The Basic Formula Everyone Knows, and the Mistake Almost Everyone Makes

Return on ad spend is calculated as revenue generated from ads divided by amount spent on those ads — a simple formula that becomes deceptively easy to miscalculate in practice. The most common mistake we see Nigerian businesses make is using platform-reported revenue (from Meta or Google’s own attribution) without reconciling it against actual revenue recorded in their own systems, which frequently overstates true performance due to attribution overlap and click-through windows that are generous by design.

A second common mistake is calculating ROAS at the campaign level without accounting for return rates, refunds, or payment failures that are common in the Nigerian e-commerce and fintech context — a sale attributed to an ad is not the same as revenue actually collected.

What "Good" ROAS Actually Means Depends on Your Margin

A 3x ROAS sounds impressive in isolation, but whether it is actually profitable depends entirely on your margin structure. A business with 60% gross margin can be highly profitable at 2x ROAS, while a business with 15% margin needs a much higher ROAS just to break even on the marketing spend itself. Reporting ROAS without context of margin is one of the most common ways performance marketing results get misread, both by agencies trying to look good and by businesses unsure what number actually matters for them.

  • Calculate your breakeven ROAS based on actual gross margin before judging any campaign result
  • Reconcile platform-reported revenue against your own payment or order system regularly
  • Account for returns and payment failures, which are meaningfully common in Nigerian e-commerce
  • Track ROAS by campaign and by audience segment, not just as a single blended number

Blended ROAS vs Platform-Reported ROAS

When running campaigns across multiple platforms simultaneously, individual platform-reported ROAS figures will almost always sum to more than your actual total revenue, because each platform tends to claim credit for conversions that may have been influenced by another channel too. Blended ROAS, calculated as total ad-attributable revenue across all platforms divided by total spend across all platforms, gives a more honest picture than trusting any single platform’s self-reported number in isolation.