The Truth About ROAS: Why It’s Often a Vanity Metric

ROAS looks good in reports, but it doesn’t always reflect real profit. Learn how to measure what matters.

Return on Ad Spend (ROAS) is often praised as the gold standard of ad performance. But high ROAS can be misleading if it’s not tied to actual business outcomes.

For example, a 4x ROAS sounds great—until you subtract product costs, fulfillment, team salaries, and platform fees. That 4x might mean you're barely breaking even or worse, losing money.

Shopify reports that the average profit margin for ecommerce brands is just 10–20%. So unless you’re factoring in profit, your ROAS isn’t telling the whole story.

The best marketers look at blended CAC (customer acquisition cost across channels), LTV (lifetime value), and actual net profit—not just ad revenue.

If your agency sends you pretty dashboards with high ROAS but can’t explain why profit isn’t growing, you’ve got a reporting problem—not a growth partner.

Bottom line: Don’t chase ROAS. Chase returns that show up in your bank account.