> ## Documentation Index
> Fetch the complete documentation index at: https://docs.upstackdata.com/llms.txt
> Use this file to discover all available pages before exploring further.

# 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.

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

## Formula

<Info>
  **CM1 ROAS** = **CM1** ÷ **Total Ad Spend**
</Info>

### Formula Components

| Metric                                                                       | Definition                                                         |
| ---------------------------------------------------------------------------- | ------------------------------------------------------------------ |
| [**CM1**](/reference/metrics/orders/contribution-margin/contribution-margin) | 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](/sources/shopify), [Meta Ads](/sources/facebook-ads), [Google Ads](/sources/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 |

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

***

## 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         |

***

## Related Metrics

| Metric                                                                                   | Relationship                                           |
| ---------------------------------------------------------------------------------------- | ------------------------------------------------------ |
| [CM2 ROAS](/reference/metrics/orders/performance/cm2-roas)                               | Includes fulfillment costs in the margin calculation   |
| [CM3 ROAS](/reference/metrics/orders/performance/cm3-roas)                               | Includes all marketing costs in the margin calculation |
| [ROAS](/reference/metrics/orders/performance/roas)                                       | Revenue-based return, doesn't account for costs        |
| [Contribution Margin](/reference/metrics/orders/contribution-margin/contribution-margin) | The numerator in this calculation                      |

[See all Performance metrics →](/reference/metrics/orders/performance)