Return on ad spend has become the default language of paid media performance. Hit your ROAS target and the account is healthy. Miss it and something is wrong.
This framing is convenient but misleading. ROAS measures activity, not value. It tells you what happened, not whether it was worth happening.
The Comfort of a Number
ROAS is popular because it is simple. Revenue divided by spend gives you a ratio. That ratio can be tracked, reported, and used to justify decisions.
But simplicity comes at a cost. ROAS treats all revenue as equal, regardless of:
- Product margin
- Return rates
- Customer acquisition versus repeat purchase
- Payment processing costs
- BNPL fees and their impact on net revenue
A ROAS of 5 on a 20% margin product is worth less than a ROAS of 3 on a 60% margin product. But ROAS cannot tell you that. It does not know margin exists.
Where Agencies Hide
ROAS is also convenient for agencies. It is easy to optimise for and easy to report on. Hit the number, send the report, move on.
The harder conversation is about profit contribution. That requires knowing margin data, return rates, and true customer economics. Many agencies do not want that conversation because it exposes uncomfortable questions about where budget is actually going.
The Real Question
The metric that matters is contribution margin per pound of ad spend. How much actual profit did your advertising generate after product costs, returns, and fees?
This is harder to calculate. It requires finance and marketing to share data. It forces uncomfortable conversations about which products and campaigns are genuinely working.
But it is the only metric that connects paid media to business outcomes.
Moving Beyond Comfort
If your reporting centres on ROAS, you are not measuring performance. You are measuring activity and hoping it correlates with value.
A profit-first approach to Google Ads starts with the assumption that revenue is not the goal. Profit is the goal. Revenue is just how you get there.
ROAS can be part of that picture, but it cannot be the whole picture. The brands that scale profitably are the ones that outgrew ROAS as their primary success metric.