WHAT IS CAAP?
In one sentence: CAAP (Contribution After Ad Spend) is a profitability metric that shows the actual profit contribution created by your marketing spend after accounting for product costs, making it superior to ROAS for sustainable growth decisions.
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HOW TO CALCULATE CAAP
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CAAP = (Revenue × Contribution Margin %) - Ad Spend
Where Contribution Margin = Revenue - COGS - Variable Costs
Step-by-Step Example
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Example:
- • Revenue: $10,000
- • COGS: $4,000 (40%)
- • Contribution Margin: $6,000 (60%)
- • Ad Spend: $2,000
- • CAAP: $4,000
CAAP VS. ROAS: WHY IT MATTERS
ROAS Only Looks at Revenue
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Problem: You can have great ROAS but still lose money if your margins are thin.
CAAP Shows True Profitability
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Benefit: CAAP tells you if you're actually making money or just generating revenue.
Example Comparison
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WHEN TO USE CAAP
Scaling Decisions
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Budget Allocation
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Product Strategy
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Profitability Analysis
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KEY TAKEAWAYS
- • CAAP measures actual profit contribution, not just revenue
- • It accounts for product costs, making it more accurate for profitability decisions
- • You can have great ROAS but negative CAAP with thin margins
- • Use CAAP for scaling decisions and budget allocation
- • Track CAAP by channel, campaign, and product for best insights
TRACK CAAP AUTOMATICALLY WITH AI
ORCAai automatically calculates CAAP across all your channels and campaigns