Nearly all agencies and in-house teams manage campaigns toward one metric: ROAS. Although ROAS is great for measuring efficiency, it won’t account for sales volume. Translation: if you’re using this metric, you’re probably leaving money on the table.
ROAS does not take into account key factors that are linked to every sale, like the cost of goods and variable overhead. Simply put, it’s not an accurate measure of the impact your campaigns have on your business.
We recommend a managing your ad campaigns to a different metric: contribution. This metric measures the contribution your paid ads make toward the overall operating profit of your business. Contribution margin is closely related and measures the percentage of your overall revenue that’s preserved as profit.
In other words, how much money have your ads made for you lately? And could you be making more?
Read this whitepaper to find out!