The ROAS Era
For years, the playbook was simple: "What's your ROAS?" Hit target, increase spend. Miss target, optimise. Repeat.
It was clean. It was measurable. It was completely wrong.
Why ROAS Fails
Problem 1: It Ignores Margin
A 4x ROAS means nothing without knowing your margins:
- 4x ROAS at 50% margin = profitable
- 4x ROAS at 20% margin = losing money
Yet most accounts target flat ROAS across products with wildly different margins. Read our full breakdown.
Problem 2: It Conflates Revenue with Value
ROAS treats all revenue equally:
- £100 from a new customer = £100 from remarketing a loyal customer
- £100 from a full-price sale = £100 from a 50%-off purchase
- £100 from a low-return category = £100 from a high-return category
The value isn't equal. ROAS pretends it is.
Problem 3: It Enables Channel Gaming
Where do you get the best ROAS? Branded search. Remarketing. Bottom-funnel.
These channels show high ROAS because they capture demand you already created elsewhere. Optimizing for ROAS pushes spend toward these channels: away from actual growth drivers.
Problem 4: It Creates Scaling Ceilings
At some point, every account hits a ROAS wall. You've captured the efficient demand. To grow, you need to accept lower ROAS on prospecting.
ROAS-focused brands can't do this. They stay stuck at artificial ceilings while competitors invest in growth.
The Replacement Metrics
Smart brands in 2025-2026 are shifting to:
Contribution Margin (Primary)
Revenue minus COGS minus ad spend = what's left for overheads and profit.
This tells you whether Google Ads is actually making money, not just driving revenue.
New Customer CAC (Secondary)
What does it cost to acquire a genuinely new customer? Not remarketing, not brand search, not existing customers browsing.
This separates growth investment from retention efficiency.
MER / Blended Efficiency (Context)
Marketing Efficiency Ratio: Total revenue / Total marketing spend.
Provides holistic view without channel attribution games.
How to Transition
Step 1: Get Margin Data Into Google Ads
Use product feed optimisation to segment by margin tier. Create separate campaigns for different margin products.
Step 2: Build Contribution Reporting
Your reporting should show:
- Revenue
- COGS (from product data)
- Ad spend
- Contribution profit
This is more complex than ROAS reporting but infinitely more useful.
Step 3: Segment New vs Returning
Use customer match lists to identify existing customers. Measure new customer acquisition separately.
Performance Max makes this harder, but it's still essential.
Step 4: Reframe Targets
Instead of "maintain 4x ROAS," target "maintain 18% contribution margin" or "acquire new customers at <£25 CAC."
The Resistance You'll Face
"But ROAS is what we've always measured." "Our board/investors want ROAS numbers." "It's more complicated."
All true. And all irrelevant. The brands that figure out profit-focused measurement will outcompete those stuck on ROAS.
What This Means for 2026
The coming year will separate:
- ROAS-optimisers: Stuck at efficiency ceilings, losing share to smarter competitors
- Profit-optimisers: Able to invest in growth while maintaining margins
Read about our approach to spend governance: it's built on profit, not ROAS.
Ready to move beyond ROAS? Our audit includes full margin analysis and contribution profit calculation.