Where Your Break-even ROAS and Target ROAS Come From
Quick answer
You set your Break-even ROAS at the bottom of the Brand page. It's the return at which your ads stop losing money. Agency AI compares your actual ROAS against it — and against a target ROAS — to decide what to recommend and how urgently.
Break-even ROAS
The point where an advertising dollar pays for itself. Below it, every dollar you spend costs you money.
The formula:
Break-even ROAS = 1 ÷ gross margin
| Gross margin | Break-even ROAS |
|---|---|
| 25% | 4.0 |
| 33% | 3.0 |
| 40% | 2.5 |
| 50% | 2.0 |
| 60% | 1.67 |
Agency AI doesn't calculate this for you. The Brand page asks for the number directly, so the number is only as good as your math.
Calculate your margin honestly. After cost of goods, shipping, payment processing, and returns. Merchants routinely overstate margin by forgetting fulfillment and chargebacks. An inflated margin sets your break-even artificially low, which tells Agency AI that unprofitable campaigns are profitable. Every recommendation downstream inherits that error.
Target ROAS
The target ROAS field is located in the onboarding questionnaire.
The three zones
Agency AI places every campaign into one of three zones each cycle. The zone determines the posture.
| Zone | Condition | What Agency AI does |
|---|---|---|
| Critical | ROAS below break-even | Stop the bleed. Reduce spend on Meta, raise target ROAS on Google. Diagnose before anything else. |
| Optimization | ROAS between break-even and target | Improve efficiency. Test creative. No scaling, no cutting. |
| Growth | ROAS at or above target | Scale, within guardrails. Budget increases on Meta, target ROAS decreases on Google. |
A campaign can sit in different zones on Meta and Google at the same time. That's normal, and Agency AI reads them together.
Why Agency AI doesn't act on one bad day
Every recommendation carries a confidence score before it surfaces, built from four things weighted equally: how much the campaign has spent, how long it's been active, how many conversions it produced, and how stable its ROAS trend has been day over day.
Low confidence means no recommendation. This is why a campaign that had one terrible Tuesday doesn't generate a panic recommendation on Wednesday.
One naming warning
"Target ROAS" means two different things in your account.
- Agency AI's target ROAS is your profit goal, the benchmark the zones are measured against.
- Google's tROAS is a bidding setting inside a Performance Max campaign that tells Smart Bidding what return to aim for.
Agency AI uses the first to decide how to move the second. They are not the same number and they will not match.