Real ROAS
Real ROAS is return on ad spend calculated on orders that were delivered and collected, and on profit rather than revenue. The ROAS an ad platform shows is calculated on orders when they are recorded and on gross revenue. In a cash-on-delivery market the gap between the two numbers is structural, not a measurement error.
And the platform's number:Platform ROAS = Attributed revenue at order time ÷ Ad spend
The three gaps
The platform counts the order; you get paid from the delivered one
The moment a customer places an order, the platform records a conversion at its value. But with cash on delivery, money only comes in once the order arrives and is collected. Any order refused at the door or returned stays counted in the platform's number with zero revenue.
So the platform's number measures demand, and yours measures collection. The ratio between them is your delivery rate, a number you measure yourself rather than take from anyone. How to calculate it properly.
The platform counts revenue; you live on profit
ROAS divides revenue by spend. But revenue contains product cost, shipping, collection commission and packaging. A campaign at 3× ROAS on a product with a 25% margin loses money, and the platform does not know your margin to tell you.
Attribution is not causal measurement
The platform's number is built on an attribution model and a time window: it credits itself with conversions that happened after a view or click within a set period. That measures association inside a window. It does not prove the ad caused the sale.
Beware the opposite exaggeration: this does not mean attributed sales did not come from the ad. It means the result depends on the attribution model and its window, and that the ad's true incremental effect, the sales that would not have happened without it, may be higher or lower than the number shown. The only way to estimate it is a controlled experiment such as a lift test or geo experiment, not reading the ads dashboard.
How a 3× campaign loses
| Revenue the platform shows | 300 |
| Profit before ads (25% of revenue) | 75 |
| Ad spend | −100 |
| Result | −25 |
And that is before subtracting the orders that will come back. Calculate your break-even number.
The common mistake
Comparing platform ROAS with "the market number". The comparison fails twice: the market number comes from the same dashboard (so it carries the same three gaps), and break-even ROAS varies with your margin and collection rate. Calculate your own break-even number instead of borrowing someone else's.
FAQ
So is the platform's number useless?
No. It is very useful for relative comparison: which ad beats which inside the same account and window. The trouble starts when it is used as an absolute profitability number.
How do I calculate real ROAS?
You need to link each order to its ad source, wait until it reaches a final state, and calculate profit rather than revenue. The hard part is the linking and the waiting. The arithmetic itself is simple.
How long should I wait before judging a campaign?
Until a reasonable share of its orders reach a final state. Judging a campaign whose orders are all still in shipping measures purchase intent, not profit.
Last updated: