Symptom
The distortion lives in ROAS — it divides revenue by ad spend without accounting for the variable costs required to deliver the product behind that revenue.
You asked
Marketing performance is evaluated using top-line metrics that exclude key costs — creating a false view of profitability while contribution margin declines.
Symptom
The distortion lives in ROAS — it divides revenue by ad spend without accounting for the variable costs required to deliver the product behind that revenue.
Cause
Marketing dashboards maximize revenue efficiency relative to ad spend — discount-heavy and high-fulfillment channels produce strong ROAS while their variable cost structures compress contribution margin simultaneously.
Impact
Budget is scaled into channels that appear efficient on ROAS but reduce overall business profitability — McKinsey documents fifteen to thirty-five percent overinvestment in channels with strong ROAS and weak contribution margin.
Marketing performance is evaluated using top-line metrics that exclude key costs — creating a false view of profitability while contribution margin declines.
The distortion lives in ROAS — it divides revenue by ad spend without accounting for the variable costs required to deliver the product behind that revenue.
Marketing dashboards maximize revenue efficiency relative to ad spend — discount-heavy and high-fulfillment channels produce strong ROAS while their variable cost structures compress contribution margin simultaneously.
Budget is scaled into channels that appear efficient on ROAS but reduce overall business profitability — McKinsey documents fifteen to thirty-five percent overinvestment in channels with strong ROAS and weak contribution margin.