A more refined profitability metric for D2C brands calculated as Revenue minus COGS minus variable marketing costs (performance marketing spend), before fixed costs like salaries and rent.
CM2 = Revenue - COGS - Variable Marketing Spend. This is the clearest picture of D2C marketing efficiency: if CM2 is negative, you are losing money on every order even before fixed costs. Sustainable D2C brands maintain positive CM2 of at least 15-20% to cover fixed costs. CM2 analysis by channel reveals which acquisition channels are actually profitable, even when blended ROAS looks healthy.
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