Attribution & Measurement
Why a 400% ROAS can still lose money
A 400% ROAS means $4 of attributed revenue for every $1 of ad spend. It says nothing about what the product costs to make and deliver.
Example: thin margin
- Revenue: $100
- Ad spend at 4x ROAS: $25
- Product cost: $60
- Fulfilment/shipping/payment: $15
$100 - $25 - $60 - $15 = $0 before overhead.
The campaign reports 400% ROAS and produces no first-order contribution.
Attribution can make it look even better
If Meta claims revenue also claimed by Google, platform ROAS is not necessarily exclusive channel revenue.
Margin determines "good"
At 70% contribution margin, 400% can be extremely strong. At 20%, it may be below break-even.
Use break-even ROAS
Calculate from contribution margin and set targets above that level according to desired profit and LTV. The underlying formula is in how gross margin changes your break-even ROAS.
Never evaluate ROAS without asking, "What percentage of revenue is actually available to pay for the advertising?"
Reconcile the report with the bank account
If 400% sounds good in your reports but profit does not feel good in the bank account, send us an inquiry. We can reconcile the two.