Profitability as the Primary Source of Truth

Introduction

For most direct-to-consumer (DTC) brands, marketing has become a numbers game built on the wrong scoreboard. Teams, ad spend, creative resources, everything is still optimized toward metrics that don’t reflect the true financial outcome of the business.

For most DTC brands, multi-touch attribution profitability debates distract from the only metric that truly matters: profit. To ensure the P&L moves in the right direction. Yet the single largest line item in the budget, paid media, is rarely tracked against that outcome on a daily basis. Because when the person managing your ad budget is essentially the largest investor in your company, they need to be held accountable to financial outcomes, not proxy metrics that can be gamed

Instead, most brands chase proxy metrics: platform-reported ROAS, last-click revenue in Google Analytics, or the latest multi-touch attribution model.

👉 For example, see Shopify’s blog on Marketing Attribution: Definition and Different Models (2024).

The result? Two major problems:

1. Constant distraction. Without a clear framework, teams get stuck on the “metric of the week.” One week it’s last-click ROAS, the next it’s new sessions, the next it’s blended CAC. This constant context-switching wastes time, creates chaos, and burns through ad dollars.
2. Weak connection to reality. Even when a measurement system is in place, the chosen metrics often have little or no causal link to profitability. Attribution models can easily shuffle credit across channels, but they can’t tell you if the business is actually making money.

And that’s the real issue: most DTC operators are optimizing for numbers that don’t move the bank account.

What a Useful Measurement Framework Really Needs

At the end of the day, your measurement system doesn’t need to be complicated. It needs to do three simple things:

• Connect marketing to money. Finance and marketing can’t live in separate worlds, your growth team should be measured on the same numbers that show up in your P&L.
• Stay consistent. If the target keeps shifting from ROAS one week to sessions the next, nobody knows what success really means. The rules can’t change mid-game.
• Keep profit at the center. Because revenue screenshots don’t pay salaries, profit does.

This is the shift modern brands have to make if they want growth that lasts.

Why eCommerce Brands Fell in Love With ROAS (and Why It No Longer Works)

Ecommerce has officially morphed from a marketing exercise into a numbers game wrapped in a marketing cloak.

Let’s give credit where it’s due: ROAS wasn’t always the villain. In fact, for years it was celebrated as a breakthrough.

• Ad costs were low – Inefficiency didn’t hurt because clicks were cheap, competition was lighter, and platforms like Facebook and Google rewarded even the most basic targeting. You could throw money into campaigns and still make a return without really understanding your true unit economics.
• Attribution was cleaner – Consumers shopped on fewer devices, tracking cookies still worked (Pre iOs14), and privacy regulations weren’t yet reshaping the industry. That meant marketers could look at a ROAS figure in Ads Manager and feel reasonably confident it was directionally accurate.
• Growth was cheap – The playbook was simple: money in, sales out. With customer acquisition costs so low, the pressure to track profitability didn’t exist. Revenue growth was enough to keep investors and founders happy, and ROAS gave them the quick-hit metric to justify scaling.

In that environment, ROAS was the right tool for the job. In fact, it was a huge step up from the days when all you could track were CPCs, impressions, or top-line traffic. ROAS gave the industry a common language, a single number everyone could rally around.

The Limitations of ROAS and Multi-Touch Attribution

The Fatal Flaw in ROAS and Attribution

At its core, ROAS is nothing more than a measure of revenue generated per dollar of ad spend. It was never designed to reflect profitability. And yet, for years, the entire DTC ecosystem has treated it like the gold standard.

The problem is this: most good DTC brands only generate 8-15% net profit each year. Between rising ad costs, supply chain pressure, inflation on the rise, DTC is already a razor-thin margin business.

If margins are that fragile, why would we orient ourselves around a metric that only measures revenue? Why would we anchor strategy to a number that can look impressive on the surface but says nothing about whether there’s anything left over at the bottom line?

Even if attribution were perfect, whether single-touch, last-click, or multi-touch, it still wouldn’t solve the bigger issue. ROAS and MTA can’t tell you if your business is profitable.

Here’s where ROAS and, by extension, MTA fall apart for modern DTC operators:

• It ignores COGS. ROAS looks at gross revenue only. It doesn’t deduct COGS, shipping, fulfillment, transaction fees, or overhead (very real costs). You can celebrate a 4x or 6x ROAS while quietly running a negative margins.
• It ignores returns. In verticals like apparel, where return rates regularly hit 30%, your shiny ROAS figure is automatically inflated by 30-40%. The platform counts the revenue, but your P&L shows the refund.
• It rewards bad behavior. One of the easiest ways to inflate ROAS is to retarget your existing customers, people who were likely to buy again anyway. It makes the dashboard look great, but it doesn’t create incremental growth.
• It encourages instant gratification. Because ROAS provides fast feedback, teams get addicted to chasing quick wins at the expense of long-term strategies like retention, bundling, and LTV expansion.
• It’s easy to game. Want to juice your ROAS overnight? Just shorten or lengthen the attribution window. Suddenly, your numbers look better. But which of the 50+ attribution models out there is “true”? None of them provide certainty.

They’re proxy metrics, not truth. And in a margin-thin industry like DTC, optimizing for proxies is the fastest way to end up with revenue growth that looks exciting on the outside while draining your bank account on the inside.

👉 For more context, check out Meta’s own guide on attribution models and attribution settings.

The 4x ROAS Illusion

Imagine this: a DTC brand spends $1.25M on ads and proudly reports a 4x ROAS/MER.

• Ad spend: $1.25M
• Revenue generated: $5M
• Reported ROAS: 4x

On the surface, this looks like a massive success. Screenshots get posted, the marketing team celebrates, and the brand positions itself as a growth machine.

But here’s what happens when you dig deeper:

• The brand runs at a 40% gross margin, leaving $2M in gross profit.
• Subtract the $1.25M ad spend, and you’re left with $750,000.
• Factor in returns and refunds (say 20%, common in categories like apparel), and $1M of revenue disappears overnight. That wipes out another $400,000 in gross profit.
• Suddenly, the $750,000 in “profit” shrinks to just $350,000, and that’s before overhead, payroll, or platform fees.

Why Profitability, Not ROAS, Determines Your Valuation

There’s another angle too many founders overlook, and it’s the one that matters most if your aspiration is to sell your business one day. If you’re building toward a sale, private equity firms and strategic acquirers aren’t buying a revenue multiple, they’re buying your ability to consistently generate profit. They look past vanity metrics and dig into the fundamentals:

• Contribution margin – are you scaling profitably or burning cash?
• LTV:CAC ratio – are you acquiring customers who stick around?
• CAC payback period – how quickly do you recover your acquisition costs?

These metrics prove whether your business is truly scalable, or if it only “works” when fueled by constant injections of ad spend and investor cash.

If your reporting framework revolves around ROAS, you’re optimizing for a number that might impress in a marketing dashboard or on LinkedIn, but it won’t move your valuation when it matters most.

Focusing on profitability doesn’t just make you a sharper operator today. It builds the kind of business buyers fight over tomorrow, the brand that commands a premium multiple, rather than a discount.

Profitability Is the Only Source of Truth

Ad costs are rising. Margins are thin. Returns, platform fees, and supply chain costs are real. In that environment, building your business on ROAS, or even chasing the “perfect” multi-touch attribution model, is like trying to balance on quicksand.

These metrics might offer direction, but they are not truth. They tell you where revenue came from, not whether it turned into profit. And in DTC, where most brands only net 8–15% profit at best, optimizing for revenue alone is a dangerous game. Check out our blog on The Brand Founder’s Guide to Improving Margins

The brands that will win in 2026 and beyond are the ones that shift their mindset: from revenue to profitability, from attribution theory to financial reality. They understand that the single biggest investor in their company is the person deploying ad spend—and they hold them accountable not to proxy metrics, but to the P&L.

Because when it comes down to it, your customers don’t care about ROAS. Neither do your investors. And your buyers certainly don’t.