CM1 ROAS measures how much gross margin (revenue minus COGS) you earn for every dollar spent on advertising.
CM1 ROAS = CM1 ÷ Total Ad Spend
| Metric | Definition |
|---|
| CM1 | Gross margin after subtracting cost of goods sold from net revenue |
| Total Ad Spend | Combined advertising spend across all connected platforms |
| Metadata | |
|---|
| Type | Multiplier |
| Data Source | Shopify, Meta Ads, Google Ads |
| Aggregation | Ratio |
Example
Your Shopify store generated $150,000 in CM1 (gross margin) while spending $50,000 on advertising.
| Metric | Value | Calculation |
|---|
| CM1 (Gross Margin) | $150,000 | Net Revenue − COGS |
| Total Ad Spend | $50,000 | All ad platforms |
| CM1 ROAS | 3.0x | $150,000 ÷ $50,000 |
How It Works
CM1 ROAS calculates the ratio of gross margin to advertising spend. Unlike revenue-based ROAS, it accounts for product costs, giving you a more accurate picture of advertising profitability at the gross margin level.
When to Use
| Scenario | Action |
|---|
| Evaluating ad profitability | Use CM1 ROAS to see actual profit contribution per ad dollar |
| Comparing campaigns with different product mixes | CM1 ROAS normalizes for COGS differences |
| Setting advertising budgets | Target a minimum CM1 ROAS to ensure gross margin coverage |
| Assessing high-COGS products | Understand if ads are profitable after product costs |
| Metric | Relationship |
|---|
| CM2 ROAS | Includes fulfillment costs in the margin calculation |
| CM3 ROAS | Includes all marketing costs in the margin calculation |
| ROAS | Revenue-based return, doesn’t account for costs |
| Contribution Margin | The numerator in this calculation |
