What is ROAS? Return on Ad Spend Explained (with NZ Examples)
If you've spent any time around paid media — Google Ads, Meta Ads, TikTok, LinkedIn — you've heard the acronym ROAS thrown around like it's the holy grail of marketing metrics. The truth is, it kind of is. And it kind of isn't.
I run kiwitechlabs, a digital marketing agency in Mt Eden, Auckland, and I've watched dozens of NZ businesses chase ROAS into the ground. I've also watched it transform companies from break-even to genuinely profitable. The difference isn't the metric — it's how you use it.
ROAS stands for Return on Ad Spend. It's a ratio that tells you how much revenue you generate for every dollar you spend on ads. That's it. No more, no less.
The formula is dead simple:
ROAS = Revenue from Ads ÷ Ad Spend
If you spent $1,000 on Google Ads last month and those ads drove $4,000 in tracked revenue, your ROAS is 4 — usually written as 4x or 4:1 or 400% depending on which tool you're looking at. They all mean the same thing: for every $1 in, you got $4 back.
Let's ground this in a real Auckland example. Say you run a furniture e-commerce store based in Penrose. Last month:
- Google Ads spend: $5,000 NZD
- Meta Ads spend: $3,000 NZD
- Tracked revenue from Google Ads: $22,000 NZD
- Tracked revenue from Meta Ads: $9,600 NZD
Your Google Ads ROAS is $22,000 ÷ $5,000 = 4.4x. Your Meta Ads ROAS is $9,600 ÷ $3,000 = 3.2x. Blended across both channels, you spent $8,000 and made $31,600 — a 3.95x blended ROAS.
Good? Bad? It depends entirely on your margins, your overheads, and what else you're paying for. We'll get into that. But the number itself is just a ratio. It's the diagnostic, not the diagnosis.
Why does ROAS exist as a metric? Because before it, marketers used to say things like "we got 50,000 impressions and great brand lift" — none of which paid the rent. ROAS forced paid media to justify itself in dollars. Spend a dollar, show me what came back. It's the most honest metric paid advertising has ever produced, and it's also the one most often misread.
How to Calculate ROAS (Formula, Examples, Common Mistakes)
The formula is simple. The inputs are where everyone gets it wrong.
The clean formula:
ROAS = Attributed Revenue ÷ Ad Spend
If you want it as a percentage, multiply by 100. So 4.0 becomes 400%.
Worked Example #1: E-commerce
Auckland-based skincare brand. Selling NZ-made serum on Shopify. Month of April:
- Google Ads spend: $4,200 NZD
- Revenue tracked from Google Ads conversions: $18,900 NZD
- ROAS = $18,900 ÷ $4,200 = 4.5x
Looks great. But the average order value is $85, the cost of goods sold is $32 per order, and the shipping subsidy costs another $8. So actual gross margin per order is $45 — about 53% of revenue.
At 4.5x ROAS, that $18,900 in revenue produces roughly $10,000 in gross margin. Subtract the $4,200 ad spend and you're left with $5,800. Now subtract Shopify fees, payment processing, customer service costs, and your overhead — and suddenly that "4.5x ROAS" is barely breaking even.
This is the trap. ROAS measures revenue, not profit. We'll come back to this.
Worked Example #2: Lead Generation (B2B services)
Wellington-based commercial law firm. They don't sell anything on the website — they generate leads.
- Google Ads spend: $6,000 NZD
- Leads generated: 48
- Cost per lead: $125 NZD
- Lead-to-client rate: 20% (so 9.6 → call it 10 new clients)
- Average client value: $14,000 in fees over 12 months
- Revenue from those 10 clients: $140,000 NZD
ROAS = $140,000 ÷ $6,000 = 23.3x. Lovely, except that revenue rolls in over a year, not a month. And the firm only captures it if those clients actually pay. This is why lead-gen businesses often look at cost per acquisition (CPA) and lifetime value (LTV) alongside ROAS — the headline ratio is meaningless without time.
Worked Example #3: SaaS
NZ-based property management SaaS, subscription model at $89/month per customer.
- Meta Ads spend: $8,000 NZD
- Trial signups: 240
- Paid conversions (after 14-day trial): 36
- Month 1 revenue: $89 × 36 = $3,204
- ROAS Month 1 = $3,204 ÷ $8,000 = 0.4x
Disaster, right? Wrong. The average customer stays 18 months, so true revenue per acquisition is $89 × 18 = $1,602 × 36 customers = $57,672. LTV-adjusted ROAS = 7.2x. SaaS is the king of misleading short-term ROAS. If your boss looks at a Meta dashboard and freaks out, you need a better conversation about LTV.
Common ROAS Calculation Mistakes
Mistake #1: Including revenue you would have got anyway. Branded search is the classic. Someone Googles your business name, clicks your ad, and buys. Ad platforms attribute all of that revenue to the ad — even though the person was already coming to you. This artificially inflates ROAS.
Mistake #2: Ignoring returns and refunds. If you sold $40,000 worth of product but $4,000 came back as refunds, your real revenue is $36,000. Most ad platforms don't auto-deduct refunds.
Mistake #3: Using last-click attribution only. A customer might see your Meta ad on Monday, your Google ad on Wednesday, and convert on Friday from an organic search. Last-click gives organic search all the credit. Data-driven attribution spreads it fairly. Most businesses still use last-click and wonder why their Meta ROAS looks bad.
Mistake #4: Not separating new customers from returning ones. If 60% of your "new" sales are actually existing customers buying again, your new customer ROAS could be 1.5x while your blended ROAS looks like 4x. You're not acquiring — you're retargeting.
Mistake #5: Comparing platforms with different attribution windows. Google Ads defaults to 30-day click attribution. Meta Ads defaults to 7-day click, 1-day view. If you add them together as if they're the same, you're double-counting some sales and undercounting others.
The honest version of ROAS measurement requires you to wrestle with all five of these. Most businesses never do.
What's a "Good" ROAS? Industry Benchmarks Across NZ Businesses
Here's the question I get asked more than any other: "What ROAS should I be hitting?"
The honest answer is: it depends on your margins. A 2x ROAS could be wildly profitable for a high-margin software business and catastrophically loss-making for a discount retailer. So before benchmarks, you need to know your breakeven ROAS.
Breakeven ROAS = 1 ÷ Gross Margin %
If your gross margin is 50%, your breakeven ROAS is 1 ÷ 0.5 = 2.0x. Anything above 2x makes money on the ad spend itself (before overheads). If your margin is 25%, breakeven is 4.0x. If it's 70%, breakeven is 1.43x.
With that out of the way, here's what we see across NZ clients in 2026:
| Industry | Typical Blended ROAS | What "Good" Looks Like | Notes |
|---|---|---|---|
| E-commerce (general) | 3.0x – 6.0x | 4.5x+ | Highly dependent on AOV and margin |
| E-commerce (fashion / apparel) | 2.5x – 4.5x | 3.5x+ | Returns hammer the real number |
| E-commerce (luxury / high-AOV) | 4.0x – 10.0x | 6.0x+ | Few sales, big revenue swings |
| E-commerce (low-margin / FMCG) | 5.0x – 12.0x | 8.0x+ | Needs high volume to work |
| B2B SaaS (NZ market) | 2.0x – 4.0x (Month 1) | LTV-adjusted 5x+ | Look at 12-month LTV, not month 1 |
| Local services (trades, dental, law) | 5.0x – 15.0x | $20–$60 CPL is the real metric | ROAS often misleading — use CPL |
| Hospitality / restaurants | 3.0x – 6.0x | 4.0x+ | Repeat visits not captured |
| Tourism / experiences | 4.0x – 8.0x | 5.0x+ | Big seasonal swings |
| Lead-gen (mortgage, insurance) | $30–$80 CPL | CPL under $50 | Lifetime client value drives it |
| Education / courses | 3.0x – 7.0x | 5.0x+ | Long consideration window |
These are blended numbers — meaning paid media as a whole, not single-campaign best-case numbers. Single campaigns on retargeting audiences can easily hit 10x or 15x ROAS, but they're cannibalising existing demand, not creating it.
Realistic Auckland small business example: A homewares store in Newmarket spending $4,500/month on combined Google Ads and Meta Ads, generating about $18,000 in tracked revenue. That's a 4.0x blended ROAS, gross margin around 55%, leaving roughly $9,900 in margin minus the $4,500 ad spend = $5,400 contribution per month. After Shopify, packaging, fulfilment, and overheads — they're net-profitable. Just.
Be sceptical of "15x ROAS" case studies. Most are either (a) running on tiny budgets where one big customer skews the average, (b) measuring branded search only, (c) using attribution windows that double-count, or (d) outright fabricated. Genuine 10x+ blended ROAS in NZ is rare and usually means the business has product-market fit so strong they barely need ads at all.
ROAS vs ROI vs ROMI vs MER — Which One Actually Matters?
This is where things get fun, because every consultant has their favourite acronym and they all measure slightly different things.
ROAS (Return on Ad Spend)
Formula: Revenue from Ads ÷ Ad Spend
Measures revenue per ad dollar. Doesn't account for product cost, overheads, or whether you actually made money. It's an efficiency metric, not a profit metric.
ROI (Return on Investment)
Formula: (Net Profit from Ads − Cost of Ads) ÷ Cost of Ads × 100%
Measures actual profit. Subtracts product costs, fulfilment, agency fees, software costs — everything. A campaign with a 5x ROAS might have a negative ROI if your margins are thin enough.
Worked example: Auckland clothing brand spends $10,000 on Meta Ads, generates $40,000 in revenue (4x ROAS). COGS = $14,000. Returns = $4,000. Shipping = $2,000. Net contribution = $40,000 − $14,000 − $4,000 − $2,000 − $10,000 ad spend = $10,000 profit. ROI = $10,000 ÷ $10,000 = 100%. So 4x ROAS = 100% ROI for this brand. For a higher-margin brand, the same ROAS could mean 200% ROI. For a lower-margin one, 0% or negative.
ROMI (Return on Marketing Investment)
Formula: Similar to ROI, but includes all marketing costs, not just ad spend — agency fees, software (Klaviyo, Triple Whale), creative production, salaries.
This is what CFOs care about. ROAS makes a campaign look great. ROMI tells you whether your entire marketing function is profitable. A lot of agencies don't love ROMI conversations because they include the agency fee.
MER (Marketing Efficiency Ratio) — aka "Google MER" / Blended MER
Formula: Total Revenue ÷ Total Marketing Spend
This is the metric that's quietly replaced ROAS as the gold standard for serious operators, especially after iOS 14.5 broke attribution.
The key difference: ROAS uses tracked, attributed revenue from ad platforms. MER uses total business revenue divided by total marketing spend. So if your business made $200,000 last month and you spent $40,000 across all marketing (Google Ads, Meta, SEO, agency fees, email tools), your MER is 5.0x.
Why MER matters: ad platforms over-report their own contribution. Meta will claim 30 sales that Google also claims, and they can't both be right. MER sidesteps the attribution wars by looking at top-line revenue against top-line spend. It's blunt, but it's honest.
The phrase "Google MER" is used loosely — sometimes it refers to MER calculated specifically for Google's ecosystem (Google Ads + YouTube + Display), sometimes it's confused with Google Ads ROAS. Strictly speaking, MER is platform-agnostic. If someone in NZ uses "Google MER" they usually mean their blended efficiency including Google channels.
Which one should you actually use?
| If you're... | Use this | Why |
|---|---|---|
| An ad operator optimising a single campaign | ROAS | Fastest feedback loop, daily decision-making |
| An e-commerce founder reviewing the month | MER + Net New Customer ROAS | Strips out attribution noise |
| A CFO or business owner | ROMI / Profit | Tells you whether marketing is actually making money |
| A B2B service business | CPL + LTV:CAC ratio | ROAS is meaningless without time |
| A board-level conversation | Contribution margin after marketing | The number that pays the rent |
At kiwitechlabs we report ROAS to clients because it's universally understood, but we always also report MER (which we call "blended") and contribution margin where we have the data. If your agency only ever shows you platform ROAS, ask why.
Why ROAS Lies (And What to Look At Instead)
ROAS is the most lied-to metric in marketing, mostly because the ad platforms themselves are the ones reporting it. Let's be specific about the lies.
Lie #1: Ad platforms double-count conversions
Meta and Google both want credit for the same sale. If a customer sees a Facebook ad, then clicks a Google ad, then buys — both platforms will report the conversion. Add their dashboards together and your "total revenue from ads" can exceed your actual revenue. We've seen clients where the reported revenue across platforms is literally 130% of the company's real revenue.
Lie #2: Branded search inflates ROAS
If you run Google Ads on your own brand name (and you should — competitors will run on it otherwise), those clicks convert at 20-40% with very high ROAS. But those people were searching for you specifically. They were going to find you anyway. Including branded search in your overall ROAS makes everything look amazing while masking whether your non-branded efforts are working.
Always look at non-brand ROAS separately. If non-brand is below your breakeven, you're not really acquiring — you're harvesting.
Lie #3: Retargeting cannibalises organic conversions
If someone visited your site and was going to buy anyway, then sees your retargeting ad and clicks through to buy, the ad gets credit. But you didn't actually generate that sale — you just paid for it. Pure retargeting often shows ROAS of 8-15x, which is mathematically impressive and economically meaningless.
Use incrementality testing. Hold out a portion of your audience and see whether sales drop when you don't retarget them. Most brands find 30-60% of retargeting "conversions" would have happened anyway.
Lie #4: iOS 14.5 broke Meta's data
When Apple introduced App Tracking Transparency in 2021, Meta lost the ability to track most iOS users post-click. Their algorithm now uses modelled conversions — essentially guesses based on patterns. These guesses are often wrong, especially for smaller advertisers without enough data to train the model. Meta-reported ROAS in 2026 is, in our experience, often 20-40% inflated vs. what actually shows up in Shopify or GA4.
Lie #5: First-time vs repeat customers
If your business has good repeat-purchase rates, your overall ROAS will look great because existing customers convert easily. But that's not the job of paid ads — paid ads should be acquiring new customers, and email/CRM should be driving repeat purchases. If you can't separate the two, you're flying blind.
What to look at instead
- MER (Marketing Efficiency Ratio): Total revenue ÷ total marketing spend. Boring, honest, hard to fake.
- nCAC (new customer acquisition cost): Ad spend ÷ first-time buyers. Tells you what it really costs to acquire a customer.
- Contribution margin after marketing (CMAM): Revenue − COGS − fulfilment − ad spend. Actual profit number.
- Incrementality lift: Run holdout tests. What happens to revenue when you turn ads off in one region?
- Payback period: How many months until acquired customers pay back their CAC?
Most NZ businesses we work with start tracking ROAS, graduate to MER within 6 months, and end up running on contribution margin and payback period after a year. That's the maturity curve.
How to Improve Your ROAS — 8 Levers We Use at kiwitechlabs
Improving ROAS isn't about "better targeting" or "more creative" — those are tactics. The actual levers are mathematical. Here are the eight we work through with clients in priority order.
Lever 1: Increase Average Order Value (AOV)
Higher AOV is the cheapest way to improve ROAS. If your AOV goes from $80 to $110 and your cost-per-conversion stays the same, your ROAS jumps 37.5% — without changing a single ad.
Tactics: Free shipping threshold, bundles, upsells at checkout, product recommendations, post-purchase upsell apps. For an Auckland skincare brand we work with, adding a "free shipping over $90" threshold lifted AOV from $76 to $97 in 60 days — ROAS went from 3.4x to 4.6x with no other changes.
Lever 2: Improve Landing Page Conversion Rate
If your landing page converts at 2% and you double it to 4%, you've literally doubled your ROAS. Most NZ ad accounts we audit have landing pages that haven't been touched in two years.
Where to look: Page speed (under 2.5s LCP is non-negotiable), mobile UX, above-the-fold clarity, hero image quality, trust signals (reviews, NZ-made badges, secure checkout), and the actual offer. Half the time the offer is unclear and the page is fine.
Lever 3: Tighten Audience Targeting
This one has gotten harder. Meta's broad targeting often outperforms detailed targeting in 2026 because their algorithm has better data than any audience you can build manually. But for Google Ads, audience signals (in-market segments, customer match lists, similar audiences) still matter enormously.
Tactic: Build a customer match list from your CRM. Upload it. Layer it on top of search campaigns as a bid modifier. Existing customers convert at 3-5x the rate of cold traffic, and they're cheap to re-engage.
Lever 4: Negative Keywords (Google Ads)
The cheapest, fastest ROAS lift in Google Ads is killing search terms you shouldn't be paying for. We've taken Auckland clients from 2.1x ROAS to 3.8x in 30 days just by cleaning the negative keyword list. "Free," "DIY," "how to," competitor names you don't want to bid on, irrelevant locations.
If you're running search campaigns in NZ and you haven't reviewed your search terms report in the last 30 days, that's where you start. Read our Google Ads service page for how we structure ongoing optimisation.
Lever 5: Better Creative
For Meta especially, creative is 70% of the result. Same audience, same offer, different ad — the difference can be 3x in CTR and 2x in CVR. That's a 6x difference in ROAS from creative alone.
What's working in NZ in 2026: UGC-style video (real people, phone footage, not polished), founder-led talking head ads, before/after comparisons, native-feeling vertical content. Polished commercial-style ads still work for premium brands but they're expensive to produce and decay fast.
Lever 6: Match Type and Bid Strategy
If you're on Google Ads using "broad match" with "Maximise Conversions" and you don't have enough conversion data, the algorithm will burn your budget on irrelevant queries. Switch to phrase match or exact match for cold campaigns, and only use broad match once you have at least 50 conversions per month per campaign for the algorithm to learn from.
Lever 7: Funnel Structure
Most accounts run only bottom-funnel ads ("people searching for our product right now") and wonder why scaling stops working. The pool of bottom-funnel traffic is finite. To grow, you need top-of-funnel awareness campaigns feeding mid-funnel consideration campaigns feeding bottom-funnel conversion campaigns.
Yes, your awareness ROAS will look terrible (often 0.5x). That's fine. Your blended MER will improve. This is one of the hardest conversations we have with NZ clients — they want every ad to be profitable on day one. Profitable acquisition often requires unprofitable awareness.
Lever 8: Lifetime Value (LTV) Increase
The most underrated ROAS lever isn't about ads at all — it's about what happens after the first sale. Better email flows, SMS, loyalty programmes, subscription models. If your customers buy 2.5 times in their lifetime instead of 1.4, your effective ROAS doubles even if first-purchase ROAS stays the same.
This is why we increasingly recommend Klaviyo, Postscript, or similar tools as part of a paid media engagement. Ads bring them in; lifecycle marketing makes them profitable.
Tracking ROAS Properly — Server-Side, Attribution, iOS 14.5
You can have the best campaigns in the world, and if your tracking is broken, your ROAS is fiction. Here's the 2026 setup we deploy for NZ clients.
Server-Side Tracking
Browser-side tracking (the old way) relies on pixels firing in the user's browser. Ad blockers, iOS privacy settings, and Safari ITP all break it. We see 20-40% of conversions go missing on browser-only setups.
Server-side tracking sends conversion data directly from your server to Meta, Google, TikTok, etc. via their Conversions APIs. It's not blocked by browser restrictions. The tools we use:
- Stape.io or Server-Side Google Tag Manager — the infrastructure layer
- Meta Conversions API (CAPI) — direct server-to-Meta
- Google Enhanced Conversions — hashed first-party data sent to Google
- TikTok Events API — same idea for TikTok
A proper server-side setup for an NZ e-commerce client takes 1-2 days of dev work and recovers 25-40% of "lost" conversion data. ROAS reporting becomes meaningfully closer to reality.
Attribution Windows
The big platforms default to different windows, which makes apples-to-apples comparisons impossible. Standardise across your reporting:
- Google Ads: Default 30-day click. We usually leave it.
- Meta Ads: Default 7-day click, 1-day view. We usually shorten to 7-day click only to avoid double-counting with Google.
- GA4: Data-driven attribution by default. This is your source of truth for cross-channel comparison.
If you're serious, use a tool like Triple Whale, Northbeam, or Polar Analytics as your central source of truth. They de-duplicate conversions across platforms and give you blended ROAS / MER honestly. They cost $300-1,500 NZD/month depending on your revenue tier — worth it if you spend over $20k/month on ads.
iOS 14.5 and Beyond
App Tracking Transparency (ATT) gutted Meta's tracking precision in 2021 and the situation has only gotten worse with each iOS update. By 2026, here's the reality:
- Meta reports modelled conversions for opted-out users (most iPhone users)
- Meta-reported ROAS is typically 20-40% inflated vs. actual revenue
- Attribution windows are shortened to 1-7 days, missing longer consideration cycles
- Audience matching is less accurate, so look-alike audiences perform worse than 2020
The response from sophisticated operators: stop trusting platform ROAS as truth. Use it as a relative signal ("this campaign is up 20% vs last week") but cross-reference with Shopify revenue, GA4, and ideally a unified attribution platform. We recommend this approach to every Meta Ads client.
UTM Tagging and Spreadsheet Reality Checks
Even with all the fancy server-side stack, the simplest test is still the best: at the end of each week, look at Shopify (or your sales source of truth), sum the revenue, divide by your total ad spend across all platforms, and compare to what the platforms are claiming. If the platforms claim 90% of your revenue but the math says 60%, you have an attribution problem.
ROAS by Channel — Google Ads, Meta Ads, LinkedIn, Bing/Microsoft, TikTok
Different channels produce different ROAS profiles. Here's what we typically see in NZ in 2026.
Google Ads (Search + Shopping + Performance Max)
| Campaign Type | Typical ROAS (NZ) | Notes |
|---|---|---|
| Branded Search | 10x – 30x | Misleadingly high — would convert without ads |
| Non-Brand Search | 2x – 5x | The real measure of acquisition |
| Shopping | 3x – 6x | Strong for e-commerce with clean feeds |
| Performance Max | 3x – 8x | Black box — must check placements |
| Display | 0.5x – 2x | Mostly awareness; rarely directly profitable |
| YouTube | 1x – 3x | Brand-builder; assist conversions |
Google Ads remains the highest-intent paid channel. People searching "plumber Mt Eden" are ready to buy. The catch is that high intent attracts every competitor, so CPCs in competitive NZ verticals (legal, finance, trades) can hit $15-30 NZD per click. ROAS works because conversion rates are also high.
For most NZ service businesses, we recommend starting with Google Ads before Meta. The math is more forgiving when intent is high.
Meta Ads (Facebook + Instagram)
| Campaign Type | Typical ROAS (NZ) | Notes |
|---|---|---|
| Advantage+ Shopping (e-commerce) | 2.5x – 5x | The workhorse for DTC brands |
| Retargeting | 5x – 15x | Cannibalises organic — measure incrementally |
| Cold Prospecting | 1.5x – 3.5x | The real acquisition number |
| Lead Gen Forms | $15-$80 CPL (NZ) | Quality varies wildly by industry |
Meta is best for discovery-led products — fashion, beauty, homewares, food, lifestyle. It struggles with intent-driven services where people search rather than browse. Creative quality matters more on Meta than any other platform — see our Facebook Ads service page for how we approach creative testing.
LinkedIn Ads
The most expensive paid channel in NZ. CPCs of $8-25 NZD are normal. ROAS measured in raw revenue is almost always under 2x on first-touch. The justification for LinkedIn is B2B lead quality and long sales cycles. A single deal from a LinkedIn ad in commercial real estate or enterprise software can be $50,000-$500,000.
Realistic LinkedIn benchmarks (NZ, 2026):
- Cost per click: $8-$25
- Cost per lead (Lead Gen Forms): $80-$250
- Cost per qualified opportunity: $500-$2,000
- Use case: B2B services, enterprise SaaS, recruitment, professional services
Don't measure LinkedIn on month-1 ROAS. Measure it on pipeline contribution over 6-12 months.
Bing / Microsoft Ads
The most underrated channel in NZ paid media. Bing has 8-12% of NZ search market share — small but not nothing. CPCs are 30-50% cheaper than Google for the same keywords. Audiences skew older and higher-income (Bing is the default on work laptops, which means corporate users).
What we see: ROAS on Microsoft Ads is typically 1.2-1.5x higher than the same campaign on Google Ads, simply because clicks are cheaper. The downside is volume — you'll get 10-15% of the impressions you'd get on Google for the same keyword set. If you're already running Google Ads, importing the campaigns into Microsoft Ads takes an hour and is almost always worth it.
TikTok Ads
TikTok has grown into a real paid channel in NZ over the last two years. The audience is younger (skewing 18-34), creative-led, and impatient — the first 1.5 seconds of your ad is everything.
Typical TikTok ROAS (NZ, e-commerce):
- Cold prospecting: 1.5x-3x
- Retargeting: 4x-8x
- Spark Ads (organic-boosted): 2x-5x
TikTok works for visual, demonstrable products — beauty, food, fashion, novel gadgets, services with strong before/after stories. It struggles with B2B, high-consideration purchases, and anything requiring extensive explanation. Creative production is the bottleneck — you need 5-10 new creatives per week to fight ad fatigue.
Channel Mix Recommendations for NZ Businesses
| Business Type | Primary Channel | Secondary | Avoid (Initially) |
|---|---|---|---|
| E-commerce (DTC product) | Meta | Google Shopping, TikTok | |
| Local service business | Google Search | Google Local Services | TikTok, LinkedIn |
| B2B SaaS | Google Search | TikTok | |
| Professional services (law, accounting) | Google Search | LinkedIn (for high-ticket) | TikTok, Meta |
| Restaurant / hospitality | Meta (Instagram) | Google Local | |
| Tourism / experiences | Meta + Google | TikTok | |
| Fashion / beauty / lifestyle | Meta + TikTok | Google Shopping |
Disclaimer: kiwitechlabs is ours. We placed ourselves first in any examples or recommendations above, and obviously we benefit from you hiring us. We've tried to give honest, conservative numbers throughout — the kind of numbers you'd hear if you sat down with us for a coffee in Mt Eden, not the inflated case-study figures most agencies plaster across their homepages.
FAQs
What is a good ROAS for a small business?
For most NZ small businesses, a blended ROAS of 3x-4x is profitable, assuming gross margins around 50-60%. Below 2.5x and you're likely losing money once overheads are included. Above 6x and you're either highly efficient or under-spending (probably under-spending — you could likely scale and still be profitable).
Is a 2x ROAS good or bad?
It depends entirely on your gross margin. If your margin is 70%+ (software, services, digital products), 2x ROAS is great. If your margin is 30% (retail, fashion, FMCG), 2x ROAS means you're losing money on every sale.
How is ROAS different from ROI?
ROAS measures revenue per ad dollar (e.g. $4 revenue per $1 ad spend = 4x ROAS). ROI measures actual profit after all costs. You can have a 5x ROAS and 0% ROI if your product costs and overheads eat the margin.
What is MER and how is it different from ROAS?
MER (Marketing Efficiency Ratio) = Total Revenue ÷ Total Marketing Spend. It uses your actual business revenue instead of platform-reported attributed revenue. ROAS is per-channel; MER is blended across everything. MER is harder to game and more honest.
What is "Google MER"?
It's loosely used to refer to MER calculated for the Google ecosystem (Google Ads, YouTube, Display) or just the overall blended MER for an advertiser using Google as their primary channel. Strictly, MER is platform-neutral.
Why does my Meta Ads ROAS look different from my Shopify revenue?
Meta uses modelled and attributed conversions, which are often inflated due to iOS 14.5 changes. Shopify shows actual revenue. The gap is usually 20-40%. Use Shopify (or your sales source of truth) as the ground truth and Meta-reported ROAS as a directional signal only.
What ROAS should I target for Google Ads in NZ?
For non-brand search campaigns, target 3x-5x ROAS as a starting point. For Shopping campaigns, 4x-6x is standard for healthy e-commerce. For branded search, expect 10x+ but recognise it's not real acquisition.
How do I calculate breakeven ROAS?
Breakeven ROAS = 1 ÷ Gross Margin %. If your gross margin is 40%, breakeven = 1 ÷ 0.4 = 2.5x. Anything above 2.5x is profitable on the ad spend itself (before overheads).
Should I lower my ad budget if ROAS drops?
Not necessarily. ROAS naturally declines as you scale because you're reaching less-qualified audiences. The real question is whether your blended ROAS / MER is still profitable. Scaling spend often lowers ROAS but increases total profit dollars.
How long does it take to improve ROAS?
Quick wins (negative keywords, audience cleanup, landing page tweaks): 30-60 days. Structural improvements (funnel restructure, server-side tracking, creative testing pipeline): 90-180 days. Compounding improvements from LTV and brand strength: 12+ months.
What's the difference between ROAS and CPA?
CPA (cost per acquisition) is the dollar amount you spent to get one conversion ($100 to acquire a customer). ROAS is the revenue ratio (4x means $4 revenue per $1 spent). CPA is better for lead-gen businesses where transaction value isn't fixed; ROAS is better for e-commerce where each sale has an attached revenue figure.
Can ROAS be too high?
Yes — counterintuitively, a very high ROAS often means you're under-spending. If you're hitting 10x ROAS, you're probably leaving demand on the table. Most healthy businesses operate at 3-5x blended ROAS because that's where the marginal dollar still pays back.
How do you improve ROAS without lowering ad spend?
Increase AOV, improve landing page conversion rate, build customer match audiences, kill bad search terms, improve creative quality, and structure a proper funnel. These compound — fix three of them and you can typically lift ROAS 50-100% inside 90 days. That's the work we do every day at kiwitechlabs.
Where to from here?
If you've made it this far, you understand ROAS better than 90% of the people running ads in NZ — including, frankly, some agencies. The next question is whether your own ROAS is actually any good, and whether the right levers are being pulled to improve it.
If you'd like a free audit of your current Google Ads or Meta Ads account, we'll pull the data, calculate real ROAS and MER, identify the three biggest leaks, and give you a written report — no obligation, no pitch. Just an honest read of where you stand. Reach out via our Google Ads, Facebook Ads, Meta Ads, or full digital marketing service pages.
ROAS is just a number. Whether it's a useful one depends entirely on how you measure it, what you compare it to, and what you do with the answer. Get those three things right and paid media stops being a guessing game.
