A 6× return can still lose money. Here is the number we report instead.
By the Reachwise team
Return on ad spend is the number everyone quotes, and it can look great while a business loses money.
Why ROAS misleads
A 6× ROAS on a product with a 15% margin still loses money once you count shipping, returns and the cost of the creative. ROAS also ignores customers who would have bought anyway.
What we report instead
- Contribution after ad spend: revenue minus product costs, shipping and ads
- New-customer cost: what it costs to win someone who never bought before
- Payback period: how many days until a new customer has paid for their ad
We would rather show you a smaller number that is true than a bigger one that isn't.
The result
Budgets move to the campaigns that make money, not the ones that look good in a screenshot.
