Return on ad spend is the revenue attributed to advertising divided by the advertising spend. A figure of four means four in revenue for every one spent.
Revenue is the wrong denominator to stop at
Advertising is paid for out of margin, not out of revenue. A return of four on a twenty per cent gross margin returns eighty in margin for every hundred spent, which is a loss.
The break-even point is one divided by the margin. At twenty per cent margin, advertising has to return five before it has paid for itself. At fifty per cent it has to return two.
This is the single most common error in reading the figure, and it is why a campaign can be reported as performing while losing money.
The attribution underneath it
The revenue side depends on knowing which sales came from the advertising. Where a customer sees an advertisement and later searches for the business by name, the attribution is arguable — see marketing attribution.
Treat the figure as directional. It is reliable for comparing periods and channels measured the same way, and less reliable as an absolute.
First sale or lifetime
Return measured on the first job understates advertising in a trade where customers return. Measured on lifetime value it is higher, and slower to confirm.
Both are legitimate; they answer different questions, and a comparison between them is not meaningful.