Conversions, Costs & Profit: The Numbers Your CFO Cares About
Your media buyer shouts, “We hit a ten-times ROAS!” Your CFO answers, “Nice. How much profit is left after the smoke clears?”
Below are the six metrics that settle whether your ad budget compounds capital or sets it ablaze.
1. ROAS, ROI, and LTV are not interchangeable
- ROAS (Return on Ad Spend): gross revenue divided by ad spend. Great for a quick pulse check, blind to cost structure.
- ROI (Return on Investment): (revenue minus COGS minus fees minus overhead) divided by total spend. The finance lens.
- LTV (Lifetime Value): total profit a customer generates before churning. Pair it with CAC (Customer Acquisition Cost) so one-off wins turn into durable cash flow.
Rule of thumb: LTV should hit at least three times CAC within twelve months.
2. CAC beats CPA once you scale
- CPA (Cost per Action): cost to trigger any step like a lead or sign-up. Perfect for early creative testing.
- CAC (Customer Acquisition Cost): every dollar required to secure a paying customer, including media, salaries, tools, even swag.
Numeric targets without a table:
- Self-serve products with annual contract value under $1,000: keep CAC between $200 and $400 and earn it back inside three months.
- Mid-market products with ACV from $5,000 to $15,000: keep CAC between $1,500 and $4,500 and earn it back inside nine months.
- Enterprise deals with ACV above $50,000: keep CAC below $15,000 and earn it back inside eighteen months.
If payback drifts past your cash runway, you are financing a donation, not an investment.
3. Fix conversion rate before adding more spend
Scaling traffic into a leaky funnel only scales waste. Tighten these screws first:
- Offer clarity: one promise, one call to action
- Trust signals: verified reviews, guarantees, transparent pricing
- Speed and UX: load pages in under three seconds, especially on mobile
- Post-purchase flow: instant confirmation, sensible upsells, referral nudge
A half-point lift in conversion rate chops CAC like a coupon.
4. Lifetime ROAS and AOV drive the long game
- Lifetime ROAS equals cohort LTV divided by the ad spend that acquired that cohort. It reveals channels that look weak on first purchase but shine after ninety days.
- AOV (Average Order Value) rises through bundles, subscriptions, and tiered pricing, stretching ROAS without extra traffic cost.
Compare thirty-day ROAS to one-hundred-eighty-day ROAS. Healthy retention should at least double the ratio. If it stays flat, back-end monetization needs attention.
Attribution window warning: Most platforms default to 7-day or 28-day windows. Push for 90+ day tracking to catch the full customer journey, especially for considered purchases.
5. Quick scorecard before your next finance review
- Conversion rate: steady or rising
- CPA: trending down
- CAC: payback in twelve months or less
- ROAS: above four when spending real budget, not lunch money
- ROI: positive after every expense
- LTV: at least three times CAC
Business Model Benchmarks
- B2C E-commerce: Focus on 30-day ROAS (2-3x minimum) and quick payback cycles
- B2B SaaS: Prioritize CAC:LTV ratio (1:3+) and watch monthly cohort retention
- Mobile Apps: ARPDAU matters more than install volume; D30 retention predicts LTV
- Bottom line: A ten-times ROAS on five dollars means fifty dollars in revenue and maybe fifteen in margin. Save the high fives for the day you post that ratio on fifty-thousand dollars of monthly spend while still meeting payback and ROI goals. Optimize for profit, not platform vanity, and your CFO will finally smile.
