Scaling an ecommerce business is no easy feat. It requires a strategic mindset, a willingness to invest in long-term growth, and a deep understanding of your metrics. Yet, it seems that many ecommerce brands continue to chase Return on Ad Spend (ROAS) as their primary performance metric, often at the expense of long-term growth. Here’s why ROAS is an overrated metric and how ecommerce brands can adopt a more sustainable paid media strategy in 2025.
What Is ROAS, and Why Do Brands Love It?
ROAS measures the revenue generated for every dollar spent on advertising. It’s simple, it’s tangible, and it’s appealing to marketers and executives alike. After all, who wouldn’t want to see a $15 return on every $1 invested?
But here’s the catch: ROAS doesn’t account for the full picture. For instance:
- Overemphasis on Retargeting: It’s easy to achieve high ROAS by targeting users who are already familiar with your brand, such as website visitors or past purchasers. While this might look impressive on paper, it doesn’t really help you grow your customer base.
- Ignoring Customer Acquisition Costs (CAC): ROAS doesn’t consider how much it costs to acquire a customer, nor does it factor in long-term value (LTV).
- Missed Opportunities for Brand Awareness: Focusing solely on ROAS can starve your top-of-funnel (TOF) efforts, limiting your ability to attract new customers and scale.
Why Chasing ROAS Can Hurt Your Paid Media Strategy
To illustrate why ROAS isn’t always the best metric, think about this example:
You run a campaign with a ROAS of 15. Sounds great, right? But how did you achieve it? If it involved only retargeting past visitors, you’re not expanding your audience or driving net-new customers. Over time, this strategy will dry up your TOF pipeline, leaving you with dwindling growth and higher customer acquisition cost CAC.
In contrast, a lower ROAS from a robust TOF campaign might actually set your business up for long-term success by:
- Attracting new customers who fuel future growth.
- Diversifying your audience base and reducing dependency on existing customers.
- Increasing brand awareness and driving additional traffic to your website.
These are all important things to consider when it comes to your paid media strategy.
The Costs of Building and Scaling a Paid Media Strategy
Building a scalable paid media strategy in 2025 requires more than just clever retargeting. It demands investments in:
- Creative and Copy Development: High-quality creative assets tailored to your audience segments can make or break your campaigns. Meta Ads, for example, favor engaging and visually compelling content.
- Campaign Testing: Successful paid media strategies rely on rigorous testing of creative, ad formats, targeting, and messaging to identify what resonates best with your audience.
- Top-of-Funnel Ads: Prospecting campaigns on platforms like Meta and Google Ads are critical for driving awareness and filling your customer pipeline.
- Landing Page Optimization: Dedicated landing pages aligned with your paid ads improve conversion rates and enhance the user experience.
This holistic approach may reduce your ROAS in the short term, but it will set you up for sustainable growth.
Paid Media Strategies for Ecommerce Brands in 2025
To move away from ROAS dependency and build a sustainable paid media strategy, ecommerce brands should focus on the following tactics:
1. Invest in Top-of-Funnel Campaigns
- You’ll want to allocate a portion of your ad budget to prospecting campaigns aimed at reaching new audiences.
- For example: Use Meta Ads’ Lookalike Audiences to find users similar to your existing customers.
- Combine broad targeting with engaging creative to maximize reach and drive awareness.
2. Test, Test, Test
- Continuously test ad creative, formats, and messaging to identify high-performing combinations.
- For example: A/B test carousel ads versus video ads on Meta to see which format drives better engagement.
- Regularly refresh your creative to combat ad fatigue and maintain strong performance.
3. Focus on Lifetime Value (LTV)
- Shift your mindset from short-term ROAS to long-term LTV.
- For example: Use Google Ads’ Customer Match feature to target high-value segments with tailored messaging.
- Retarget past customers with cross-sell or upsell offers to maximize their lifetime value.
4. Leverage Automation
- Platforms like Meta and Google Ads offer automation tools to optimize bidding and targeting.
- For example: Use Google’s Performance Max campaigns to reach audiences across multiple channels, including Search, Display, YouTube, and Gmail.
- Rely on automation to streamline campaign management while focusing on strategy and creative.
5. Diversify Your Channels
- Don’t put all your eggs in one basket. Use a mix of paid media platforms to reduce dependency on a single channel.
- For example: Combine Meta Ads for high-impact visuals with Google Ads for intent-based targeting.
- Experiment with emerging platforms like TikTok Ads to capture younger demographics.
Balancing ROAS with Growth Metrics
While ROAS can provide useful insights, it shouldn’t be the sole metric guiding your strategy. Instead, focus on a balanced approach that considers several different metrics:
- Customer Acquisition Cost (CAC): Track how much you’re spending to acquire each new customer.
- Conversion Rates: Monitor how effectively your ads are turning clicks into sales.
- Lifetime Value (LTV): Measure the total revenue generated by a customer over their lifetime.
- Revenue Growth: Focus on overall revenue growth rather than just short-term profitability.
By taking all of these metrics into account, you’re more likely to grow.
So, are you convinced? The truth is that chasing ROAS might provide short-term gratification, but it’s not a sustainable growth strategy for ecommerce brands. By shifting your focus to TOF initiatives and adopting a balanced paid media strategy, you can build a scalable business that thrives in 2025 and beyond.
Remember, building a brand is tough. It takes time, money, and resources—but the rewards are worth it. Stop chasing ROAS and start chasing sustainable growth.
