Return on ad spend is the number most sellers watch, and it is quietly the wrong one. ROAS tells you how much revenue you earned for each unit of ad spend — and revenue is not profit.
The gap ROAS hides
A product with a 4x ROAS looks healthy. But if that product carries thin margins after cost of goods, referral fees, and fulfilment, a "healthy" ROAS can still lose money on every order. The metric flatters campaigns that sell high-revenue, low-margin products and punishes campaigns that sell the opposite.
What to optimise instead
Optimise to contribution margin after ad spend — what you actually keep once product cost, fees, and advertising are all subtracted. This is harder to calculate, which is exactly why most agencies avoid it and default to ROAS.
When you optimise to profit rather than revenue, three things change: you bid differently across products, you stop scaling campaigns that look good but bleed money, and you finally see which parts of your catalogue are worth advertising at all.
That shift — from revenue to margin — is the single most valuable change most advertising accounts can make.
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