Before running an agency, I was the one hiring them. As a founder, a consultant, and a head of growth, I reviewed countless reports telling me ads were “working”.
The usual story? A healthy ROAS, maybe a solid CPA. But the one number no one gave me was the most important: actual profit.
And when you’re a founder, profit isn’t optional – it’s survival.
That gap between looking good on paper and running a profitable business is why we built Ballpoint. From day one, we decided to treat profitability as a core part of growth – not a footnote. That’s where CM3 comes in.
CM3: The Metric That Matters
CM3 gives you your contribution margin after all variable costs. It’s what’s left after:
**Revenue
- Cost of goods
- Fees and shipping
- Marketing spend**
No assumptions. No platform estimates. Just real profit per order.
We track CM3 across every ad, every channel, every test. Because otherwise, you’re flying blind.
Real Example: Calculating CM3 on a Product
Let’s say you’re selling a skincare serum online.
You ran a Facebook campaign and sold 500 units over the course of a week.
Step 1: Revenue
You sell each serum for £40.
You sold 500 units.
Total revenue = 500 x £40 = £20,000
Step 2: Cost of Goods Sold (COGS)
Each unit costs £9 to produce (including packaging).
COGS = 500 x £9 = £4,500
Step 3: Fees and Shipping
- Shipping cost per unit: £3.50
- Payment processing fees: 2.5% of total revenue
- Platform/warehouse fees: say, flat £400
Shipping = 500 x £3.50 = £1,750
Payment fees = 2.5% of £20,000 = £500
Other fees = £400
Total fees and shipping = £1,750 + £500 + £400 = £2,650
Step 4: Marketing Spend
Let’s say you spent £6,000 on ads to generate these 500 sales.
Final CM3 Calculation
CM3 = Revenue – COGS – Fees/Shipping – Marketing Spend
CM3 = £20,000 – £4,500 – £2,650 – £6,000 = £6,850
The Hidden Cost of “Winning” Ads
We worked with a brand recently that had scaled their “top performers” based on ROAS. But when we broke it down using CM3, it turned out those ads were generating sales at a loss.
Margins were tight. Shipping costs were high. The ROAS looked fine, but profitability was nowhere to be found. They weren’t scaling winners – they were scaling losses.
And they’re not alone. We’ve seen agencies hit their targets while clients quietly bleed cash.
ROAS Is a Signal – But It’s Not the Answer
ROAS still has its place. But optimising for it blindly leads to:
- Spending more to convert the same customer twice
- Prioritising low-hanging fruit over sustainable growth
- Ignoring cost structure and margin realities
When agencies chase ROAS without context, they often push bottom-funnel spend that cannibalises organic conversions – not adds to them.
