Advertising skill guide
ROAS, CAC and the metrics that matter
Calculate ROAS correctly
ROAS = attributed revenue ÷ media spend. $6,000 attributed revenue on $2,000 spend = 3.0x or 300%. ROAS is not profit and is not ROI. Use a consistent revenue basis, subtract refunds and account for attribution overlap.
Find the break-even point
If contribution margin before ads is 40%, media break-even ROAS is 1 ÷ 0.40 = 2.5x, before fixed overhead and other acquisition costs. For a $100 order with $60 variable costs, $40 remains for media; a sustainable target may need a lower CPA than $40.
CAC, MER and profit
Media CPA is spend per conversion; media CAC is spend per acquired customer. Fully loaded CAC includes relevant creative, agency, tools and sales costs. MER = total business revenue ÷ total ad spend over a consistent period; it is a blended ratio, not attributed channel ROAS. Contribution after advertising = net revenue minus variable costs minus advertising.
For lead generation
Track lead → qualified lead → meeting → opportunity → closed customer. At $50 CPL and a 10% lead-to-sale rate, media CAC is $500. A $25 lead with 2% close rate has $1,250 media CAC. Return closed revenue and value where supported rather than rewarding junk leads.
Reconcile attribution
Compare platform reports, analytics and the sales/checkout system. Use consistent windows and time zones; separate click-through from view-through. Do not add each platform's attributed revenue together: multiple platforms may claim the same sale. Deduplicate transaction and conversion IDs.
Measure incrementality
Attribution assigns credit; incrementality asks whether the sale would have occurred without advertising. Use holdout or lift experiments when scale permits. Small tests may not support lift measurement; state that limit instead of claiming causation from a tracking report.
Daily monitoring
Check spend pacing, broken destinations, payment/stock availability, disapprovals, duplicate events, geography and unusual traffic. Repair technical faults immediately. Monitor lead response time and whether CRM records receive campaign context.
Weekly monitoring
Review mature CPA/ROAS, new-customer share, qualification, funnel conversion, search terms/placements, frequency, creative fatigue and refund rate. Look at marginal results after budget changes, not just blended totals. Long-cycle B2B needs cohort-based pipeline and closed-revenue reviews.
Glossary
CTR = clicks ÷ impressions. CPC = spend ÷ clicks. CPM = spend ÷ impressions × 1,000. CVR = conversions ÷ relevant visits/clicks using a stated denominator. CPA = spend ÷ conversions. Frequency = impressions ÷ reach. LTV is customer value over a defined horizon; use realized contribution and retention evidence before funding losses with speculative LTV.
Frameworks, examples and budget recommendations are editorial guidance. Use your verified business data and current account requirements when making a spending decision.