Return on advertising spend is a useful performance metric, but only with accurate attribution.

ROAS connects advertising investment to revenue. The calculation is simple:

ROAS = (Sales Attributed to Ads) / (Cost of Ads)

The result can help marketers compare campaigns and allocate budgets.

ROAS’s usefulness depends on the accuracy of its attribution.

Trackable Sales

For all of its potential, ROAS has an Achilles heel, according to Mike Murphy, vice president of marketing at Incremental, an attribution firm.

ROAS is misleading if the process gives an ad too much or too little value or ignores purchase intent and additional sales.

Imagine an ecommerce company that spends $10,000 on retail media. The store attributes $50,000 in sales to the campaign using a last-touch attribution model. The resulting ROAS ratio is 5:1, meaning that for every dollar spent, the store gains $5 in revenue.

The seemingly obvious decision would be to invest more in retail media advertising. But this example has a problem.…