Return on ad spend is a vanity metric
ROAS made sense when margins were comfortable and returns were rare. Neither is true in 2026. Here is what to put in its place.
Sophia Båge · Cut Waste
Return on ad spend was a useful metric in 2015. In 2026, it is mostly a vanity number that lets people feel good about budgets that are not earning their keep.
Why ROAS got popular
It is simple, every platform reports it natively, and it travels well in a slide. None of those are reasons to steer a P&L by it.
What ROAS hides
- Margin: a 6x ROAS on a 10% margin product loses to a 3x ROAS on a 60% margin product.
- Returns: revenue counted at checkout that walks back through the door six weeks later.
- Cannibalization: brand and search taking credit for sales that would have happened anyway.
- Customer quality: discount hunters who convert once and never come back.
If your ROAS is going up and your contribution margin is flat, the metric is the problem, not the channel.
What to use instead
- POAS, profit on ad spend, as your day-to-day steering metric.
- Incrementality tests, monthly or quarterly, to check whether the spend is causing the sale.
- New-customer contribution margin, to separate acquisition from harvesting.
Stop optimizing toward a number that makes platforms look good. Start optimizing toward the number that makes the business look good.
About the author
Sophia Båge
Co-Founder, Untangle Collective
Sophia Båge is Co-Founder of Untangle Collective. She works with ecommerce leaders to reconnect performance marketing with profitable growth. Identifying where revenue and margin become disconnected, and what should scale instead.
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