 enquiries, 8 of them serious after screening, and 4 site visits. No signatures in September: the displayed ROAS and the cohort ROAS are both 0.
In December, one of the September enquiries signs for €9,000 excluding VAT. The cohort ROAS rises to 9,000 ÷ 1,500 = 6.
Is that profitable? It depends on the margin. With a 35% gross margin, that signature leaves €3,150 to cover installation, overheads and advertising. Once the €1,500 of ad spend is deducted, €1,650 remains. The campaign made money, even though September's dashboard said the opposite.
Setting a realistic target from your margin
A ROAS target is not something you copy from a competitor. You derive it from your margin, in two steps.
Break-even ROAS. This is the point where advertising neither earns nor costs anything:
Break-even ROAS = 1 ÷ gross margin rate
With a 35% gross margin, the threshold is 1 ÷ 0.35, roughly 2.9. Below that, every euro of advertising destroys margin. With a 50% margin, the threshold drops to 2. With 25%, it rises to 4.
Target ROAS. Break-even is not enough; you want to keep something. Decide what share of revenue you are willing to spend on acquisition, then invert it:
Target ROAS = 1 ÷ share of revenue spent on advertising
Back to a 35% gross margin. If you want to keep at least 15 points of margin after advertising, you can spend 20% of revenue on acquisition. The target ROAS is then 1 ÷ 0.20 = 5.
Two points prevent unpleasant surprises. First, if you pay an agency or a freelancer, add their fees to ad spend in the calculation: they are part of your acquisition cost. Second, use a realistic margin, after materials and installation labour, not the sale price minus the purchase price alone.
Metrics to track while you wait for signatures
Waiting six months to judge a campaign is not workable. In the meantime, track the steps that come before the sale, each with its own threshold:
- Cost per enquiry, to know what you pay for each contact.
- Share of serious enquiries, to check that the form is filtering properly.
- Site visit or appointment rate, which measures your responsiveness as much as lead quality.
- Average time from enquiry to signature, which tells you when to read your cohort ROAS.
If these intermediate steps hold up, signatures will follow at your trade's usual pace. If one of them drops, that is where to act, without waiting for the final verdict.
ROAS and ROI do not measure the same thing
ROAS compares revenue with ad spend. ROI, return on investment, compares profit with all the costs involved. A ROAS of 6 can go with a negative ROI if the margin is thin or jobs run over budget.
To manage your campaigns, cohort ROAS compared with your target ROAS is enough. To decide whether to increase the budget, also look at your real capacity: an excellent ROAS is useless if your team cannot install more jobs this quarter.
Where to start
Work out your real gross margin rate on recent jobs. Derive your break-even ROAS and your target ROAS from it. Add a "source" column and a "month received" column to your enquiry tracking, starting today.
Then stop using the ROAS in Ads Manager to judge your results. It is still useful for comparing two ads against each other, not for knowing whether advertising makes you money. For that, only signed revenue tied back to its original enquiry gives a reliable answer.