(Part 1) Why ROAS Sucks: The New Marketing Metric Everyone Should Use…But Aren’t
Mar 18, 2025
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John Moran, a growth strategist and Google Ads expert at Tier 11, challenges the prevailing wisdom around Return on Ad Spend (ROAS). He explains why this traditional metric may be holding businesses back and advocates for new, more effective measures like Media Efficiency Ratio (MER) and New Customer Acquisition Cost (NCAC). Moran emphasizes the importance of a multi-channel, client-centric approach in performance marketing, urging marketers to focus on sustainable growth and profitability instead of vanity metrics.
Traditional metrics like ROAS fail to capture the complexities of multi-channel marketing and can mislead businesses into poor strategies.
A shift towards metrics such as Media Efficiency Ratio (MER) provides a more accurate reflection of campaign effectiveness and business growth.
Adopting a client-centric approach fosters stronger agency-client relationships, ensuring that marketing strategies align with broader business objectives rather than isolated performance metrics.
Deep dives
Impressive Revenue Growth
A lifestyle brand achieved significant financial success, growing its revenue by nearly 50% year-over-year and crossing the eight-figure mark for the first time. They are projected to reach $25 million in revenue by 2025. This impressive growth is attributed to the effective use of the Tier 11 Data Suite, which dramatically reduced their unattributed traffic by 90%. Such a transformation not only unlocked $850,000 in hidden revenue but also allowed the company to increase their ad spend by over three times.
Shift in Key Marketing Metrics
The focus of success measurement has shifted from traditional metrics such as Return on Ad Spend (ROAS) to more comprehensive metrics that reflect overall business health. ROAS and Cost Per Acquisition (CPA) were once considered primary indicators, but their significance has diminished, with marketers now considering them secondary metrics. Instead, new metrics like Media Efficiency Ratio (MER) are becoming the North Star for evaluating campaign effectiveness. This paradigm shift is vital for adapting to the evolving marketing landscape, especially in a world increasingly focused on privacy and data attribution.
The Shortcomings of ROAS
ROAS, once a cornerstone of performance marketing, is now recognized as an inadequate measure due to its failure to consider multi-channel marketing dynamics and customer behavior across devices. Current marketing practices often involve customers interacting with multiple platforms before converting, complicating the attribution process. This confusion leads many agencies to focus on in-app metrics that provide a skewed perspective of overall business growth. Consequently, marketers are urged to reassess how they evaluate campaign success, emphasizing the importance of tracking genuine business outcomes rather than superficial channel metrics.
Agencies Must Embrace Client-Centricity
Agencies that focus solely on individual performance metrics risk alienating their clients and may find themselves falling short of delivering true value. A client-centric approach, which seeks to understand a client's overall business goals and challenges, distinguishes successful agencies from those that merely chase vanity metrics. It is imperative for agencies to evolve and integrate various marketing channels while fostering strong relationships with clients to better align with their objectives. This collaboration is crucial for ensuring that marketing strategies effectively contribute to the client's bottom line rather than simply measuring performance in isolation.
Practical Applications of Multi-Channel Marketing
Real-world examples demonstrate how effective multi-channel marketing strategies can lead to remarkable results, even when traditional metrics appear unfavorable. A case study revealed a company that achieved substantial revenue growth by reallocating its ad spend from underperforming campaigns to focused, strategic investments in primary products. Despite a documented decrease in conversions according to in-app metrics, the overall business growth reflected a significant increase in revenue. This emphasizes the necessity of embracing a holistic view of marketing, prioritizing overall business health over individual channel performance.
Return on Ad Spend (ROAS) has been the go-to metric for measuring success in digital advertising, but is it actually holding your business back? In this episode, we break down why traditional ROAS is misleading, how agencies manipulate data to appear successful, and what you should be focusing on instead. John Moran joins the conversation to discuss the metrics that actually drive growth, including Media Efficiency Ratio (MER) and New Customer Acquisition Cost (NCAC). Learn how to shift your marketing strategy to prioritize long-term scalability and profitability, rather than short-term vanity metrics.
Chapters:
00:00:00 - Welcome to Perpetual Traffic: Why This Episode is a Must-Listen
00:00:17 - The Episode That Changed How Marketers Measure Success
00:00:55 - The Truth About ROAS: Why It’s Holding Your Business Back
00:02:00 - John Moran Joins Tier 11: A Game-Changer for Performance Marketing
00:03:47 - From Google Ads Expert to Growth Strategist: John Moran’s Evolution
00:05:21 - The Fatal Flaw of Single-Channel Agencies
00:06:57 - Why a Client-Centric Approach Beats Platform Metrics Every Time
00:14:02 - How Marketing Measurement Has Been Broken for Years
00:16:54 - The New Marketing Strategy That Actually Scales Businesses
00:25:20 - The Secret to Aligning Teams for Maximum Growth
00:27:13 - Why Most Agencies Won’t Survive the Next Marketing Shift
00:28:02 - The Role Agencies Should Play in Growing Your Business
00:29:41 - The Future of Marketing Metrics: What You Need to Track Now
00:33:13 - Real-World Case Studies: How to Fix Your Marketing Measurement Today
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