ROAS, CPA and CAC explained: how to read advertising numbers
Moxmore · 2026-10-30 · 4 min read
Key takeaways
- ROAS is the revenue earned for every unit spent on ads.
- CPA is what one conversion (sale, message, appointment) costs you.
- CAC is the total cost of winning a customer, agency and effort included.
- There is no single good number; the target depends on your product margin.
ROAS: revenue from ads
ROAS (return on ad spend) is ad revenue divided by ad spend. If you spend 100 and bring in 400, ROAS is 4.
But revenue is not profit. If your product margin is low, even a ROAS of 4 can lose money. That is why the target ROAS should be set by your margin.
CPA: the cost of a conversion
CPA is spend divided by the number of conversions. For a barber a conversion may be an appointment, for a language school a trial-lesson request. CPA is the main metric for message- and form-driven work.
But not every message is valuable. CPA should be read together with message quality: how many messages actually became customers?
CAC: the real cost of a customer
CAC is the total cost of winning a customer: ad spend, agency fee and effort. To mean something, it is compared with the total value that customer will bring. If a customer will keep coming for years, even a high CAC can be profitable.
Which one, and when?
In e-commerce, ROAS and revenue lead; for message or appointment businesses, CPA and message quality; in long relationships, CAC and customer value. We write down which one we target together before the work starts.
Frequently asked questions
What is a good ROAS?
There is no universal number. The target is calculated from your product margin and other costs.
If CPA is low, is everything fine?
No. If the messages that come at a low CPA do not turn into sales, the number is misleading; quality has to be tracked as well.
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