The ROAS Era
For years, the playbook was simple: "What's your ROAS?" Hit target, increase spend. Miss target, optimise. Repeat.
It was clean. It was measurable. It was completely wrong.
Why ROAS Fails
Problem 1: It Ignores Margin
A 4x ROAS means nothing without knowing your margins:
- 4x ROAS at 50% margin = profitable
- 4x ROAS at 20% margin = losing money
Yet most accounts target flat ROAS across products with wildly different margins. Read our full breakdown.
Problem 2: It Conflates Revenue with Value
ROAS treats all revenue equally:
- £100 from a new customer = £100 from remarketing a loyal customer
- £100 from a full-price sale = £100 from a 50%-off purchase
- £100 from a low-return category = £100 from a high-return category
The value isn't equal. ROAS pretends it is.
Problem 3: It Enables Channel Gaming
Where do you get the best ROAS? Branded search. Remarketing. Bottom-funnel.
These channels show high ROAS because they capture demand you already created elsewhere. Optimizing for ROAS pushes spend toward these channels—away from actual growth drivers.
Problem 4: It Creates Scaling Ceilings
At some point, every account hits a ROAS wall. You've captured the efficient demand. To grow, you need to accept lower ROAS on prospecting.
ROAS-focused brands can't do this. They stay stuck at artificial ceilings while competitors invest in growth.
The Replacement Metrics
Smart brands in 2025-2026 are shifting to:
Contribution Margin (Primary)
Revenue minus COGS minus ad spend = what's left for overheads and profit.
This tells you whether Google Ads is actually making money, not just driving revenue.
New Customer CAC (Secondary)
What does it cost to acquire a genuinely new customer? Not remarketing, not brand search, not existing customers browsing.
This separates growth investment from retention efficiency.
MER / Blended Efficiency (Context)
Marketing Efficiency Ratio: Total revenue / Total marketing spend.
Provides holistic view without channel attribution games.
How to Transition
Step 1: Get Margin Data Into Google Ads
Use product feed optimisation to segment by margin tier. Create separate campaigns for different margin products.
Step 2: Build Contribution Reporting
Your reporting should show:
- Revenue
- COGS (from product data)
- Ad spend
- Contribution profit
This is more complex than ROAS reporting but infinitely more useful.
Step 3: Segment New vs Returning
Use customer match lists to identify existing customers. Measure new customer acquisition separately.
Performance Max makes this harder, but it's still essential.
Step 4: Reframe Targets
Instead of "maintain 4x ROAS," target "maintain 18% contribution margin" or "acquire new customers at <£25 CAC."
The Resistance You'll Face
"But ROAS is what we've always measured." "Our board/investors want ROAS numbers." "It's more complicated."
All true. And all irrelevant. The brands that figure out profit-focused measurement will outcompete those stuck on ROAS.
What This Means for 2026
The coming year will separate:
- ROAS-optimisers: Stuck at efficiency ceilings, losing share to smarter competitors
- Profit-optimisers: Able to invest in growth while maintaining margins
Read about our approach to spend governance—it's built on profit, not ROAS.
Ready to move beyond ROAS? Our audit includes full margin analysis and contribution profit calculation.