When business owners ask whether their ads are "working", they usually mean one of two things: are people clicking? And is it making money? The first is easy to measure. The second — the actual return — is where most small businesses lack a clear benchmark.
This guide sets out realistic ROAS (return on ad spend) targets for different business types, explains why the same number can mean very different things depending on your margins, and gives you a simple framework for deciding whether to scale, adjust, or pause a campaign.
What ROAS actually means
ROAS is the revenue generated for every pound spent on advertising. A 4× ROAS means you made £4 in revenue for every £1 in ad spend. Sounds simple — but revenue and profit are not the same thing, which is where most benchmarks mislead people.
A 4× ROAS on a product with 70% gross margins is excellent. A 4× ROAS on a product with 20% margins means you're likely losing money once you account for fulfilment, returns, and overheads. The right ROAS target is entirely specific to your cost structure.
Your break-even ROAS = 1 / gross margin. At 40% margin, you need at least 2.5× ROAS to cover cost of goods. Anything above that starts contributing to profit.
Typical benchmarks by business type
These are median ranges based on industry data — starting points, not targets. Your business may perform above or below these depending on competition, creative quality, and landing page effectiveness.
- E-commerce (physical goods, 40–60% margin): 3×–6× ROAS is typical; 6×+ is strong
- Local services (plumbing, dental, fitness): Cost per lead £15–£60 on Google Search is realistic
- B2B lead generation: Cost per qualified lead £40–£150; volume is low but intent is high
- Hospitality/events: ROAS 2×–4× is common; brand awareness value is harder to measure
Typical ROAS benchmarks by business type
Why the first month is always the worst
New campaigns underperform. Google's algorithm needs data to optimise bidding. Your ad copy hasn't been tested. Your audience targeting is broad. Conversion tracking may have gaps. Expect the first two to four weeks to cost more per result than steady-state will.
The mistake is judging a campaign before it has enough data to be judged. 200+ clicks and 10–20 conversions is the minimum before drawing meaningful conclusions. Pausing after 50 clicks because the ROAS "looks bad" is almost always the wrong call.
Three signals that a campaign is genuinely underperforming
- Click-through rate below 2% on Google Search (your headlines don't match search intent)
- Landing page bounce rate above 80% (traffic is arriving but not engaging)
- Cost per conversion more than 3× your target after 30+ days and 500+ clicks
When to scale and when to pause
Scale when: you're hitting your ROAS target consistently across multiple weeks, your landing page has headroom (good conversion rate, not maxed out on capacity), and you have creative ready to rotate in when fatigue sets in.
Pause when: you've spent 2–3× your target cost per acquisition with no conversions, the search terms triggering your ads are clearly irrelevant, or your landing page is broken or offline. Never pause simply because a campaign hasn't returned profit in its first week.
The businesses that get the most from paid advertising are the ones that treat the first month as investment, the second month as learning, and the third month as optimisation. Patience, specific targets, and honest measurement are the only tools that reliably work.