The ROAS Reality: Why ‘High Spend = High Return’ Is a Total Myth

tanmisha s
Jun 20
3 min read

An Essential Guide for Early-Career Marketers

In digital marketing, one of the most common misconceptions is that increasing ad spend will automatically improve results.

While it’s true that more budget can expand reach, without a performance strategy in place, increased spend often leads to diminishing returns.

As a Marketing Analyst with hands-on experience running Google Ads campaigns in the entertainment space, I’ve consistently seen how Return on Ad Spend (ROAS) — when tracked and optimised correctly — becomes the most reliable compass for media investment decisions.

What Is ROAS and Why Does It Matter?

ROAS (Return on Ad Spend) measures how much revenue you earn for every unit of currency spent on advertising:

ROAS = Revenue from Ads / Cost of Ads

For example, if you spend £100 on advertising and generate £600 in sales, your ROAS is 6.0 — meaning you earn £6 for every £1 invested.

ROAS is essential because it cuts through vanity metrics like impressions or clicks and focuses on profitability. High ROAS = strong return. Low ROAS = inefficient spend.

Why Increasing Spend Doesn’t Always Increase Return

Consider this:

With a £20/day budget, a campaign generates £120/day in revenue. ROAS = 6.0
Budget increases to £60/day, but revenue only rises to £150/day. ROAS = 2.5

Despite tripling spend, revenue barely increases. The campaign is now far less efficient.

Common Reasons for ROAS Drop:

Audience Saturation: The highest-intent users are already reached at low spend levels.
Creative Fatigue: Repetitive ads drive lower engagement and conversion.
Poor Segmentation: Treating cold and warm audiences the same leads to ineffective messaging.

How to Track ROAS Accurately

Effective ROAS tracking requires structured measurement across the ad funnel. Start with:

✅ Google Ads Conversion Tracking: Track purchases, form fills, and other key actions.
✅ Google Analytics 4 (GA4): Understand attribution across channels.
✅ Google Tag Manager (optional): Centralise and simplify tag firing.
✅ Revenue Data Passback: Ensure platforms like Shopify, Wix, or Eventbrite are sending real revenue data into Google Ads.

Use data-driven attribution models for accuracy. Last-click attribution often misrepresents campaign performance.

Realistic Example of ROAS Decline

A ticketed event campaign starts with a £20/day budget and generates £128/day in revenue (ROAS = 6.4). Budget increases to £60/day, but revenue only grows to £174/day (ROAS = 2.9).

Spending more without strategic audience and creative planning significantly reduces return on investment.

Sample Google Ads ROAS Breakdown

Campaign Name	Cost (£)	Conversions	Revenue (£)	ROAS	CTR	Conv. Rate
Brand Search UK	300.00	45	1,800.00	6.00	8.5%	15.0%
Generic Comedy Terms	500.00	40	1,200.00	2.40	6.1%	8.0%
Retargeting - Tickets	150.00	30	900.00	6.00	12.3%	20.0%
YouTube Discovery	250.00	10	300.00	1.20	2.9%	4.0%

Insight: Retargeting and branded campaigns deliver higher ROAS than cold audience awareness formats. Spend should align with campaign efficiency.

Personal Insights & Practical ROAS Tips

Through hands-on experience, I’ve adopted several practices that consistently protect or improve ROAS:

Isolate cold vs. warm audiences: Run separate campaigns with tailored messaging and budget priorities.
Benchmark before scaling: Always assess 7–14 day average ROAS trends before increasing spend.
Track ROAS and conversion rate together: Falling ROAS is often tied to declining conversion efficiency.
Refresh creatives proactively: Avoid fatigue by updating ads every 2–3 weeks in high-frequency campaigns.
Scale incrementally: Increase budgets in controlled increments and monitor results.
Use structured naming conventions: Makes ROAS analysis and reporting more manageable across variations.

Insight Over Spend

Success in paid media doesn’t come from spending more — it comes from spending intelligently. ROAS gives marketers a clear, quantifiable view of ad efficiency and allows for scalable decision-making based on real business outcomes.

For early-career marketers, mastering ROAS means learning to invest budget with intention, segment audiences effectively, and iterate quickly based on performance insights.

Coming Soon: The Marketing Analyst Toolkit

If you're just starting out in digital marketing and want to run campaigns with confidence, my Marketing Analyst Toolkit (launching July 23rd) is for you.

It includes: