ROAS Benchmarks 2025: What's Good by Industry

"Is 3x ROAS good?" It's the question every Meta advertiser asks at some point. And the answer is frustratingly contextual: it depends on your industry, your margins, your customer lifetime value, and your growth stage. A 3x ROAS that's excellent for a luxury brand might be catastrophic for a commodity seller.

This guide breaks down ROAS benchmarks across major industries in 2025, explains what drives the differences, and helps you determine what "good" actually means for your specific business. Spoiler: the number that matters isn't your competitor's ROAS—it's your profitability threshold.

Understanding ROAS: The Basics

Return on Ad Spend (ROAS) measures revenue generated per dollar spent on advertising. A 3x ROAS means you generate $3 in revenue for every $1 in ad spend. Simple in theory, complex in practice.

The formula: ROAS = Revenue from Ads / Ad Spend

But here's where it gets complicated: what counts as "revenue from ads"? Meta attributes conversions based on your attribution window (typically 7-day click, 1-day view). This includes modeled conversions for users who opted out of tracking. The number you see in Meta Ads Manager may not match your backend exactly.

2025 ROAS Benchmarks by Industry

These benchmarks represent median performance across accounts spending $10,000+ monthly on Meta Ads in 2025. Your results may vary based on audience targeting, creative quality, and market conditions.

E-commerce: Fashion and Apparel

Fashion sees high variability due to price points. Fast fashion with $30 AOV needs higher ROAS than luxury with $300 AOV. Seasonality matters heavily—Q4 typically sees compressed ROAS as CPMs spike.

E-commerce: Health and Wellness

Health and wellness benefits from repeat purchases, which Meta doesn't fully capture in first-purchase ROAS. Brands with subscription models should factor in LTV—a 2.5x first-purchase ROAS might yield 6x+ lifetime value.

E-commerce: Home and Furniture

Home and furniture has longer consideration cycles. Retargeting windows of 30-60 days often outperform shorter windows. High AOV means fewer conversions but higher revenue per conversion.

SaaS and Software

SaaS ROAS looks low compared to e-commerce, but subscription revenue compounds. A $99/year subscription at 2x ROAS becomes 6x+ over a 3-year customer lifetime. Focus on trial-to-paid conversion, not just trial volume.

Lead Generation (B2B)

B2B lead gen doesn't use ROAS directly since revenue is delayed. Track cost per lead and lead-to-close rate. A $100 CPL that closes at 10% with a $10,000 deal value is effectively 10x ROAS—you just won't see it in Meta.

Lead Generation (Local Services)

Local services vary wildly by market saturation. A plumber in rural Iowa has different CPLs than one in Manhattan. Track lead quality—a $50 lead that books is worth more than a $10 lead that ghosts.

What Actually Determines Good ROAS

Industry benchmarks provide context, but your "good" ROAS depends on your specific unit economics. Here's how to calculate your break-even ROAS:

The Break-Even Formula

Break-Even ROAS = 1 / Gross Margin Percentage

If your gross margin is 50%, your break-even ROAS is 2.0x. Any ROAS above 2.0x generates profit (before accounting for other costs). If your gross margin is 25%, you need 4.0x ROAS just to break even.

Target ROAS Formula

Target ROAS = (1 / Gross Margin) + Profit Margin Target

Want a 20% profit margin on a 50% gross margin product? You need (1/0.5) + 0.2 = 2.4x ROAS. This gives you a concrete target based on your business, not industry averages.

LTV-Adjusted ROAS

For subscription or repeat-purchase businesses, first-order ROAS understates value. Calculate:

LTV ROAS = First-Order ROAS x (Average Orders Per Customer)

A 2x first-order ROAS with 3 average orders = 6x LTV ROAS. This justifies lower first-order targets for businesses with strong retention.

Why Your ROAS Might Be Low

If you're below industry benchmarks, diagnose before you optimize. Common causes of low ROAS:

Targeting Too Broad

Wide audiences include people unlikely to convert. Your CPM might be low, but conversion rate tanks. Test narrower targeting or use Advantage+ with audience suggestions to guide the algorithm.

Creative Fatigue

Same ads running for months lose effectiveness. Frequency above 4-5 often correlates with declining ROAS. Refresh creative every 4-6 weeks, or sooner if frequency spikes.

Landing Page Problems

High CTR but low conversion rate points to landing page issues. Slow load times, confusing UX, or ad-landing page mismatch all kill ROAS. Test your pages with real users.

Wrong Campaign Objective

Using Traffic or Engagement objectives when you want conversions confuses the algorithm. It optimizes for what you ask—clicks, not purchases. Use Conversion objectives with proper pixel events.

Attribution Mismatch

Meta's default 7-day click, 1-day view attribution might not match your customer journey. High-consideration products may need longer windows. Low-consideration impulse buys might show inflated numbers.

Strategies to Improve ROAS

1. Optimize for Value, Not Volume

Switch from Conversion campaigns to Value Optimization campaigns. Tell Meta which customers are most valuable (highest AOV, repeat purchasers) so it optimizes for profit, not just conversions.

2. Segment by Customer Value

Create separate campaigns for prospecting vs. retargeting. Retargeting typically delivers 2-3x higher ROAS than prospecting. Allocate budget based on marginal returns, not just averages.

3. Test Bid Strategies

Lowest Cost maximizes volume but can tank ROAS. Cost Cap protects efficiency but may limit scale. Test both and find the balance that hits your target ROAS at acceptable volume.

4. Improve Creative Quality

Creative is the biggest lever for ROAS improvement. Test hooks, formats (video vs. static), and messaging angles. One winning creative can 2x your account ROAS.

5. Fix Your Funnel

ROAS problems often aren't ad problems—they're funnel problems. Improve landing page conversion rate, reduce cart abandonment, optimize checkout flow. A 1% conversion rate improvement can transform ROAS.

ROAS Trends in 2025

Several factors are affecting ROAS benchmarks this year:

• Rising CPMs: Platform costs are up 15-30% year over year in most verticals, compressing ROAS
• Attribution degradation: iOS 14.5+ continues to affect tracking; modeled conversions create noise
• AI-driven competition: More advertisers using Advantage+ creates more efficient markets
• Shift to Reels: Reels inventory offers lower CPMs but different performance characteristics
• First-party data advantage: Brands with strong customer data see better ROAS through custom audiences

How to Use Benchmarks Correctly

Benchmarks are directional, not absolute. Use them to:

• Identify if you're dramatically underperforming (2x below benchmark warrants investigation)
• Set realistic expectations for new campaigns or verticals
• Contextualize performance for stakeholders who ask "is this good?"
• Identify improvement potential (if top performers hit 5x and you're at 2.5x, there's room to grow)

Don't use benchmarks to:

• Set hard targets without considering your unit economics
• Compare yourself to different business models (DTC vs. marketplace, for example)
• Make panic decisions based on short-term variance from benchmarks

Key Takeaways

• ROAS benchmarks vary significantly by industry—fashion averages 2.5-3.5x while SaaS averages 1.5-2.5x
• Calculate your break-even ROAS based on gross margin before comparing to benchmarks
• For subscription businesses, LTV-adjusted ROAS is more meaningful than first-order ROAS
• Low ROAS usually stems from targeting, creative, or funnel issues—not just bid strategy
• 2025 trends (rising CPMs, attribution challenges) are compressing ROAS across industries
• Use benchmarks for context, but optimize for your profitability threshold

FAQ

What's a good ROAS for a new account with no historical data?

Start with your break-even ROAS as the floor, then add 20-30% buffer for learning phase inefficiency. If break-even is 2x, target 2.5x initially and optimize from there. Don't expect to hit top-tier benchmarks immediately—it takes 2-3 months for algorithms to optimize.

Should I use Meta's reported ROAS or calculate my own?

Calculate your own using backend revenue data for accuracy. Meta's ROAS includes modeled conversions and may over-report by 15-30% depending on your iOS traffic percentage. Use Meta's for directional optimization, your own for business decisions.

My ROAS dropped suddenly—what happened?

Sudden drops usually have identifiable causes: algorithm changes, competitor activity, creative fatigue, audience saturation, or tracking issues. Check frequency, CPM, and CTR trends first. If all metrics look normal but ROAS dropped, investigate tracking and attribution.

Is higher ROAS always better?

Not necessarily. Very high ROAS (10x+) often indicates under-spending—you're being too conservative and leaving growth on the table. There's usually a trade-off between ROAS and volume. The goal is hitting your profitability target at maximum profitable scale, not maximizing ROAS at the expense of growth.