Picture this familiar boardroom scenario: “How’s our digital marketing performing?”
“Great news – we’re hitting a 5:1 ROAS across all channels!”
Cue the satisfied nods and budget approvals. But here’s what nobody’s talking about: that impressive number might be masking some serious growth problems.
As marketing leaders, we’ve become addicted to Return on Ad Spend (ROAS) because it feels bulletproof. It’s simple math, looks fantastic in presentations, and gives everyone that warm fuzzy feeling that money isn’t being wasted.
The reality? Why CMOs should rethink ROAS as a north star metric becomes clear when you realize this single number often creates tunnel vision that actually stunts long-term business growth.
Don’t get me wrong – I’m not here to trash ROAS entirely. But if you’re serious about building sustainable revenue growth, expanding market share, and creating real customer value, it’s time for a more nuanced approach to measuring marketing success.
The Hidden Problems With ROAS-First Thinking
Let’s dig into why ROAS can be deceiving when used as your primary performance indicator.
It Creates a False Sense of Security
ROAS feels scientific because it’s mathematical: total revenue divided by advertising spend. Invest $5,000 and generate $20,000 in sales? That’s a clean 4:1 ratio that makes everyone happy.
But here’s where it gets tricky:
- Your best ROAS often comes from people already buying from you. Branded search campaigns and retargeting audiences typically show stellar returns because they’re capturing existing demand, not creating new growth.
- Profit margins get completely ignored. That amazing $50 customer acquisition cost might be profitable for your premium products but catastrophic for budget items.
- Innovation dies. When teams are measured purely on ROAS efficiency, they’ll kill experimental campaigns or upper-funnel investments that could drive future revenue.
It Encourages Short-Term Optimization
Here’s something most marketing teams don’t discuss openly: ROAS can be easily manipulated.
Agencies and internal teams know exactly how to make this metric look good. They’ll shift budget toward bottom-funnel campaigns, focus on existing customers, and avoid any “risky” audience testing.
The result? Your marketing becomes incredibly efficient at harvesting existing demand while doing nothing to create new opportunities.
Timing Becomes Everything (And Nothing)
ROAS is essentially a snapshot based on whatever reporting window you choose. But customer behavior doesn’t care about your monthly reports.
You might lose money acquiring a customer today, break even after two weeks, and see significant profit after 90 days. ROAS measured at day 30 tells you nothing about the actual relationship value.
This timing issue becomes especially problematic for businesses with longer sales cycles or subscription models where the real value emerges over months or years.
When ROAS Actually Makes Sense
Before we completely abandon ship, let’s acknowledge where ROAS genuinely provides value.
Strategic Use Cases for ROAS
Campaign comparison and optimization. When evaluating similar campaign types or testing creative variations, ROAS gives you a quick efficiency benchmark.
Short-term promotional tracking. For flash sales, seasonal campaigns, or time-limited offers, immediate ROAS measurement makes perfect sense.
Platform and channel evaluation. If you’re comparing Google Ads to Facebook Ads performance for similar audiences, ROAS helps identify where your dollars work hardest.
Remarketing efficiency. Since these campaigns target people already familiar with your brand, ROAS becomes a useful gauge of message effectiveness and audience quality.
The key insight? Treat ROAS as a diagnostic tool, not your destination. It’s one data point in a much larger story about your marketing effectiveness.
Better North Star Metrics For Sustainable Growth
So what should replace ROAS as your primary success indicator? The answer depends on your business model, but here are the metrics that typically provide clearer signals about long-term marketing health.
Customer Lifetime Value to Customer Acquisition Cost Ratio (CLV:CAC)
This metric forces you to think beyond the first transaction. If you’re acquiring customers who buy once and disappear, you’ll never build a sustainable business.
Why it works: CLV:CAC shows whether your marketing investments create lasting value. A healthy ratio typically runs 3:1 or higher, depending on your industry and margins.
How to implement: Track acquisition costs by campaign and model projected customer value based on historical purchase behavior. Look for campaigns that might have higher upfront costs but deliver customers with stronger long-term value.
Incremental Revenue Growth
Not all revenue is created equal. Measuring incrementality helps you understand what your paid campaigns actually add versus what would have happened anyway.
Why it matters: Many campaigns get credit for conversions that were going to occur regardless. Branded search is the classic example – people searching for your company name were likely buying anyway.
Testing approaches:
- Geographic holdout tests
- Audience exclusion experiments
- Platform-specific incrementality tools from Google and Meta
While incrementality can be challenging to measure precisely, it brings crucial clarity about where your advertising dollars create genuine lift.
Customer Payback Period
This metric tracks how long it takes for acquired customers to recoup their acquisition cost through repeat purchases or ongoing value.
Strategic value: Not every marketing investment needs immediate returns, but leadership should align on acceptable payback timeframes. This transparency enables more confident investment in top-funnel activities.
Implementation: Tag customer cohorts by acquisition source and track revenue progression over time. You’ll quickly identify which campaigns deliver fast-paying customers versus those requiring longer-term nurturing.
New Customer Revenue Percentage
Instead of optimizing for cheapest conversions or highest ROAS, focus on expanding your actual customer base.
Business impact: This metric keeps marketing focused on market share growth rather than just retargeting your existing audience pool.
Measurement strategy: Segment all campaign performance by new versus returning customers. Use CRM integration or post-purchase surveys to identify truly new customer acquisition by channel.
Fixing The Organizational Alignment Problem
The biggest barrier to better marketing measurement isn’t technical – it’s organizational. When CMOs set ROAS targets without context, execution teams optimize for efficiency over growth.
How Misalignment Happens
Here’s the typical breakdown:
- Leadership sets simple targets. “We need 4:1 ROAS to justify our spend.”
- Teams optimize for what’s easiest. Branded campaigns, retargeting, and low-risk audiences get priority.
- Growth stagnates. New customer acquisition slows as budgets shift toward “safe” channels.
- Performance plateaus. Despite great ROAS numbers, revenue growth stalls.
This cycle continues until someone asks the uncomfortable question: “Why aren’t we growing if our marketing is so efficient?”
Creating Better Alignment
Reset expectations with finance teams. Show your CFO examples of campaigns with lower short-term ROAS that delivered high-value, repeat customers over time. Help them understand marketing performance compounds.
Educate execution teams. Don’t just say “ROAS isn’t our priority anymore.” Explain what you’re optimizing for instead and why those metrics matter for business goals.
Set realistic benchmarks by funnel stage. Prospecting campaigns will never look as efficient as remarketing efforts. Create different performance expectations based on campaign objectives.
Building A Layered KPI Framework
Moving beyond ROAS doesn’t mean abandoning measurement – it means getting more sophisticated about what you track and when.
Short-Term Optimization Metrics
These guide daily campaign management and tactical decisions:
- ROAS (by campaign and platform)
- Cost per acquisition
- Conversion rates
- Click-through rates
- Impression share
Use case: Weekly optimization and efficiency monitoring. These help maintain performance but shouldn’t drive strategic decisions.
Mid-Term Growth Indicators
These show whether your marketing builds momentum toward larger goals:
- Payback period trends
- New customer acquisition rates
- Micro-conversion growth (demos, signups, app installs)
- Assistant conversion paths
Use case: Monthly reviews and quarterly planning. These metrics help evaluate whether top-funnel investments are creating future opportunities.
Long-Term Strategic Health Metrics
This is where your real North Star lives:
- Customer lifetime value
- CLV to CAC ratios
- Retention and churn rates
- Repeat purchase rates
- Gross margin by acquisition channel
Use case: Annual planning and resource allocation. These reflect the outcomes that truly matter for business sustainability.
Practical Steps To Implement Change
Ready to evolve beyond ROAS-centric measurement? Here’s how to start transitioning your organization tomorrow.
Audit Your Current Optimization Targets
Begin with a reality check. Ask your teams or agencies to show you the actual goals configured in their campaign platforms. Are they optimizing for purchases, leads, or something vague like clicks?
You might discover significant misalignment between strategic goals and tactical execution. If you want market share growth but your team focuses on protecting branded search efficiency, that’s a disconnect worth addressing immediately.
Restructure Team Incentives
Review how you evaluate internal team performance and agency contracts. If ROAS is the primary success metric, people will naturally optimize for it regardless of business impact.
Consider restructuring evaluation criteria to include new customer acquisition, customer quality metrics, or long-term value indicators alongside efficiency measures.
Invest In Better Data Infrastructure
You don’t need perfect attribution to start measuring better metrics. However, you do need visibility into customer behavior over time.
Start building basic models using existing tools:
- Google Analytics 4 for user journey analysis
- CRM exports for customer value tracking
- E-commerce platform data for repeat purchase patterns
Even directional insights about customer payback and lifetime value can dramatically improve strategic decision-making.
Change How You Discuss Performance
Your language as a marketing leader sets the tone for your entire team. Instead of asking “What’s our ROAS this week?” in every meeting, try:
- “How many high-value customers did we acquire?”
- “Which campaigns are building our new customer base?”
- “What’s our customer payback trend looking like?”
These questions signal that you value growth and customer quality over short-term efficiency metrics.
Phase In New Metrics Gradually
Don’t abandon ROAS overnight. Instead, gradually introduce additional context metrics alongside your existing reports.
Start presenting ROAS data with customer lifetime value insights, new customer percentages, or payback period trends. This helps your organization understand the fuller story without creating measurement chaos.
The Path Forward: Marketing Metrics That Actually Matter
The goal isn’t to make measurement more complicated – it’s to make it more meaningful.
ROAS will always have a place in your marketing toolkit. But when it becomes the only metric that matters, you risk optimizing your way into stagnation.
True marketing success comes from balancing efficiency with growth, short-term performance with long-term value creation. This requires metrics that reflect how your business actually operates and what your customers truly value.
Start by identifying which metrics align with your real business objectives. Get your team aligned on why these measurements matter. Then give everyone permission to optimize for outcomes that drive sustainable growth, even if it means accepting lower efficiency in the short term.
The companies that master this balance – the ones that measure what matters while maintaining operational efficiency – those are the brands that don’t just survive market changes. They create them.
Your north star metric should guide you toward building something lasting, not just something that looks good in this quarter’s presentation.
