The metrics that decide profit, defined.
Plain, technical definitions of the numbers margin-true operators actually use, each with its formula and, where it helps, a calculator. Start with the ROAS vs POAS pillar.
Profit & margin
Ad efficiency
Break-even ROAS
The minimum return on ad spend at which an order neither makes nor loses contribution margin, equal to 1 divided by your contribution margin percentage.
ROAS (return on ad spend)
Attributed revenue divided by ad spend; a revenue-side efficiency ratio that says nothing about whether an order is profitable until you compare it to break-even ROAS.
MER (marketing efficiency ratio)
Total revenue divided by total marketing spend; a top-down, account-wide blended measure that sidesteps the double-counting in channel-level ROAS.
POAS (profit on ad spend)
Gross profit divided by ad spend; the contribution-margin analogue of ROAS, and the established industry synonym for contribution-margin ad efficiency.
Attribution
Incrementality
The causal lift in conversions attributable to advertising, measured by comparing an exposed group against a matched holdout that did not see the ads.
Incremental ROAS (iROAS)
Incremental revenue (the lift over a holdout) divided by incremental spend; the causal, double-count-free version of ROAS.
Multi-touch attribution (MTA)
A measurement approach that distributes conversion credit across the multiple touchpoints in a customer journey using user-level data.
Marketing mix modeling (MMM)
A statistical method that estimates each channel's contribution to sales from aggregate historical spend and outcome data, with no user-level tracking required.
Customer economics
Blended CAC
Total sales and marketing spend divided by all new customers, including organic and word-of-mouth; a true all-in cost that can flatter or hide paid-channel performance.
New-customer CAC
Paid sales and marketing spend divided only by the customers acquired through paid channels; isolates the true cost of bought growth.
Marginal CAC
The cost of acquiring the next or last customer, measured as the change in spend divided by the change in customers; the decision metric for whether to scale.
LTV:CAC
The ratio of customer lifetime value to acquisition cost; with LTV computed on contribution-margin dollars, the headline test of acquisition economics.
CAC payback period
How long it takes for the contribution margin a customer generates to repay their acquisition cost; the working-capital companion to LTV:CAC.