*Margin Optimised Performance (Yes, we are dubbing it here first)
By Luke Hill, Senior Paid Media Manager, Launch
If you’re a CMO still hanging your performance strategy on Return On Ad Spend (ROAS), this article is for you.
ROAS has long been the golden goose of digital marketing. Easy to calculate, simple to report, looks good on a slide. But the truth is, ROAS can be dangerously misleading — especially for eCommerce brands dealing with wide-ranging product margins.
At Launch, we’ve been asking: “What if ROAS is the wrong KPI altogether?”
This piece is based on a real (anonymised) example where we helped a client ditch ROAS in favour of a profit-led framework. The outcome? Higher margins, smarter spend, and a more resilient account heading into peak seasonality.
ROAS = revenue ÷ ad spend. Simple maths. But it doesn’t tell you:
In short, ROAS might make your campaigns look good. But it won’t help you scale profitably.
Our client — a major caravan accessories brand — came to us with a simple brief: “We need to hit a 5x ROAS.
Our first question: Why 5x? (Thanks, Taiichi Ohno of Toyota Motor Corporation.)
After a few more rounds of “Why?”, the answer emerged: “Because that’s when we’re profitable.”
And there it was. The real KPI wasn’t ROAS — it was net profit.
They weren’t alone. Many brands default to ROAS because it’s easy to track and compare. But ROAS is just a proxy — and often a poor one — for what really matters to the business.
This client had:
On top of this, they were allocating budget based on surface-level efficiency, not true profitability.
Here’s what we did:
We worked with the client to group products in tiers according to their profit margin:
This allowed us to set performance expectations based on profitability, not arbitrary ROAS goals.
We introduced advanced custom label structures, including product status, ROAS, margin and tightly knit categories. These margin-based labels in the product feed allowed us to implement auto-exclusions for low-margin, low-ROAS SKUS. No more wasted spend. Alongside structuring campaigns by margin to allow more room for lower ROAS targets in higher margin campaigns = more profit.
We built a custom metric to track average margin and net profit estimates across campaigns — giving us a better picture of real-time account health.
By shifting to a margin-based build, it allowed us to push budget at high margin campaigns with better net profit, thus improving efficiency without increasing spend.
ROAS: 4.64
ROAS: 5.1
Budget increase: just 40%
Budget down 19%
Net profit barely moved, proving account efficiency had skyrocketed
Budget down 37%
Revenue only down 23%
ROAS jumped to 8.83
Despite spending less, the account kept delivering more bang per buck — the clearest sign that a profit-led approach was working.
This isn’t about one brand. This is about a broader industry problem: we’ve been using the wrong metrics to measure success.
ROAS is only useful if your margins are flat and your costs are simple, which they rarely are. Moving to a net profit-based framework gives your team a smarter way to grow accounts, especially in volatile markets.
Stop optimising for ROAS. Start optimising for profit.
You’ll not only make better decisions, you’ll build stronger cases for budget increases and long-term investment.
It’s time to grab that MOP and clean up that misleading data.
Our team is here to help. Launch is a performance marketing agency for brands that want more than a quick spike – they want growth that lasts. Contact us today and we can help you get your measurement in order.
Luke Hill is a Senior Paid Media Manager for Launch with 8 years of experience in paid media and 10 years in digital marketing. Luke leads paid media campaigns and strategy, championing a data-driven approach.
Connect with Luke on LinkedIn.