What is return-adjusted ROAS?

Start with ROAS: revenue credited to ads divided by ad spend. Then take out the revenue that came back as returns.

The quick version: reported ROAS × (1 − return rate). The return rate is the share of ordered value that is returned. This is an approximation. It treats every order alike and ignores what a return costs you.

A Google Ads agency's own article (a vendor, so read it as one) gives a worked example in the same direction: reported ROAS of 4.5x falls to 3.2x once refunds are taken out of revenue¹.

The fuller version works in margin. It removes returned revenue and also subtracts what handling the return cost, such as postage back and restocking. That moves you toward contribution margin: revenue minus the variable costs that grow with each order, including returns.

Because it counts the sale first. Unless corrected, the order stays counted after the parcel comes back.

Google Ads has a way to fix this after the fact. Advertisers can retract or restate conversions². Retracting removes a conversion. Restating changes its value. If this is not set up, return-heavy products look better in the panel than in the bank.

That matters for bidding too. Automated bidding works from the conversion values it receives. Inflated values can steer it toward the wrong orders.

For ZFD: In our view, ROAS should be compared with break-even after returns. Our convention is to build break-even on contribution margin before marketing. See break-even ROAS. Reporting returns back to Google and Meta is covered in adjust Google Ads conversions for returns.