Contribution Margin Manifesto for Growth Marketers

Joel Brda
Joel Brda
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The Contribution Margin Manifesto for Growth Marketers

Why growth without profit isn’t growth at all

Let’s Be Honest: Marketing’s Having an Identity Crisis#

If you’re reading this, you’re probably a smart, metrics-driven marketer. You’ve run high-ROAS campaigns, scaled ad accounts into the millions, lowered CACs like a boss — and yet still asked yourself:

  • “Why isn’t the business growing?”
  • “Why does finance still treat marketing like a cost center?”
  • “Why do I feel like I’m optimizing for the wrong outcomes?”

Here’s the truth: Most of us are.


We’ve been trained on metrics that look good in platform dashboards, in investor pitch decks, and on Twitter. But they aren’t telling us what we really need to know:

  • ❗️ Are we making money?
  • ❗️ Can we afford to scale?
  • ❗️ Is this growth sustainable?

The only metric that answers all three is Contribution Margin (CM) — and this manifesto will show you why it needs to be your north star.

The Metrics We All Grew Up On (And Why They Fall Short)#

We’re not here to shame ROAS and CAC — they’re useful. But relying on them as your primary KPI is like judging a restaurant by how many people walk in the door, not how much money it actually makes per dish.

ROAS (Return on Ad Spend)#


What it tells you:

Revenue per dollar spent on ads


What it misses:

Cost of goods, discounts, shipping, and fulfillment

Why it misleads:

You can have a 10x ROAS and still lose money


The trap:

High ROAS often means you’re not spending enough. You’re optimizing for efficiency, not growth. ROAS naturally shrinks as you scale — that’s not failure, that’s expected. But if ROAS is your KPI, you’ll resist scaling even when it’s profitable to do so.

CAC (Customer Acquisition Cost)#

What it tells you:

How much it costs to acquire a customer

What it misses:

The value of the customer (and the cost to fulfill that value)

Why it misleads:

Not all customers or SKUs are equal

The trap:

You might lower CAC by acquiring discount-heavy or low-margin customers. Congrats — you’ve built an efficient way to give away your margin. You need context.

LTV:CAC#

What it tells you:

Lifetime value of a customer vs cost to acquire them

What it misses:

Real-time profitability and cash flow dynamics

Why it misleads:

LTV is a projection. Most brands don’t live long enough to realize it.

The trap:

If you’re betting the house on “we’ll make the money later,” you’re in dangerous territory. CM gives you visibility into what’s working today — and that’s what keeps your burn rate in check.

% of Media Spend#

What it tells you:

Where your budget is going

What it misses:

Whether that spend is driving profit

Why it misleads:

It’s budgeting, not performance analysis

The trap:

Teams spend weeks debating “how much should go to Meta vs Google” instead of asking “which channel is actually creating contribution margin?”

What Contribution Margin Actually Measures#

Let’s break it down:

    • Contribution Margin = Net Revenue
                    – Cost of Goods Sold (COGS)
                    – Shipping & Fulfillment
                    – Transaction/Platform Fees
                    – Marketing Spend

    What’s left is your true profit per order (or customer, campaign, channel — however you slice it).


    It’s the number that ties marketing directly to the P&L. It shows the incremental profit created by your next dollar spent.


    If you want to scale without burning cash, this is the number you need.

    CM + Incremental MER: Your New Power Metrics#

    MER (Marketing Efficiency Ratio) is:

    • MER = Revenue / Marketing Spend

    It’s better than ROAS because it’s blended across channels. It tracks how your whole marketing system performs, not just one platform.

    Now add Contribution Margin, and make it incremental:

    • “If I spend $1,000 more, how much additional CM do I generate?”
    • “What is the marginal profit per marginal dollar of spend?”

    This is where the magic happens. You’re now looking at:

    • Which channels are truly driving profitable growth
    • How much you can afford to scale
    • When you’re seeing diminishing returns in real time

    How This Changes Your Daily Behavior#

    When you adopt CM as your core KPI, your entire approach evolves:

    Old You

    • Chase high ROAS
    • Optimize ads for CTR or CPC
    • Evaluate channels in silos
    • Think of retention as separate


    CM-Driven You

    • Chase high profit
    • Optimize ads for margin contribution
    • Optimize across funnel and lifecycle
    • Understand retention’s impact on CM

    Real examples:

    • You stop boosting remarketing just because it looks cheap — and realize your high-margin SKUs need prospecting fuel
    • You spot that paid search is cannibalizing organic — and pulling CM down
    • You start testing bundles that increase AOV and margin, not just conversion

    What You Need to Make It Work#

    You don’t need an extensive data and engineering team to do this.

    Build Your Own#

    Here's a framework for how to consider building your own tool:

    Input:#

    • Daily spend by channel
    • Net revenue
    • COGS (by SKU or blended %)
    • Fulfillment & shipping (can be blended if needed)
    • Discounts & fees

    Tools:#

    • Data pipeline: Funnel.io, Supermetrics, FiveTran, Airbyte
    • Warehouse: BigQuery, Snowflake, Google Sheets, Airtable
    • Data Transformations: DBT, SQL
    • Dashboard: Looker, Tableau, Sheets
    • Core logic: SQL or Excel-based CM calculator

    Reporting cadence:#

    • Daily: CM & Incremental MER by channel
    • Weekly: Campaign and SKU-level review
    • Monthly: Strategic review & budget reallocation

    Use Our Tool#

    Instead of building and maintaining your own tools, you can use Profit Compass to quickly and easily have access to contribution margin and other key performance metrics.

    Explore how Profit Compass can give you the tools you need to grow and scale.

    Learn More

    Build a Contribution Margin-First Culture#

    This shift doesn’t just change metrics — it changes mindsets. You become the bridge between marketing and finance.

    Here’s how to instill it in your org:

    • Train your team: Teach channel managers to think in CM per campaign, not ROAS
    • Sync with finance: Agree on cost assumptions and margin models
    • Rebuild your dashboards: Put CM and MER at the top — everything else is a diagnostic
    • Plan budgets backwards: From margin goals, not spend goals

    Final Word: Want to Be a Better Growth Marketer? Act Like a Growth Marketer#

    Most growth marketers want a seat at the table — to be seen as strategic partners, not ad buyers.

    Here’s the cheat code:

    • Speak in margin. Speak in profit. Speak in outcomes.
    • CM-first growth marketers don’t just scale campaigns — they grow businesses.

    TL;DR for Operators#

    • ROAS tells you revenue; CM tells you profit
    • CAC is a cost; CM is an outcome
    • LTV is a bet; CM is a fact
    • Incremental MER shows your true next-dollar opportunity
    • CM-first marketing = real, scalable, healthy growth