What is Target ROAS? How to set it in Shopee GMV Max without burning profit

Plenty of sellers open Shopee GMV Max and look only at ROAS or the sales the ads brought in. But the more important question is: at this ROAS, is there any profit left?

At this ROAS, is there still any profit left?

Because every product does not earn the same profit. A product with a high margin can run a slightly lower Target ROAS and still survive. But a product with a low margin, set the Target ROAS too low, and the system will dutifully chase real sales for you — sales that may be quietly burning your shop's profit.

What is Target ROAS?

Target ROAS (target return on ad spend) is the ratio you set as the goal for an automated campaign: the revenue you want back for every THB 1 of ad spend. Set it to 5 and you are telling Shopee GMV Max to keep bidding as long as each THB 1 of ad spend returns at least THB 5 of sales. The catch is that ROAS is measured in sales, not profit — which is exactly why a healthy-looking Target ROAS can still lose money.

A simple example

Take a product that sells for THB 1,000. Before a single baht of ad spend, here is what stands between the price tag and the profit.

Profit before ads = 1,000 − 600 − 120 − 80 − 50 = THB 150
So this product has a margin of only 15% before ads.

So what does this have to do with Target ROAS?

Carrying on from the example: if we set the Target ROAS to 5, it means every THB 1 we spend on ads brings back THB 5 of sales — before any hidden costs. We can convert that ROAS of 5 into profit by multiplying it by the margin, and in this case we get:

True ROAS (the real return on ad spend) = 5 × 0.15 = THB 0.75

But wait — we spent THB 1 on ads and only got THB 0.75 back. Where is the win in that? At this rate, spend THB 1,000 and you get THB 750 back: a THB 250 loss per unit.

This is why setting Target ROAS matters. Set it low and the platform will find you plenty of orders — but it will also burn through plenty of ad spend doing it, leaving you with no profit at all.

Set the Target ROAS too low and GMV Max buys you sales that quietly burn your profit.

The formula: minimum (break-even) Target ROAS

If you do not want to lose profit, use this formula to set your Target ROAS. The minimum Target ROAS is:

Break-even ROAS = 1 ÷ margin before ads = 1 ÷ 15% = 6.67

So if this product runs below a ROAS of 6.67, the shop may start making no profit — which means you need to set the Target ROAS to at least 7.

How to set Target ROAS so you keep the profit you want

But because everyone wants profit, we need to set it higher than that. For example, if you want to keep 10% net profit after ads: on THB 1,000 of sales you need THB 100 left, which means you can allow at most 150 − 100 = THB 50 for ads. So the Target ROAS you should set is 1,000 ÷ 50 = 20.

Target ROAS = 1 ÷ (margin before ads − the margin you want to keep) = 1 ÷ (15% − 10%) = 1 ÷ 5% = 20

So Target ROAS should not be the same for every product

This is why Target ROAS should not be set the same across every product. A product at 40% margin can run a ROAS of 3–4 and still be fine, while a product at 15% margin may need a ROAS of 7–10 or higher just to avoid burning profit. The table below shows the minimum ROAS — and the target for keeping profit — at each margin.