There are (too) many digital marketers who, when you talk to them about profit, say that they don’t measure profit. “I don’t need to measure profit, I measure ROAS, ROAS is a best practice“.
The fun part of the comment is that the digital marketer IS measuring profit, s/he just doesn’t realize it.
Here’s a table for a digital marketing initiative, broken down into deciles for the sake of illustration.
We see total results on the left – I converted the results to incremental outcomes by decile. In this example, deciles 7/8/9/10 lost money, they were unprofitable.
Now look at Incremental ROAS on the far right. An approximate Incremental ROAS of $2.25 is unprofitable. Anything below that is unprofitable.
If you have the discipline to keep incremental activities above a 2.25 ROAS, you’re generating profit. Good for you!
