ROAS and Profitability Math

Turn spend and revenue into the numbers that decide whether a campaign lives. Reads only; this is math, not a spend change.

Confirm the account: list_connected_accounts, then pull real figures with the supported performance tools (pull_google_ads_performance, pull_meta_ads_performance, pull_linkedin_ads_performance, pull_microsoft_ads_performance, pull_reddit_ads_performance). Never invent revenue or margin; if the user has not given margin or conversion value, ask rather than assume.

The core numbers

• ROAS = revenue / ad spend. A ratio, before costs.
• CPA = spend / conversions. What one conversion costs.
• Break-even ROAS = 1 / gross margin. At 50% margin you break even at 2.0x; at 25% margin, 4.0x. Below break-even, spend loses money even when ROAS looks positive.
• Target ROAS = break-even divided by the profit multiple the business wants. Always state the margin behind it.
• Profit = (revenue times margin) minus ad spend. ROAS can look healthy while profit is negative once margin is real.
• Max CPC = target CPA times conversion rate. Bidding above it pushes CPA past target.
• LTV:CPA = lifetime value / CPA. Roughly 3:1 or higher is the usual healthy line for a recurring-revenue model.

How to use it

• Compute blended (all platforms) and per-platform; a strong average can hide a channel losing money.
• Compare CPA to real customer value or LTV, not a vanity target.
• Platform-reported revenue over-claims. Reconcile with the attribution skill before trusting a single platform's ROAS.

Report

Show the inputs (spend, revenue, margin), the derived ROAS/CPA/break-even, and the profit. State the margin assumption plainly. Then translate into a decision: at target and profitable, scale with the optimize skill; below break-even with no fixable cause, see kill-scale-rules.

Rules

• Every ROAS needs its margin and attribution basis stated, or it is a half-number.
• Use real figures from the tools; ask for margin or conversion value rather than guessing.
• Break-even, not gross ROAS, is the line that decides profitability. Feed the numbers into the mmm-budget-planner skill for cross-platform reallocation.