D2C brands look beyond ROAS as rising CAC puts profitability under the lens

For years, ROAS has been one of the most closely watched numbers in the D2C playbook. A campaign delivering 3X or 4X ROAS could signal that a brand had found a winning acquisition formula, prompting marketers to increase budgets and push for faster growth.

But as customer acquisition costs rise and the D2C market becomes more crowded, that equation is increasingly being questioned. Recent industry reports point to rising digital acquisition costs and a broader shift among Indian D2C brands towards retention, profitability and unit economics.

Indian D2C brands are now looking beyond the ROAS reported by individual platforms such as Meta and Google, with greater attention being paid to contribution margins, blended CAC, CAC payback, repeat purchase rates and customer lifetime value. The shift reflects a broader change in the sector, from optimising for revenue generated by advertising to understanding whether the customers being acquired can create sustainable profit.

At its simplest, ROAS measures revenue generated for every rupee spent on advertising. The limitation is that it does not tell a brand how much of that revenue is actually left after the cost of goods, shipping, returns, payment processing, discounts and other variable costs.

A campaign can therefore look highly efficient from a platform's perspective while producing weak or even negative contributions at the business level. A 4X ROAS, for instance, does not necessarily mean a brand is profitable if its gross margin is low and other fulfillment and operating costs consume the remaining revenue.

That distinction is increasingly influencing how brands evaluate acquisition.

Looking beyond the first transaction

Shaily Mehrotra, CEO & Co-Founder, Fixderma said, “As customer acquisition becomes more competitive, the conversation around marketing effectiveness has to move beyond ROAS. ROAS tells us what a campaign has generated, but it does not necessarily tell us whether that growth is sustainable or profitable. At Fixderma, we increasingly look at the quality of the customer being acquired, contribution margins, repeat behaviour, CAC payback and lifetime value alongside campaign performance.” 

Mehrotra said the focus is not simply on maximising transactions, but on building sustainable consumer relationships. In skincare, where trust, consistency and results drive repeat behaviour, a customer’s value often extends well beyond the first purchase. A customer may not be profitable on the first order because of acquisition costs, but that does not diminish their long-term value. Fixderma therefore looks beyond immediate conversions to retention, repeat purchases and potential lifetime value, using these metrics to guide marketing spends and build product trust rather than chase short-term numbers.

The same shift plays out differently across categories, particularly where repeat purchase cycles vary.

Praveen Prabhakar, CEO, Provogue, said ROAS remains an important day-to-day metric, with the brand tracking channel-level P&Ls to determine the ROAS at which each channel can operate profitably. However, for longer-term growth, Provogue looks beyond platform ROAS to metrics such as contribution margin, CAC payback and customer lifetime value.

For travel luggage, where replacement cycles can be long, Prabhakar said LTV cannot be measured only through repeat purchases of the same product. Instead, the brand looks at opportunities to increase customer value through cross-category purchases across luggage, backpacks and travel accessories, giving it a broader view of customer profitability and long-term value.

“The longer replacement cycle in luggage means that our approach to customer value is increasingly focused not only on driving the next purchase, but on building a relationship with the customer across our wider travel portfolio. We are therefore allocating a percentage of our spends in building targeted cross-sell journeys and recommend relevant products based on their previous purchases and travel needs,” he said, adding that Provogue is also exploring category-based bundles, personalised offers and post-purchase engagement to create additional purchase occasions between suitcase replacement cycles.  

For fine jewellery, the equation extends even further because the purchase journey itself is longer and more relationship-driven.

Neha Roongta, Founder & CEO, Neha Roongta Fine Jewellery, said ROAS remains a useful indicator, but is no longer viewed in isolation. The brand is increasingly focused not just on the revenue generated by a campaign, but on the quality of customers it acquires and the long-term value of those relationships.

She added that this is particularly important in fine jewellery, where the purchase journey differs significantly from that of a typical D2C category. “The consideration period can be longer, customers may interact with us across multiple touchpoints before making a purchase, and a strong first experience can lead to significantly higher-value purchases over time. We therefore look at the quality of acquisition alongside metrics such as CAC, contribution margins, conversion quality and lifetime value.” 

Roongta noted that marketing spends need to drive sustainable, profitable growth rather than simply deliver a strong ROAS. In fine jewellery, where relationships and trust are central, the brand looks beyond the first transaction to lifetime value, repeat purchases and referrals. This has led to greater focus on retention, personalised communication, clienteling and experiences that build long-term customer relationships.

Repeat purchases change the acquisition math

For categories with shorter consumption cycles, repeat purchases can have an even more direct impact on customer economics.

A spokesperson at MyFitness said, “Honestly, ROAS was never the whole story for us at MyFitness. It tells you what a click cost, not whether that customer is actually worth anything to the business. We've always tracked contribution margin and CAC payback alongside it - what's changing is that the rest of the industry is having to do the same now that acquisition costs are climbing everywhere.” 

The spokesperson added that repeat purchases are central to MyFitness’ customer economics. While the first purchase may not fully recover acquisition costs, the second, third and fourth purchases significantly improve customer value. With high repeat rates, the brand views acquisition spend as a long-term investment rather than a cost to minimise.

A similar dynamic applies to fragrance, where the first purchase can be more about discovery and trial than immediate profitability.

Meanwhile, a spokesperson at Villain said the brand no longer treats ROAS as the end goal, noting that a strong number only indicates efficient acquisition in the short term. The brand instead tracks contribution margin and CAC payback, particularly as acquisition costs rise. In fragrance, the first purchase is often an entry point, as customers sample products and discover their preferences.

“The real payoff comes when they settle into a signature scent and start reordering, or explore the wider range. Because Villain sits at an accessible price point, that path to a second and third purchase stays open in a way it wouldn't for a premium fragrance brand. So we're increasingly willing to spend to acquire, knowing the value shows up over time, not on day one,” the spokesperson said.

Across these categories, the common thread is that the economics of acquisition are increasingly being evaluated over the customer's journey rather than at the point of the first conversion.

Broader perspective

The shift is also being reflected in how agencies and marketing leaders are advising brands.

Sini Magon, COO and Global Partner of Grapes Worldwide said, “Platform ROAS still has its place, but brands are realising that a good ROAS does not always mean the business is growing profitably. As acquisition costs rise, brands are also looking beyond the first sale and asking whether those customers return and continue to contribute to the business.” 

Magon said the shift is driven by rising CACs and a greater focus on the quality of customers acquired, rather than just the number of conversions. Brands are increasingly tracking contribution margins, repeat purchases, CAC payback and lifetime value to understand what happens after the first transaction. The key questions are whether customers return, how quickly acquisition costs are recovered and whether the relationship generates enough long-term value to justify the initial spend.

This was further reiterated by Aakash Goplani, Vice President - Business, SoCheers, who said ROAS remains important, but is increasingly being viewed as a platform performance metric rather than a measure of overall business growth. A strong platform ROAS, he noted, does not necessarily translate into healthy margins or profitability.

Brands are therefore bringing metrics such as contribution margin, blended CAC, CAC payback and overall profitability into marketing decisions. The focus is shifting from identifying the platform or campaign with the highest ROAS to understanding which investments are driving profitable growth. Goplani added that customer quality is becoming more important as acquisition costs rise, with repeat purchases and cross-category buying potentially making a higher initial CAC more valuable over time.

“In categories like food, wellness or consumables, frequency of purchase becomes particularly important to the economy. This is pushing brands to look beyond the first transaction and understand the customer’s journey over time. The cheapest customer acquisition isn’t necessarily the most valuable customer and increasingly, brands are optimizing for customer value, not just acquisition,” he concluded.

The metric is changing, but ROAS is not disappearing

The shift does not mean ROAS is becoming irrelevant. Rather, brands are increasingly treating it as one part of a broader measurement framework.

For day-to-day campaign and channel optimisation, ROAS remains useful. But when the question moves from “Did this campaign work?” to “Did this marketing investment create profitable growth?”, brands are bringing in contribution margin, CAC payback, retention, repeat purchases and LTV.

That distinction is becoming increasingly important as acquisition gets more expensive. Industry data also points to the growing importance of retention in D2C economics, with first orders often failing to fully recover acquisition costs and repeat purchases becoming a key path to profitability.

For D2C brands, therefore, the question is no longer simply how much revenue a campaign generated. It is increasingly about what kind of customer that campaign acquired, how quickly the acquisition cost can be recovered and how much value that customer can generate over time.