Why your ROAS is lying

Your campaign shows a ROAS of 8. Well done. Except you might be losing money.

Platform ROAS measures one thing: the revenue Google or Meta attributes to itself, divided by media spend. Two words are the problem.

"Attributes to itself," first. The platform counts the sales it touched, not the ones it created. Your brand campaign captures customers who were already typing your name: they were going to buy anyway. That ROAS inflates a result you already had in the bag.

"Revenue," next. ROAS reasons in revenue, never in margin. On a product with a 20% margin, a ROAS of 8 leaves a starvation-level profit once the ads, returns and logistics are paid for. On another product, the same 8 makes you rich. Same number, two opposite realities.

ROAS isn't wrong. It simply answers a different question from yours. You want to know whether the advertising creates profit. It tells you whether the platform attributes revenue to itself.

The metric that doesn't lie: incremental profit. What you earn on top, margin deducted, thanks to one euro invested. Harder to measure. But it's the only number that pays your salaries.

How do you get close to it? You stop taking the platform's word for it, and you test. Switch off the ads in one geographic area, let them run elsewhere, compare the sales: the gap is the real incremental. That's the principle of geo-tests. Google Ads offers it under the name geo-based Conversion Lift (Goals › Lift measurement menu): it splits your regions into exposed and unexposed groups, and gives you back an iROAS, the incremental ROAS - the only version of the number that tells the truth. Two caveats to know: the tool isn't open to all accounts (you have to go through your Google contact), and Google keeps changing these features, so check the current state before scoping a test.

The reflex to keep: before congratulating a campaign, ask a single question. If I switch it off, what do I really lose? Until you can answer that, your ROAS isn't measuring your performance. It's measuring the platform's ability to sell itself.