From ROAS to Real Profit: Building Performance Campaigns with Margins in Mind"Estimated Read Time: 5 minutes

Introduction

ROAS (Return on Ad Spend) has long been the north star for performance marketers. But in 2025, high-ROAS campaigns are no longer enough. Why? Because ROAS doesn’t always translate to actual profit.

Margins matter.

If you're selling a product with a 60% COGS and another 15% eaten up by logistics and warehousing, even a 3x ROAS might leave you in the red after discounts, returns, and platform fees.

This blog explores how to shift your focus from vanity metrics to real profitability — and how to design performance campaigns that account for margins from day one.

Why ROAS Can Be Misleading

ROAS is a revenue-focused metric. It tells you how much money you made for every rupee/dollar spent. But it ignores:

• Cost of Goods Sold (COGS)

• Fulfilment & Warehousing Costs

• Discounts & Returns

• Payment Gateway Fees

• Affiliate/Influencer Commissions

• Team Costs & Platform Fees

Imagine this:You spend ₹1L and make ₹3L. Your ROAS is 3.But if your net margin is 25%, your actual profit is ₹75K – barely breakeven after considering fixed costs and customer support.

Profit-First Campaign Planning: The 2025 Framework

1. Know Your Break-Even ROAS (BEROAS)Calculate the exact ROAS you need to break even using:

BEROAS = 1 / Profit MarginExample: If your profit margin is 30%, BEROAS = 3.33

Any campaign performing under this is losing you money.

2. Structure Campaigns by Contribution MarginBuild ad sets around:

• High-Margin SKUs

• Bundled Offers with Better Margins

• New Products with Low CAC but High Retention Potential

Use AOV and LTV as strategic levers here.

3. Layer in First-Party Data to Improve CACTargeting returning customers or lookalikes of high-margin buyers reduces CAC. Pair this with GA4 or Meta’s Conversion API to drive smarter optimizations.

4. Test Discount Thresholds CarefullyDon’t blindly offer 20% off. Test what discount gives the best lift without killing margins. Often, a 10% discount with urgency messaging converts just as well.

5. Monitor True Profit Per Campaign WeeklyPull your Meta/Google Ads data, Shopify COGS, and fixed costs into one Google Sheet (or automated dashboard). Evaluate profit per campaign, not just ROAS.

A Quick Profit Audit Template

Campaign Name	Spend	Revenue	ROAS	COGS	Net Margin	Actual Profit
Summer D2C Drop	₹50,000	₹1,50,000	3x	₹75,000	30%	₹45,000
Gut Health Bundle	₹30,000	₹75,000	2.5x	₹48,000	20%	₹12,000

Notice: Campaign #2 has a decent ROAS but almost no profit due to lower margins.

Retention = Margin Booster

Want to increase profit without raising ROAS? Retain customers.

Set up post-purchase email flows, retarget existing buyers, and create bundles that drive second and third purchases. Retention = compounding profit with near-zero CAC.

Closing Thoughts

In 2025, smart performance marketing is about profit per campaign, not just performance metrics. ROAS will get you clicks, but margin-led thinking will grow your business.