When High ROAS = Big Problems

Welcome to this issue of The DTC Insider newsletter. 👋

We strive to deliver the latest growth marketing news and trends in the DTC space straight to your inbox every Wednesday.

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Let's dive in!

Topics we'll cover today:
💠 When High ROAS = Big Problems
💠 Meta's New Attribution Setting
💠 Lessons From Serving 200,000 Customers

When High ROAS = Big Problems

Last year, a brand reached out to us because they’d been stuck in a revenue plateau for the past three years. We performed a deep-dive analysis and kept the conversation going ever since.

Earlier this week, they hit me with this email:

"Brian, we've gathered the following information on our Google Ads performance for the last 90 days, do you feel like you could improve these results?"

The information they gave me:
⤷ Jan: 6.3x ROAS
⤷ Feb: 4.4x ROAS
⤷ Mar: 7.6x ROAS 

Their question is catchy.

Clearly, a 5-7x ROAS is high in 2025.

But...what is that ROAS hiding?
Should we aim to increase it even more?
Or should we focus on something else?

For context, when we did the audit, we found 2 main challenges:
⤷ Revenue plateau for the past 3 years
⤷ All Google ad campaigns included brand keywords
⤷ And that was the main reason the ROAS was so high

If this remains true today, the 5-7 ROAS is flagging a problem: the lack of incrementality.

This means, that they're paying to reach people who are already searching for their brand, which aligns with the fact that their business hasn't grown in 3 years.

So, what did I suggest?

They need to stop focusing on improving their ROAS and start focusing on breaking the plateau, acquiring new customers, and keeping existing ones coming back to buy more.

Yes, ROAS matters. However, as I just showed you, it doesn't tell the full story.

For example: if you spend $20/day on Meta Ads targeting existing customers, you might see a very high ROAS.

What does that tell you?
⤷ Your budget is too low
⤷ Your audience is super hot

Is that wrong?

 Of course not, BUT here's what would be wrong:

If, based on those results, you stopped scaling or targeting a broader audience just to preserve ROAS.

The lesson: a high ROAS could mean something good or something bad.

Don't let it be your north star.

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If you own or work for a DTC brand and are in a similar situation or just want to keep growing with an experienced growth marketing team, feel free to book a call with me and I'll see how we can help you.

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Meta's New Attribution Setting

In August 2024, I reported Meta was testing it. Now, they're finally rolling it out.

 What is it?

It’s an opt-in setting that aims to optimize for conversions that wouldn’t have happened without the ad (aka, truly incremental conversions).

Instead of optimizing for volume (as many attributed conversions as possible), this focuses on impact. If it works as promised, it could help you scale more profitably.

To see if you have access:
⤷ Start a new Sales campaign
⤷ Go to ad set level
⤷ Click "Show more options"
⤷ You should see Incremental Attribution there

 Are you planning to test it? Hit reply and let me know.

 --
Follow me on LinkedIn for more growth marketing content in the e-commerce space.

Lessons From Serving 200,000 Customers

Some brands have served 10,000 clients, others 50,000.

This brand? Over 200,000 🤯

Tune in to this episode of The DTC Insider podcast in which I sat down with Victoria Melnyk, co-founder of Sunbabe.

We discussed:

👉 Turning personal passion and curiosity into a successful beauty brand
👉 How creating for yourself can foster deeper customer connection
👉 The power of transformation stories in branding and marketing
👉 Why branding is about meaning, not just products
👉 Using the hero’s journey to create compelling customer narratives
👉 Building community to strengthen brand loyalty
👉 Understanding your customer’s needs to drive effective marketing
👉 The importance of a clear, focused message in brand communication
👉 Structuring ad creation to improve performance
👉 Embracing continuous learning for long-term growth 

Tune in:
📺 YouTube
🎧 Apple
🎙️ Spotify
🌐 Website

More episodes our listeners love:

💎 How BRĒZ is Disrupting the Beverage Industry with Aaron Nosbisch
💎 Bootstrapping a $100M E-Commerce Empire with Bear Handlon
💎 The Secret Sauce Behind BattlBox's Success with John Roman
💎 IQBAR’s Journey to 10,000 Locations And $50 Million with Will Nitze
💎 Supplement Brand Bootstrapped $10,000 and Built It Into Sales of $30 Million in Three Years with Ronak Shah

Also Happening in the DTC Space

📰 Temu pulls its U.S. Google Shopping ads
📰 Marketing To AI Agents Is The Future – Research Shows Why
📰 Meta Shares Insight Into How Brands Can Connect With Gen Z Audiences

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