Moving beyond ROAS in commerce media

What if I told you that there’s a way to improve commerce media budget allocation, and all it takes is a more holistic approach to metric-driven analysis? In this post, we’ll dive into lower-funnel, direct response measurement in a commerce media context, addressing how commerce media networks can move beyond Return on Ad Spend (ROAS) into a more comprehensive measurement framework to better understand and allocate spend.

How we got here

ROAS has long been the most common performance metric in commerce media. It is easy to calculate, easy to communicate, and offers a clear efficiency signal. But anyone managing commerce media investment today knows that ROAS alone does not tell the whole story.

Commerce media advertisers today demand more comprehensive, robust, and transparent metrics beyond ROAS alone. And while we often hear about terms like incrementality and full-funnel measurement, those frameworks can be hard to operationalize across media channels. 

Though we know ROAS alone isn’t cutting it, without a solid replacement or addition, there doesn’t seem to be anything better…or is there? As the GM of a retail media network, I’ve learned that the key isn’t to abandon ROAS altogether, but to complement it with additional metrics that offer a more complete view of how much budget is appropriate for each brand or product.

To explain how these metrics work together, I want to use an analogy. Believe it or not, growing sales in commerce media is a little like running a farm: just think of sales as your crops, ad spend as irrigation (water), and the campaigns as an irrigation system. 

If you were to ask any farmer, “how much water should I put on my crops?” the answer will almost certainly be, “it depends.” The farmer will want to know several things: what are you growing, where is the field, how big is the field, and so on.

Similarly, when a brand asks “how much should I spend on commerce media network x?”, there are a few things you need to know to answer that question the right way. Like in farming, a combination of adequate input/investment and efficient management leads to the biggest yield. 

In farming, inputs like water, fertilizer, weather, and time determine whether your crop thrives. In commerce media, that balance comes from ad spend and efficiency, as measured by three key metrics: ROAS, TACoS, and category share.

1. ROAS: Measuring efficiency in your irrigation system

If your irrigation system delivers water efficiently, your crops thrive and you don’t waste water trying to get it to the plants. That is what campaign ROAS tells us in commerce media.

ROAS measures how effectively your ad spend (the water) turns into sales (the harvest). A high ROAS means your system is efficient: campaigns are well targeted, budgets are optimized, and waste is minimized.

But efficiency alone does not mean growth. An advanced irrigation system won’t help you if there is no water flowing through it or too much. To find the right investment level, we need additional context that ROAS cannot provide on its own.

2. TACoS: Balancing the right amount of water

The second metric, TACoS (Total Ad Cost of Sales), tells us the amount of our ad spend in proportion to our total sales (not just ad-attributed sales.)

A larger field requires more water than a small one. Similarly, a category leader requires more investment than an upstart brand. This is why TACoS is a great signal for you to understand how much investment you’re making relative to the size and maturity of your product or brand.

TACoS helps marketers determine how much to invest to maintain or grow category share. If you spend too little, your crops, or sales, could dry up. Spend too much, and you waste resources and flood your field, creating inefficiencies that hurt profitability.

By balancing efficiency (ROAS) with scale (TACoS), marketers can calibrate ad spend to ensure healthy, sustainable growth.

3. Category share: Measuring the harvest

The third metric, category share, represents the ultimate goal: how much of the market harvest you are capturing.

Category share measures your brand’s sales relative to the total category, providing a realistic view of growth. Just as farmers track crop yield compared to others in their region, last year’s harvest, etc., marketers can use category share to understand how their products are performing in context.

This metric is especially important because it adjusts for external factors. If your category is shrinking but your brand’s sales are holding steady, you are gaining share. If the category is growing and your sales are not keeping pace, you are losing share even if topline numbers look strong.

Monitoring category share helps you decide when to increase or decrease ad investment. Growth naturally slows as a field or market reaches maturity. Understanding those limits prevents over- or under- watering and ensures long-term health.

Bringing it all together: Cultivating commerce media growth

Commerce media success requires the same mindset as successful farming: constant measurement, calibration, and care.

When used together, ROAS, TACoS, and Category Share are the components of a holistic framework for budget allocation:

• ROAS ensures campaign efficiency (no wasted water).
• TACoS aligns ad spend with overall business scale (the right amount of water).
• Category Share measures growth and competitiveness (am I getting results).

These metrics can even be combined into a single metric to make measurement easier. One way is to multiply ROAS times one minus your category share, and then divide that by TACoS. This “Growth Efficiency Index” (GEI) gives you a single number you can compare across products and networks. A higher GEI would mean you’ve got a winner that’s doing well: ROAS is good, there’s room to grow, and you’re not spending too much on it. A lower GEI means either you’re saturated, or you can’t efficiently use ad spend to grow the brand. 

Marketers who balance these three metrics have the potential to maximize sales performance without overwatering or under-investing. Like a farmer tending a field, a system of measurement for your input and efficiency will help you know when to add more, when to hold steady, and when to harvest your success.