Understanding True ROAS
Platform ROAS vs Blended ROAS vs Profit ROAS vs Contribution Margin
The e-commerce industry uses 'ROAS' loosely. At least four distinct metrics exist, each measuring something different. Understanding the differences determines whether you make decisions on real profit or reporting artifacts.
Platform ROAS
What Google Ads or Meta reports as your return. Calculated from platform-tracked conversions and attributed revenue. Suffers from click-through attribution windows, view-through inflation, cross-device gaps, and double-counting across platforms. It's the number the platform wants you to optimize against.
Blended ROAS
Total store revenue divided by total ad spend across all channels. Avoids platform double-counting but loses campaign-level actionability. A 5x blended ROAS tells you nothing about which campaigns are profitable.
Profit ROAS
Net profit per ad dollar spent. It starts from Shopify order data, deducts COGS, refunds, transaction fees, and Shopify charges, then attributes profit back to campaigns. This is what GravityAds True ROAS calculates. A campaign with 4x Platform ROAS might show 0.8x Profit ROAS, meaning it actually loses money.
Contribution Margin
Revenue minus all variable costs (COGS, fulfillment, transaction fees, ad spend) for a given unit, product, or period. GravityAds calculates this at the product and campaign level, giving you the most accurate measure of whether an activity generates value.