Many Australian small and medium enterprises invest in paid search (like Google Ads), social media advertising, and email marketing. But knowing which channel delivers the best return isn’t always straightforward. It’s tempting to look at simple metrics like clicks or likes, but true comparison hinges on profitability – what revenue each channel generates versus its cost. We’ll outline how to do this effectively.

The key is to move beyond vanity metrics and focus on return on ad spend (ROAS) and customer lifetime value (CLTV). These are core concepts for understanding channel performance. ROAS tells you how much revenue you get back for every dollar spent on advertising. CLTV predicts the total revenue a single customer will generate throughout their relationship with your business. Comparing these across channels gives a much clearer picture.

Here’s how we recommend approaching the comparison:

• Consistent Cost Tracking: Accurately record *all* costs. For paid search and social, this is ad spend plus any agency fees. For email, include software costs, design time, and list management. Don’t forget to factor in the internal time your team spends managing each channel.
• Attribution Modelling: Understand how each channel contributes to a sale. Is it the first touchpoint, the last, or somewhere in between? Consider using a multi-touch attribution model to give credit where it’s due. Many platforms offer this functionality, or you can use dedicated attribution software.
• Calculate ROAS: For each channel, divide the revenue generated by the total cost. A ROAS of 3 means you’re generating $3 in revenue for every $1 spent. This is a good starting point, but remember it doesn’t account for CLTV.
• Estimate CLTV: This is more complex, but crucial. Consider average purchase value, purchase frequency, and customer lifespan. Channels that attract customers with higher CLTV are more valuable long-term, even if their initial ROAS is lower.

It’s also important to remember that channels work best *together*. A customer might discover you through a social ad, then convert after receiving an email offer. Don’t silo your analysis. Looking at combined performance, and how channels influence each other, will give you the most accurate view of profitability. As we move into 2026, more sophisticated attribution tools will become available, making this process even easier.

Ultimately, comparing profitability across these channels isn’t about declaring a ‘winner’. It’s about understanding where to allocate your marketing budget for the greatest overall return. Your next step should be to implement consistent cost tracking and attribution modelling to start gathering the data you need to make informed decisions.