Business Context
A mid-market ecommerce advertiser spends heavily on Meta Ads across Facebook Feed, Instagram Reels, and Stories. After a recent campaign review in Meta Ads Manager, the client says ROAS fell from 3.8x last month to 2.9x this month, even though total purchases increased.
Metric Scenario
The client spent $120,000 last month and attributed $456,000 in purchase value, for a 3.8x ROAS. This month, spend increased to $180,000 and attributed purchase value increased to $522,000, producing 2.9x ROAS. In the same period, purchases rose from 3,800 to 4,350, average order value fell from $120 to $100, and CPM increased from $14 to $18. The Account Executive wants you to explain ROAS clearly, show how it should be interpreted, and identify what additional cuts of the data would help explain the decline.
Requirements
- Define ROAS in plain business terms for a client using Meta Ads.
- Calculate ROAS for both months and explain why ROAS can decline even when revenue and purchases increase.
- Decompose the change into likely drivers such as spend, conversion efficiency, and average order value.
- Explain what caveats you would mention around attribution windows, incrementality, and campaign mix.
- Recommend 3 specific follow-up analyses in Meta Ads Manager or supporting data to diagnose the drop.
Data Available
- Meta Ads Manager campaign report: campaign_id, objective, spend, impressions, clicks, purchases, purchase_value, placement, attribution_setting
- Meta Pixel / Conversions API events: event_time, user_id, event_name, purchase_value, device_type, country
- Shopify order table: order_id, order_time, customer_id, gross_revenue, net_revenue, discount_amount, product_category
- Creative performance table: ad_id, format, audience, frequency, CTR, CPC, CPM, landing_page_views
