Most audits start with the ads. Mine starts with the maths. If the maths is broken, no creative on earth fixes it.
How to know if your meta ads are profitable comes down to five numbers, in a fixed order, and not one of them is in Ads Manager's default columns. Here is the order I run, straight from my book. No new ads, no budget changes. Just the numbers, in the order that tells you whether the account is sick and where.
1. Find Breakeven First
Breakeven ROAS is 1 divided by your contribution margin. Not gross margin. The margin left after product cost, shipping and payment fees, because that is the money actually available to buy a customer with. A 40% contribution margin means you need a 2.5 ROAS just to not lose money.
I write that number at the top of the page before I look at anything else. Every campaign gets measured against it. Most people audit for months without ever calculating the one number that decides whether they are winning.
2. Set the Kill Line
Max CPA is AOV times margin. Spend a cent more than that to acquire a customer and you are paying for the privilege.
Work it once and it stops being abstract. A 90 pound AOV at a 40% contribution margin gives you 36 pounds to acquire a customer. Spend 41 and the order is a loss you paid to deliver, whatever ROAS the dashboard reports next to it.
Now I sort every ad by cost per purchase and draw the line. Everything above it is bleeding. You would be surprised how many "top performers" sit on the wrong side.
3. Walk the Funnel by Ratio, Not by ROAS
Outbound CTR should clear 1.5%. View Content to Add to Cart should clear 20%. Add to Cart to Purchase should clear 1 in 3.
Each ratio isolates a different break. Low CTR is a creative problem. A healthy CTR but a collapsing cart is a site problem. The ratios tell you which fix matters before you waste a week on the wrong one.
4. Check the Store, Not Just the Account
A store conversion rate under 2% means the leak is the website, not the media. I have watched buyers pour budget into "scaling" a store that converts at 0.8%. You cannot out-spend a broken checkout.
5. Check Where the Money Actually Goes
A healthy split is 95% prospecting, 5% retargeting. What I usually find is inverted: half the budget chasing people who already know the brand, catalog ads posting a beautiful ROAS by taking credit for sales email was going to close anyway.
That Is the Audit
No new ads. No budget changes. Just running the numbers in the order that tells you whether the account is sick, and where.
90% of the time the account does not need new creative. It needs someone who checked whether it could make money before spending more of it.
One caveat worth holding onto. Breakeven is set by the price you can hold, and price is a positioning decision before it is a maths one, which is the argument in why people buy products. If you want me to run this order on your account, book an audit.
Frequently Asked Questions
How do I know if my Meta ads are profitable?
Compare cost per purchase against max CPA, which is average order value multiplied by contribution margin. On a 90 pound AOV at a 40% margin, anything costing more than 36 pounds to acquire is a loss, whatever ROAS the dashboard reports. Platform ROAS on its own cannot answer the question because it does not know your costs.
What is breakeven ROAS?
Breakeven ROAS is 1 divided by your contribution margin, the margin left after product cost, shipping and payment fees. A 40% contribution margin means a breakeven ROAS of 2.5. Below that number every sale loses money. Write it at the top of the page and measure every campaign against it.
How do you calculate max CPA?
Max CPA is average order value multiplied by contribution margin. On a 90 pound AOV at a 40% margin, that is 36 pounds. It is the most you can spend to acquire a customer and still break even, so sort every ad by cost per purchase and anything above the line is bleeding.
What are healthy Meta ad funnel ratios?
Outbound CTR should clear 1.5%, View Content to Add to Cart should clear 20%, and Add to Cart to Purchase should clear 1 in 3. Each ratio isolates a different break, so you fix the right thing instead of guessing.
What does a low store conversion rate tell you?
A store conversion rate under 2% means the leak is the website, not the ads. You cannot out-spend a broken checkout, so fix the store before you scale the media.
What is a healthy prospecting to retargeting split?
Roughly 95% prospecting and 5% retargeting. If the split is inverted, you are spending most of the budget on people who already know the brand and letting retargeting take credit for sales that would have closed anyway.