CM1 ROAS: Gross Margin Return on Ad Spend

Track your gross margin return on ad spend. Measure how much CM1 profit you generate for every dollar spent on advertising.

CM1 ROAS measures how much gross margin (revenue minus COGS) you earn for every dollar spent on advertising.

Formula

CM1 ROAS = CM1 ÷ Total Ad Spend

Formula Components

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

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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

A CM1 ROAS of 3.0x means you earn $3 in gross margin for every $1 spent on advertising.

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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.

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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

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Related Metrics

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

See all Performance metrics →