PPC Attribution Models: Which Conversions Should Get Credit for the Sale?

## What Is ROAS?ROAS stands for Return on Ad Spend. It measures the revenue generated for every dollar spent on advertising. If you spend $1,000 on ads and generate $5,000 in revenue, your ROAS is 5:1 or 500%.ROAS is the most common metric in paid advertising because platforms can track it directly. When someone clicks an ad and makes a purchase, that revenue is attributed to the ad spend.## What Is ROI?ROI, or Return on Investment, is broader than ROAS. It accounts for all costs associated with generating that revenue, not just ad spend. This includes:- Cost of goods sold (COGS)- Agency or management fees- Landing page costs- Software and tools- Staff timeA 5:1 ROAS might only be a 1.5:1 ROI once you factor in all costs. This distinction matters when evaluating whether campaigns are actually profitable.## Why Profit Matters MostProfit is what remains after all revenue and all costs are calculated. A campaign with high ROAS but thin margins might generate less profit than one with lower ROAS but healthier margins.For example:- Product A: 6x ROAS, 15% margin = 90 cents profit per ad dollar- Product B: 3x ROAS, 50% margin = $1.50 profit per ad dollarProduct B generates more profit despite lower ROAS.## What We Measure MonthlyIn our monthly reviews, we connect advertising metrics to business outcomes:1. **Lead volume by type** - Calls, forms, texts attributed to campaigns2. **Lead quality assessment** - Are leads converting to customers?3. **Revenue attribution** - When possible, connecting leads to actual revenue4. **Cost per qualified lead** - Not just cost per conversion5. **Recommendations** - Based on profit potential, not vanity metrics## Choosing the Right Target MetricThe right metric depends on your business model:- **eCommerce**: ROAS with margin consideration- **Lead generation**: Cost per qualified lead with close rate data- **SaaS**: Trial-to-paid conversion and MRR attribution- **Service businesses**: Cost per booked job with job value dataWe work with clients to identify which metrics actually drive business decisions, then build reporting around those metrics.