Many brands see increasing revenue as a sign of marketing success. But the harsh reality is that revenue won’t pay your bills. Profit will. If you’re not measuring marketing impact at the profit level, you’re likely overspending on channels that look good on paper but quietly run you dry. Without factoring in the full cost structure, you might be growing sales at the cost of shrinking profitability. Are you optimizing for revenue growth or sustainable profit?
Marketers Have Been Misled by MMM Providers
Not all revenue is created equal, some channels bring in high-margin customers while others attract low-value customers who barely cover acquisition costs. Nearly all MMM solutions focus on top-line revenue, showing which channels drive sales, but completely ignore profitability. The result? Brands keep spending on channels that look good in terms of revenue, but at the end of the day aren’t actually making them money after ad spend, COGS and fulfillment costs. Dema is the only vendor offering MMM that optimizes for profit, because revenue growth without profitability is a race to the bottom.
Revenue-Based MMM Doesn’t Cut it Anymore
Most MMM solutions inform brands which channels drive sales, but not whether or not those sales are profitable. This leads to major blind spots. Many brands celebrate revenue spikes without considering the true financial impact, assuming that more sales automatically mean more profit. However, factoring critical expenses such as fulfillment, discounts and returns might show that a campaign that looks successful on the surface may actually be a loss-making machine. This is why revenue-based measurement can be dangerously misleading since it highlights growth but hides inefficiencies that eat away at already slim margins.
Not all customers have the same lifetime value (LTV), and optimizing solely for revenue can lead to an increase in low-value buyers who don’t contribute to long-term profitability. Channels that drive high transaction volume but attract deal-seekers or high-return customers can drain resources through refund processing, customer service costs and lack of repeat purchases. Without measuring customer profitability alongside revenue, brands risk investing heavily in audiences that provide little to no long-term value.
Many brands mistakenly assume that if a marketing channel is driving revenue, increasing spend will amplify success. However, this is only true if profitability scales proportionally. As competition increases, ad costs rise and brands that blindly scale revenue-based campaigns often see diminishing returns where the additional revenue of each dollar spent is smaller than the previous.
Course Correct With Profit-Based MMM
By optimizing for profitability, not just revenue, brands are able to make smarter, data-informed decisions about where to invest their marketing spend. A profit-focused MMM model factors in factors in the entire cost base, giving a clearer picture of what is actually driving sustainable growth. By shifting focus from gross revenue to net profitability, brands can allocate budgets more efficiently and avoid investing in campaigns that generate high sales but minimal profits.
Traditional MMM might highlight channels that appear to drive significant revenue, but without factoring in costs, brands can end up scaling campaigns that are only marginally profitable, or even worse, unprofitable. Profit-based MMM helps brands differentiate between channels that generate real financial value and those that just look good on paper. With this insight, brands can double down on their most profitable channels while reducing spend on those that erode margins.
By continuously tracking profit at the marketing channel level, MMM allows brands to identify when and where additional investment will yield profitable returns, rather than just higher revenue. This ensures that scaling efforts don’t just drive growth but actually improve bottom-line performance and long-term business viability.
Shifting to Profit-Based Measurement — ROAS vs POAS
Making the switch from revenue-based MMM to profit-focused MMM can be a bit daunting. Here’s what you can do today to start shifting your mindset from revenue to profit:
- Identify your most profitable customer segments. Not all customers are created equal. Use historical data to see which segments have the highest LTV and lowest return rates, then focus your marketing spend on acquiring more of them.
- Stop relying on ROAS alone. A high ROAS might look good, but if it’s built on heavy discounting or expensive acquisition costs, it’s likely not sustainable. Instead, measure profit on ad spend (POAS) to ensure you’re making money, not just driving sales.
- Analyze CAC vs. LTV across your main marketing channels. If your CAC is close to or higher than your average LTV, you’re scaling unprofitably and should consider adjusting your strategy.
Key Takeaways of The Future of Marketing Measurement
Focusing solely on revenue is a dangerous trap, and many brands unknowingly scale unprofitable marketing channels by prioritizing sales volume over profit. As competition increases, rising costs make revenue-based measurement riskier than ever. Profit-based MMM helps brands invest in high-margin, high-LTV customers and scale only the campaigns that drive long-term profitability.
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