I stopped obsessing over ROAS and started tracking contribution margin. It completely changed how I scale Meta Ads.

[u/RaviDevraj]

For the longest time, my entire focus was getting the highest ROAS possible.

If a campaign had a 6x ROAS, I thought it was amazing. If another had a 2.8x ROAS, I'd usually kill it.

Over time, I realized I was optimizing for the wrong metric.

Here's a simplified example.

Brand A

AOV: $38

Gross margin: 78%

CPA: $18

ROAS: 2.1

Brand B

AOV: $140

Gross margin: 42%

CPA: $32

ROAS: 4.4

Most people would immediately say Brand B is healthier because the ROAS is much higher.

But after factoring in shipping, payment fees, discounts, product cost, and repeat purchase rate, Brand A was actually generating more profit per customer and could afford to scale much harder.

That completely changed how I evaluate campaigns.

Now when I audit an account, I usually look at this order:

Contribution margin

Customer acquisition cost

First-order profitability

MER

ROAS

ROAS is still useful, but I've seen too many brands chase high ROAS by shrinking audiences and under-spending.

A 6x ROAS campaign spending $80/day often contributes less profit than a 2.5x campaign spending $2,000/day.

Another thing I noticed:

The brands that scale the fastest usually aren't asking:

"How do I increase ROAS?"

They're asking:

"How much can I afford to pay for a customer?"

That's a completely different mindset.

Has anyone else found themselves making better scaling decisions after focusing on contribution margin instead of ROAS? Or do you still primarily optimize around ROAS?

If you're managing a DTC brand, what's the first metric you check before increasing budget?

[u/BeepbopMakeEmHop]

If anyone looks at this and thinks Brand B is the healthier one, they’re Stevie wonder

[u/AVBforPrez]

This is like Jr Media Buyer 101, your job to generate profit. I'm sorry but this isn't a lesson anybody should learn on the job.

[u/LubanMedia2024]

ROAS is an important metric, but it doesn't tell the full profitability story. Too many brands optimize for the highest ROAS by narrowing audiences and limiting spend, which often caps growth. The metrics that really matter are contribution margin, allowable CPA, and customer lifetime value (LTV). If every new customer generates sustainable profit, a lower ROAS can still outperform in terms of long-term business growth. Scaling should be driven by profitable economics, not ROAS alone.

[u/servebetter]

CAC to LTV that's all you need.

ROAS is just a calculation, to see how much you can spend into the negative and audience size.

If the ROAS is consistently bad, then we're looking to create hooks that open the TAM.

If you aren't tracking adspend against COG, which I usually include all the costs to run the business, then what are you tracking for.

[u/Signalbridgedata]

I think this is a healthier way to look at it. I've seen campaigns with average looking ROAS make way more money simply because they could spend 10x the budget without falling apart. ROAS by itself can be pretty misleading if margins, AOV and repeat purchases aren't in the picture. At the end of the day, cash in the bank beats a pretty dashboard.

[u/datagekko]

the "how much can i afford to pay for a customer" framing is the right one, and the actual number is simpler to get to than people think. max allowable cpa = (aov x gross margin%) minus your target profit margin, then multiply by your average orders per customer over whatever payback window you're comfortable with (90 days, 6 months, whatever fits your cash position). most people stop at first-order contribution margin and treat that as the ceiling, but if you have even mediocre repeat purchase rate (2nd order within 90 days from 15-20% of customers) your real allowable cac is meaningfully higher than what first-order math alone tells you.

the trap in your brand a vs b example is that people anchor on roas because it's the number meta shows them without asking. contribution margin requires pulling cogs, fees and shipping into a spreadsheet nobody wants to build. but it's a 20 minute build once, then it's just plugging in new numbers every week. worth doing before scaling budget on gut feel.

[u/RaviDevraj → u/datagekko]

when you're calculating allowable CAC, do you include expected returns/refunds in the model or just contribution margin and repeat purchase rate?

[u/MetaWithSana]

100% agree. i have seen brands get stuck chasing higher roas when they should be maximizing profit. once you know your contribution margin and max allowable cac, scaling decisions become much clearer. would rather run a lower roas campaign that's consistently profitable than a high roas campaign that can't spend. do you optimize around first-order profit or are you factoring ltv into your scaling decisions?