Measuring Ads ROI
5 min read
ROAS (Return on Ad Spend) is the metric every Egyptian brand owner quotes. It's also the metric that most often creates false confidence. Here's how to measure whether your ads are actually making you money — not just driving revenue.
ROAS is not profit
ROAS = revenue from ads ÷ ad spend. A 3× ROAS sounds great — you made 3 EGP for every 1 EGP spent. But ROAS ignores COGS, COD fees, returns, and operating costs. If your product has a 40% gross margin, a 3× ROAS means your gross profit from ads is 40% of the revenue, minus the ad spend: 3,000 EGP revenue × 40% = 1,200 EGP gross profit − 1,000 EGP ad spend = 200 EGP. That's barely 7% margin before you add any other costs.
The true ROI calculation
True Ad ROI = (Revenue − COGS − COD fees − Returns cost − Ad spend) ÷ Ad spend. Or simplified: Contribution margin per order × number of orders, minus ad spend. If each delivered order contributes 80 EGP of margin after COGS and COD fees, and you spend 1,000 EGP on ads to generate 10 orders, your contribution is 800 EGP against 1,000 EGP spend — a loss.
Attribution: the Egyptian market challenge
In Egypt, many customers see your Instagram ad, save your profile, and order via WhatsApp three days later. That order will never be attributed to your ad. This means Meta's dashboard will undercount conversions. Run brand lift tests, track revenue trends alongside spend, and don't obsess over last-click attribution.
Campaign-level vs. product-level ROI
Not all products are equal in ads. Some convert well from ads. Others sell better organically or via WhatsApp. Run a weekly report: ad spend per product category vs. orders generated vs. contribution margin. Cut spend on products where ad ROI is negative. Scale spend where it's strong.
The minimum viable ROAS
Work backwards from your numbers. If your product has a 35% gross margin and your COD fees eat 8% of revenue, your contribution margin is ~27%. You need your revenue to be at least 1 ÷ 0.27 = 3.7× your ad spend just to break even on gross profit. Your minimum viable ROAS is 3.7×. Below that, every ad sale loses you money.
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