You paid for your ad campaign and waited for the orders. When they started coming in, it felt like the spending had finally paid off. But after paying for the cost of goods, order fulfillment, shipping, and advertising, you found that the remaining amount was far less than you expected. You might have found yourself back at the initial question: Are ads worth what I'm paying?

The decision is even tougher now. If you pause the campaign, you worry that the orders will stop too. If you scale up the budget, you fear spending more without improving your bottom line. You are looking at a report that displays sales and orders, while what you actually need to know is what these results genuinely left your store with.

To understand this, you need to combine sales revenue and costs into a single calculation. The campaign might have genuinely attracted buyers, but discounts, product costs, or order fulfillment ate up most of the revenue before factoring in advertising. Pinpointing the issue helps you identify what needs tweaking before deciding whether to continue or stop.

In a Salla session with Mohammed Al-Omari, a specialist in business development and financial performance analysis, he presented an example illustrating this paradox: an advertising channel that generated 40 orders left a larger net amount than a channel that generated 100 orders. From this comparison, we begin to answer the question: How do you know if your campaign deserves a bigger budget?

Watch Mohammed Al-Omari’s comparison of ad channel performance, starting from minute 26:51.

The Comparison | How can 40 orders leave more money than 100 orders?

Suppose the first campaign generated 100 orders, and SAR 8 remained from each order after variable costs associated with it, including its share of the ad spend. The total remaining amount is SAR 800.

In contrast, the second campaign generated 40 orders, but SAR 25 remained from each order after calculating costs in the same way. The total remaining amount comes to SAR 1,000.

The second campaign generated fewer orders, but it left the store with a larger amount to contribute toward covering fixed overheads and generating profit.

100 orders × SAR 8 = SAR 800, versus 40 orders × SAR 25 = SAR 1,000

This remaining amount is called the contribution margin, and it differs from net profit; there are still other store-level overheads, such as salaries, software subscriptions, and rent, depending on the nature of your business.

For the comparison to be meaningful, calculate costs the same way across both campaigns, compare suitable time periods, and pay attention to variations in products, offers, cancellation rates, and returns. Part of the difference could stem from the specific products each campaign sold, not just the ad channel itself.

The Order | How much remains after each sale?

Start with the post-discount sales value, then subtract product costs and variable expenses related to order fulfillment and customer acquisition. Avoid double-counting discounts: if you use the amount the customer actually paid after the discount, do not deduct it again.

In a simplified example of a single-item order, the customer paid SAR 200. The product cost was SAR 100, packaging, payment processing fees, and the shipping costs absorbed by the store were SAR 25, and the order's share of ad spend was SAR 35. This leaves SAR 40 from the order:

200 − 100 − 25 − 35 = SAR 40

These SAR 40 contribute to covering the rest of the store's overhead and generating profit. If they do not cover the business’s share of these expenses at current sales volumes, order volume might increase while the store remains under financial strain.

Repeat this calculation across the campaign’s orders, or use averages based on actual campaign data. If product costs vary widely, analyze them by individual product or category rather than relying on an overall average that masks the discrepancies.

Also ensure consistent VAT handling across revenues and expenses, and account for any shipping fees paid by the customer versus what you absorbed, so that the calculation accurately reflects what actually happened.

The Metric | Does a high ROAS mean you are profitable?

Return on Ad Spend, or ROAS, compares the revenue attributed to advertising against what you spent on it. If SAR 10,000 in sales is attributed to a campaign with an ad spend of SAR 2,000, your ROAS is 5.

This tells you that every advertising riyal generated SAR 5 in revenue attributed to the campaign, but it does not tell you what was left after product costs, fulfillment, and other expenses.

Suppose product and order fulfillment costs for these sales totaled SAR 7,500, and advertising cost SAR 2,000. That leaves SAR 500 before fixed expenses and any other uncalculated overhead. If product and fulfillment costs were SAR 8,500 instead, the result would be a loss of SAR 500 before fixed expenses, even though the ROAS remains at 5.

Because of this, tie your ROAS to product margins and selling costs. A figure that works well for a high-margin product might not be viable for a product whose direct costs consume most of its selling price.

Customers | Are you comparing new customer acquisition to repeat purchases?

A campaign targeting previous buyers may appear much more cost-effective than a campaign reaching people who have never heard of your store. However, the difference in audience and objective must be reflected in your evaluation.

Assess whether the campaign aims to acquire new customers, reactivate past ones, or cross-sell another product. Then, track the cost per result and what orders leave behind in each scenario.

Be mindful of the distinction between ad cost per order and customer acquisition cost (CAC). If you divide spend across all orders attributed to the campaign, you are calculating ad cost per order. Evaluating new customer acquisition, however, requires knowing the actual number of new buyers acquired by the campaign, based on your attribution model.

You can accept a lower contribution margin from a customer's first order as part of an acquisition strategy, but this decision requires solid data on repeat purchase rates and subsequent order values. Calculate your CAC payback period and what you can afford to float during that time before scaling your spend on future projections.

Adapted from his discussion in the Salla session.

Revenue Leakage | Where is the money you expected to keep going?

When a campaign underperforms relative to expectations, track the line items that changed during sales. The campaign might have promoted a low-margin product, coincided with discounts and free shipping, or generated high order volume where several orders were subsequently cancelled.

Review actual discounts, fulfillment costs, payment gateway fees, and return rates, then compare them to your initial assumptions when launching the campaign. If returns arrive after the reporting period, update the figures once they materialize so you do not base decisions on sales the store never retained.

Before introducing a new promotional offer to boost conversions, calculate its impact on the remaining order margin. You might succeed in increasing sales volume, while the contribution margin per order drops to a level that requires substantially higher volume just to break even.

Read also: How to Calculate the Impact of Discounts on Your Profit Margin?

If advertising continues to strain your margins despite optimizing spend, you may need to revisit your pricing, cost structure, and the value proposition you offer the customer.

Read also: Balancing Profit Margins and Customer Retention… How Should You Price Your Products?

The Budget | Can you finance additional orders?

Even if orders generate a healthy contribution margin, scaling up advertising may require buying inventory and fulfilling orders before sales proceeds clear into your bank account. Therefore, evaluate your working capital and payment collection cycles alongside your campaign metrics.

Ask yourself before increasing the budget: Is inventory available? Do I have enough capacity to fulfill the anticipated orders? When will payouts clear relative to my supplier payment schedules?

Scaling spend requires operational and financial capacity that enables you to handle incoming demand without delays or strain on other financial obligations.

Read also: Your Store's Sales Are Growing, But Where Is the Cash Flow?

The Decision | What should you review before increasing spend?

Consolidate your campaign data into a single sheet, and apply a consistent calculation method so you can reliably compare periods and campaigns.

Net Sales: What is the sales value after discounts, cancellations, and returns? Ensure the figure strictly reflects the orders whose performance you are evaluating.

Variable Costs: How much did you spend on product costs, packaging, payment processing, absorbed shipping fees, and other order-related line items?

Campaign Cost: Include ad spend and any direct additional costs associated with the campaign, ensuring you avoid double counting.

Total Contribution Margin: What remains after deducting the above costs? Has it improved compared to the benchmark period or campaign?

Quality of Results: Did you acquire new customers? What are the cancellation and return rates? Is there verified data on repeat purchase rates?

Scalability: Can you fund and fulfill orders at the same operational standard? When scaling the budget, monitor whether performance holds steady or customer acquisition costs begin to surge.

Ad-attributed figures can vary between the ad platform and your store's backend depending on attribution models. Check whether the same order was attributed across multiple channels before combining results, and verify the total actual sales recorded in your store.

Once you have audited your costs and determined your budget, explore Salla Ads and options for launching and managing your store's campaigns.

Next Steps | Scale the budget or pause the campaign?

Start by reviewing a campaign with clear, settled order data. Determine whether it generates a positive contribution margin after sales and advertising costs, and whether this margin meets your targets.

If the performance is solid and stable, and you have the inventory, working capital, and operational capacity, test an incremental budget increase, then track what happens to your cost per order and total contribution margin. A campaign's success at a certain budget does not guarantee that its efficiency will hold as you scale.

If orders are coming in but margins are thin, identify the line item eroding profitability before allocating more budget. You might need to adjust the offer, rethink the featured products, optimize fulfillment costs, or re-evaluate your pricing.

If the data is incomplete, focus first on refining tracking and reconciling cancellations, returns, and costs. If losses exceed your predefined testing threshold, scale back ad spend or pause underperforming segments until the issue is identified.

To deepen your understanding of costs, break-even analysis, and cash flow, learn financial fundamentals for e-commerce with Mohammed Al-Omari on Salla Academy.

Before your next decision, write down three numbers side by side: the revenue retained by your store, the cost of generating it, and the remaining net amount. This snapshot will help you see what is worth scaling and what needs adjustment before you spend more.

Planning to start your e-commerce journey? Create your store on Salla, and set up your products and cost structure before launching your first campaign.