ROAS is everywhere in D2C marketing. It's the headline metric in most performance marketing dashboards. But it's a proxy — and like all proxies, it can mislead you if you don't understand what it's measuring.
The number that actually tells you whether your marketing is working is contribution margin: what's left after you subtract your COGS, shipping, returns, and marketing costs from revenue. This is the number that determines whether a brand is building toward profitability or just optimizing for scale.
I've seen brands with a strong ROAS that were losing money on every order because returns were high or shipping costs were eating the margin. And I've seen brands with a 'weak' ROAS that were genuinely profitable because their AOV was high and returns were low.
If you're working in growth, make sure you understand the full unit economics before you optimize for a single metric. ROAS tells you about advertising efficiency. Contribution margin tells you whether the business is actually working.
The best growth marketers I've seen always have a clear picture of the margin stack. It changes the decisions you make at every level — budget allocation, creative strategy, channel mix.