Your ROAS Is Lying to You: How Profit-First Marketing Actually Works

Steve Hutt:
Welcome back to eCommerce Fastlane. I’m your host, Steve Hutt.

Steve Hutt:
Here’s a number that I think should bother every brand on Shopify right now. I talk about this a lot: the cost of acquiring a net new customer. Over the last, I don’t know, three to five years, it’s gone up almost 60%. From some of the research I’ve done, ecommerce brands are losing almost $29 for every new customer they bring in. That’s why retention strategies and loyalty are so important.

Steve Hutt:
But here’s what really gets me, and it’s one of the reasons I have my guest on today. Most brands are still making decisions based on what their ad platforms are telling them. They look at the ROAS number inside Meta or Google or TikTok instead of asking whether the business is actually making money or not. The ad dashboards are interesting because they say things are working, but I’d argue the bank account often says otherwise. The founder is stuck in the middle, drowning in data but starving for clarity.

Steve Hutt:
My guest today is Matt Raminick. He’s the founder and CEO of a company called Sunnyside. Matt has spent almost two decades on the brand side. He worked for Quiksilver, Volcom, PacSun, and he was running digital strategy for a $400 million business.

Steve Hutt:
According to LinkedIn, he was laid off in 2020, and he went on to build the agency he always wished he could have hired when he was at the Quiksilver Volcom Group. His company is Sunnyside. What’s interesting about them is their angle: they’re a profitability-first growth partner. They exclusively work with lifestyle brands. They have this framework called the Profit360 framework, where they connect the brand’s P&L, creative strategy, and channel execution—the paid acquisition side—into one system. From what I understand (and we’ll learn more in a minute), marketing and finance are finally speaking to each other and working toward the same goals, instead of living in silos.

Steve Hutt:
He’s worked with so many brands: Brixton, Nixon, Municipal—another great fashion brand. It’s quite interesting. I’m hoping we can unpack what profitability-first marketing actually looks like.

Steve Hutt:
Hi Matt, welcome to the show.

Matt Raminick:
Hey, thanks a lot, Steve. Appreciate it.

Steve Hutt:
Oh, my pleasure. Let’s talk about Sunnyside—what it does and what you believe the core problem is. I kind of prefaced it at the beginning here, but you must have an elevator pitch: “Hey, I’m Sunnyside, and here’s the main problem we’re solving for brands.”

Matt Raminick:
Yeah. So we work with brands that are meaningfully trying to scale their business—whether that’s from one to five million or 25 to 50 million in annual revenue.

Matt Raminick:
We see this all the time. They get to a point where they’ve plateaued. The playbooks they’ve relied on for the last four or five years aren’t delivering the same results. Just like you said, CAC is going up, the efficacy of their ads is declining, and they’re spending more on marketing than ever, but they’re not profitable at the end of the day—if at all.

Matt Raminick:
At the same time, we have more data and tools than ever. We’re getting all these contradictory signals, and they’re not able to confidently say where the next best dollar should be spent. Leaders are drowning in information day to day. They’re getting different signals about where to spend and what to do.

Matt Raminick:
On top of that, teams have no bandwidth for the bigger strategic work, and there’s money left on the table for brand-building exercises. So you get this analysis paralysis problem.

Matt Raminick:
They know they need to increase creative output. They know they need to diversify channels, improve measurement, and optimize how they acquire new customers. But they’re either too cash-constrained because they’re not profitable and losing money on first orders, or they’re understaffed and unable to invest in the infrastructure and expertise required because the business is unprofitable.

Matt Raminick:
Where we come in is to look at the overall landscape: what’s going on at the P&L level, where they’re at with creative volume and velocity, what the channel mix has been historically. Our system comes in and helps put a plan in place to right the ship.

Steve Hutt:
It’s interesting about these playbooks that used to work. A lot of them have really started to collapse. Some of the narrative I talk about a lot on this show is Apple’s walled garden.

Steve Hutt:
I think it started way back with iOS 14. There were changes in email, privacy changes, attribution changes. What’s your overall thought about this attribution gap, the “cookie apocalypse,” Apple—all of that? I’m curious about your comments.

Matt Raminick:
You know, attribution is the holy grail in marketing. When I was at PacSun, we had a super complex MMM tool in place, and we still didn’t trust it because it was so far off. I don’t believe there’s any one tool that’s going to solve our problems here.

Matt Raminick:
I think it’s better to look at the data coming out of different sources and then triangulate it. So think about tools like Triple Whale or other attribution tools—what those are saying. Then look at what GA4 is saying, what Shopify is saying. If you have an incrementality testing tool, great—what’s that saying?

Matt Raminick:
That’s your best bet: leverage the signals you’re getting, figure out where some of the overlap is, and from there make an informed decision. Especially as the brand gets bigger and things become more complex, the best thing to do is usually to simplify.

Matt Raminick:
There’s so much data and so much information we can tap into, and all of these tools have their own interests in mind. We’ve really thought about that on our side, and it comes back to simplifying, triangulating, getting some quality signals out of each one, and then hedging some bets against it.

Steve Hutt:
It’s interesting, your time at PacSun and Volcom and whatnot. I mentioned at the top of the show that you’ve likely hired and fired a lot of agencies along the way to help that business. Clearly, you need to wear a lot of hats, but you also need to hire expertise.

Steve Hutt:
What did you see, being in that seat, trying to find agency partners to help with the brand story, mission, and profitability goals? Then once the layoff happened in 2020, you decided, “I’ve gotta build something similar or something completely different.” I’m curious about your mindset around that.

Matt Raminick:
What I kept running into was this gap between what agencies were optimizing for and what actually mattered to the business. They would show up with really great decks, impressive numbers, solid ROAS—and we’d still be losing money.

Matt Raminick:
At a business like PacSun, contribution margin was the number one thing the executive team looked at. When we saw contribution plateau, even though spend was going up, it was a red flag.

Matt Raminick:
When I eventually left the corporate side, I wasn’t looking for a better agency to go work at or partner with. It was more like, “Let’s take this knowledge and build one.” We tried to look at everything through a profit-first lens from the beginning and think about ways we could meaningfully improve the bottom line.

Matt Raminick:
Sometimes that comes at the expense of performance—at least on paper. For example, if you look at some of our Meta accounts, you might see a really simple campaign structure. It’s not overly complex in terms of targeting, because of the inherent way that platform now operates with the creative velocity piece.

Matt Raminick:
You might see ROAS down in the 2–3x range. But if we back that into an overall MER number and look at CAC, and we’re profitable on first-order new customers and the contribution goal is where it needs to be, it might signal that we can actually spend more and still be profitable.

Matt Raminick:
It differs by business. We have some brands that are more interested in growing top line and are okay with breaking even on first-order new customers—or even losing a bit of money—because it’s more of an LTV play. They’re thinking longer term, and they know the average customer will purchase two, three, four, five times.

Matt Raminick:
It was frustrating to see so many agencies look only at in-channel metrics and benchmark success on those numbers. It’s really easy to inflate ROAS—you just target past customers. We see that all the time. It’s one of the first things we look for when we audit a new account.

Steve Hutt:
Yeah, it’s so interesting. I want to make sure I share something with listeners about contribution margin. It’s a really important topic. At a high level—and I’m sure you can dig deeper—it’s the revenue left over after you subtract the variable costs tied to selling the product. That’s what’s contributing to profit.

Steve Hutt:
For a Shopify brand, the math might look like this: revenue minus cost of goods, minus shipping, minus transaction fees, minus ad spend to acquire that customer. What’s left over is the contribution margin.

Steve Hutt:
So for example, if you have a product that’s $100 and it costs you $30 to make, $8 to ship, $3 in Shopify fees, and $20 in ad spend—if my math is right—you’re making $39. That would be a 39% contribution margin in that case.

Steve Hutt:
But as you said, the ROAS number is different from the contribution margin number, right?

Matt Raminick:
Yeah, that’s exactly it. It varies. If your margin is better at the product level, it definitely helps. Some brands decide to include certain costs and some don’t. You could argue, “We did this photo shoot,” or “We paid these creators or influencers,” so you might roll that in. It depends at the business level, but at its core, it’s revenue minus variable costs.

Steve Hutt:
I see. Let’s talk about this Profit360 framework because it’s interesting to me. Let’s suppose a brand is doing, I don’t know, $15 million a year and has never heard of it. There are lots of mid-market brands listening today.

Steve Hutt:
Finance and acquisition people often sit in two different silos. They meet every quarter for a QBR. The CEO knows what’s going on generally, but maybe not day to day.

Steve Hutt:
What’s your framework around Profit360? What does it connect, and how does it allow you to make better decisions for the business?

Matt Raminick:
I love talking about this because it stems from my experience and our team’s experience working in-house. Aside from myself, most of our team comes from the brand side.

Matt Raminick:
We thought through, “Okay, how would we set this up if we were sitting in an ecommerce department? What would we be looking at? How would we tell the story of what’s going on with the business? How would we forecast effectively?”

Matt Raminick:
The framework was born to bridge the gap to finance and speak the same language as the CFO. It’s about thinking through the outcomes that move the business forward, not just those vanity platform metrics. As much as I bash on ROAS and platform metrics, they’re still important—we still optimize off them day to day—but this framework goes up one level.

Matt Raminick:
We called it Profit360 because we wanted a repeatable framework that could apply to a brand doing a million a year or a brand doing 100 million a year.

Matt Raminick:
We come in, bring in the P&L at the brand level for the ecommerce business, and look at it monthly and annually. We tie in go-to-market planning and product planning.

Matt Raminick:
What I mean by that is: what are the key drivers from marketing and brand that are going to help the business hit its forecast numbers? What are the hero products and evergreens that are going to support that down to the monthly level?

Matt Raminick:
We work with a lot of apparel brands. For example, we’ll ask the planner and buyer, “What does your buy look like at a seasonal level?” We get the line review. That lets us see the product mix and penetration down to product and category levels.

Matt Raminick:
We take that and bring in creative strategy, knowing how much creative impacts performance now. We’ll develop a full creative strategy around what the ads should look like and when they should deploy based on the calendar. That trickles down to channel execution.

Matt Raminick:
It’s like an inverted triangle. You used to have channel execution at the top and reporting at the bottom. We start the other way around to inform what’s going to happen at the channel level and where we’re going to deploy ads and dollars—based on where we think we can acquire new customers at the lowest cost.

Matt Raminick:
That gives clients more clarity on where they should invest, more confidence in the forecast, and we’re looking at the profitability goal as our North Star from day one.

Steve Hutt:
I see. Some other important metrics are repeat purchase rate and customer lifetime value. How do you incorporate those into your framework?

Matt Raminick:
We actually start with repeat customers. That helps us establish a baseline. If your repeat rate is 50%, and we know we can rely on a certain number of orders per month from returning customers, that gives us the delta of how many new customers we have to go acquire.

Matt Raminick:
If there’s an imbalance and repeat is too high, we know we’ve got more work to do in bringing that down a bit. We don’t want to just keep squeezing the sponge; we want enough new people coming in and building awareness.

Matt Raminick:
It depends on the product too. We work with some higher AOV brands where the consideration cycle is much longer. That’s another caveat. You can get stuck looking at platform metrics and say, “Why is our ROAS low?” It might be because you’re targeting 80–90% new customers who aren’t aware of the brand yet, and the purchase happens outside the attribution window.

Matt Raminick:
But if you look at the trend line and see that new customers are increasing in Shopify overall, that matters. So yeah, we start with repeat in mind, and we let email, SMS, and other retention channels do the heavy lifting there.

Steve Hutt:
I see. This is more of a side note, but what about subscription businesses? There are some subscription apparel businesses—sock companies, underwear, different categories. How does that fit into the mix?

Steve Hutt:
At the beginning of the month, if you have a certain number of active subscription customers, you can forecast that—same with supplement companies. What’s your mindset around that?

Matt Raminick:
That’s a good question. I’ll admit I don’t have a ton of direct experience with subscription, but in talking to folks who do, it does create more predictability. You can understand what the typical repeat cycle will be, especially if it’s a fixed window like monthly or biweekly replenishment, and then back into the expected lifetime value of that customer.

Matt Raminick:
If a subscription brand came to us tomorrow, we’d probably start there—back out the cohort analysis and better understand the CAC:LTV ratio, what those payback windows look like over 90, 120, 180 days, and then build from that.

Matt Raminick:
It changes things from a first-order profitability standpoint because that number might look high at first and then back off over time depending on renewals. That’s where things get interesting. You’d have to look at a much longer time frame for sure.

Steve Hutt:
What about creative? I read somewhere in my research that you talk about ad platforms treating creative quality as a targeting mechanism now. There’s been a shift over the last few years. What does that actually mean for how a brand should think about its ad creative?

Steve Hutt:
It seems like it’s the number one bottleneck.

Matt Raminick:
Yeah, it’s the number one bottleneck we see—keeping up with the creative velocity required to fuel the channels.

Matt Raminick:
It all goes back to when Meta shifted to Andromeda and moved away from detailed interest targeting. That put more pressure on brands because now the algorithm is using the creative—and the signals built into it—to figure out who to put it in front of.

Matt Raminick:
In practice, based on spend, the amount of creative required goes up or down. Let’s say you have a Meta account spending a thousand dollars a day. That backs into a specific number of creatives—and not just statics or videos.

Matt Raminick:
You have multiple buckets to fill: creator UGC, Reels and partnership ads, video, carousels, statics. The first bottleneck we see when we look under the hood is brands stuck in the old way: do a big seasonal photo shoot, come back with a lot of assets, deploy them, and the platform burns through them so fast.

Matt Raminick:
Because the way you acquire scale on Meta now is to constantly feed it more creative. You’re doing refreshes almost weekly, in some cases daily. By the time you’re done with that seasonal shoot, you’ve depleted the assets and you’re stuck. You need more, and you’re constantly trying to feed it.

Matt Raminick:
The solve is more iterations: more angles, more views, more creative diversity. We talk a lot about more UGC, more creator content. A lot of brands struggle with it, and it’s something we talk about a lot.

Steve Hutt:
I’ve written a bit about these creative challenges for Shopify brands. I see a couple of different angles.

Steve Hutt:
On the static side, there are lots of great AI tools out there. Every brand makes its own decisions about how to use them, but they’re getting better. I think of tools like AdCreative.ai or Pencil, and then some basics like Midjourney and ChatGPT. On the video side, there are tools like Runway or Creativey and a few others.

Steve Hutt:
The idea is that there are great AI tools that can ingest your brand, help you keep feeding the beast, and run nonstop A/B and multivariate tests. Then the question becomes: what are we doing for analytics and testing to see if it actually works? You mentioned Triple Whale.

Steve Hutt:
I’ve heard a lot about Northbeam as another interesting marketing intelligence platform, and Motion as well. There are tools to create static and video assets on-brand, with live actors or AI-generated photo and video. Then there’s a back-office opportunity with Triple Whale, Northbeam, or Motion to analyze the data.

Matt Raminick:
Yeah, exactly. On the data side, we’re looking at thumbstop rate, completion rate, click-throughs, and all that.

Matt Raminick:
On content generation at scale, we’re at a point where you can supplement your photo shoots and content creation with AI. I don’t think it’s fully there yet with video—we’ve seen some promising stuff—but with statics, we’re using it a lot.

Matt Raminick:
Our point of view is that you still need really good reference material. The seasonal photo shoots and content creation efforts brands are doing are still totally valid. Where AI comes in is to supplement that and help you turn 10 assets into 100 really quickly.

Steve Hutt:
Yeah, this is amazing. I did a bit more research before recording today, and I love the idea of getting a case study out of you.

Steve Hutt:
I’ve seen a couple on your site: Ibiq, which makes handmade sandals; Municipal is listed too. I’m sure you have other case studies. Is there one you can talk about publicly and say, “Here’s what life looked like without us; here’s the challenge they came with; here’s how they went through Profit360; and here’s what things look like now”?

Matt Raminick:
Yeah, absolutely. Brixton’s a good example. We kicked off with them at the beginning of the year. They had really ambitious growth goals and wanted to focus more on profitability and the bottom line. It was a great match because a lot of our team comes from similar brands.

Matt Raminick:
We came in—like you and I were talking about before we started—we just closed Q1, so we’re looking at where we landed.

Matt Raminick:
The challenge with them was they had a lot of stories and a large catalog. They had many different products they wanted to talk about. We helped them streamline and focus more. Instead of thinking about a dozen different stories per month, we focused on three or four we could hedge our bets on—based on inventory, how much of that product was expected to carry the revenue goal, and so on.

Matt Raminick:
We aligned all our creative efforts around that, and then down into channel execution—being really intentional about which channels we were on and how we iterated.

Matt Raminick:
Another thing that sets us apart and helps us see results faster is that we get really embedded in the business. That was one of the reasons they came to us in the first place—our model and how we work.

Matt Raminick:
In practice, that looks like deep conversations around cohorts and customer types, looking at which products are most profitable versus ones that maybe aren’t but have franchise potential we can build into over the long term.

Matt Raminick:
A lot of that happened quickly in January. I’m happy to say we ended Q1 really strong—around 25–30% up against their goal.

Matt Raminick:
They have very ambitious growth goals this year, so we’re setting the foundation and thinking long term about seeing a successful year through with them. But we’re off to a good start.

Matt Raminick:
A lot of it stemmed from sharpening focus, getting the creative in tune with the product and what was resonating with the customer, and trying to keep things simple—doing fewer things better.

Steve Hutt:
It comes down to this analysis paralysis too. I think about this a lot and talk about it on the show. Every week I’m bringing on either a new agency founder like yourself, solving interesting problems, or a SaaS founder building something Shopify doesn’t build yet—an app or marketing platform that connects in.

Steve Hutt:
People can get overwhelmed: “Is this right for me?” What do you say to people in that mode? They know they’re not as profitable as they could be—hence they’re listening right now—and they’re wondering if there’s a little takeaway or maybe a conversation with your team.

Steve Hutt:
They don’t know the next steps. People don’t realize you’re available—that’s why I wanted to have you on. You have this Profit360 opportunity and ways to align creative and the P&L with a proper plan. What do you believe the next steps are for those listening?

Matt Raminick:
We think of it as a low-friction diagnostic.

Matt Raminick:
When we get called in, we pull in all the data. We grab everything from Shopify, all the channels where you’re spending, and we look at the creative and do a creative audit. We try to get a clear picture of what’s going on and what’s happened over the last two or three years.

Matt Raminick:
From there, we’re looking at where some of the leaks might be: creative velocity, new customer acquisition, the ratio between new and returning customers. We come back with an itemized list of where to prioritize. Usually it comes down to a few things.

Matt Raminick:
Creative bottlenecks are a big one—everyone’s dealing with that. It could also be that marketing is pushing products with limited stock; you keep selling out. Then we think about building equity in different products or rethinking the offer or message.

Matt Raminick:
There’s no one-size-fits-all. But when you pull in all this information and look across the business level, P&L, creative, and channel level, you can clearly see where some of the opportunities are. That helps you formulate a roadmap.

Matt Raminick:
Whether we work together or not, we like to hand off something meaningful and impactful to the business.

Steve Hutt:
What’s interesting about the P&L—and I want to hit this before we wrap up—is all the other costs that hit it.

Steve Hutt:
I think about logistics and return management challenges, especially in fashion. There are large costs with wrong sizes, fraud and abuse, returns that have to be graded A/B/C, damaged or destroyed product—all of it hits the bottom line.

Steve Hutt:
You’re deep in fashion and apparel, and half of Shopify is fashion and apparel. Have you seen anything in your years and now in the agency around how people are handling returns management and abuse, knowing it hits the bottom line?

Steve Hutt:
If you don’t have a return policy, people may not buy. But then there are tools like Loop and Narvar that offer instant credits, assume you’re sending the product back, and then maybe a brick comes in the package instead. It sits in a corner for two weeks before you realize it, and they’ve skipped town. Add porch pirates on top of that. What’s your overall thought about logistics and returns in today’s world?

Matt Raminick:
Returns are a big deal, especially with footwear brands. We typically see pretty high return rates because of sizing inconsistencies and people ordering a few pairs to try at home and sending some back.

Matt Raminick:
In general, we’ve been fortunate—we haven’t seen widespread fraud or issues at a level where it becomes a huge nuisance.

Matt Raminick:
You mentioned a couple of tools, and I do think we’ve come a long way in the last few years with what happens after the order. Instant credit, making returns frictionless—all of that plays a role.

Matt Raminick:
There’s a retention play too. You can tie that into loyalty. For example, loyalty members get free returns, but there’s a restocking fee for non-members. Same on the other end: enable free shipping for loyalty members but not for everyone else.

Matt Raminick:
Tools like Loop or AfterShip are really strong now—out-of-the-box solutions that are mobile-friendly. And now you’ve got physical return locations—return “banks”—where customers can drop off items.

Steve Hutt:
Absolutely. At FedEx depots and so on. I think Happy Returns is part of PayPal now.

Matt Raminick:
Yeah, exactly. They’re making it a lot easier, but it’s a fine line. You don’t want to make it so easy that people buy with the intent to return.

Matt Raminick:
It’s something to factor in. That’s why we always look at net revenue as our North Star. If you’re just tracking top-line or gross revenue, you’ll miss the stuff hiding underneath. It’s definitely something to factor in as you sharpen focus on profitability.

Steve Hutt:
This is very cool. I’ve really enjoyed this conversation, Matt. Thank you.

Matt Raminick:
Likewise.

Steve Hutt:
I joke on the show that I’m on page two of notes. Life of learning mantra—that’s me.

Steve Hutt:
For brands listening right now who think, “Maybe this is what I need,” or “This Profit360 thing is interesting; I’d like to learn more,” I’m going to pass the baton to you. What do you believe the next steps are for mid-market brands in your sweet spot—those with data and enough revenue to justify a look—to see if there’s a way you can serve them?

Matt Raminick:
If this hits home and you’re wrestling with it inside your brand, just send me a DM on LinkedIn—Matt Raminick—and I’ll share what we’ve seen work and what we’ve seen usually not work.

Matt Raminick:
We’re always happy to hop on and listen. We love connecting with new people. Our website is sunnysidecalifornia.com. There’s plenty of information there about what we do and some of the brands we’ve worked with successfully.

Matt Raminick:
But yeah, the best place to reach me is on LinkedIn. I post there frequently and always love to share insights. I hope to hear from you.

Steve Hutt:
Yeah, it’s amazing. I love the vintage artwork and black-and-white aesthetic on your website. It’s very unique and right on brand. I love the “Sunny TV” too. I played around with it this morning, flipping all the channels. I thought, “Oh man, this is great.”

Matt Raminick:
Yeah, love it. It’s super cool.

Steve Hutt:
All right, Matt, thanks again for coming on the show. I wish you continued success. Thank you for serving these founders and marketers of Shopify brands—and other CMSs too. It sounds like you have a great framework and some great case studies. I wish you continued success, and thanks for coming on the show.

Matt Raminick:
Yeah, it’s been a pleasure. Thanks so much, Steve.

Steve Hutt:
All right, take care.

Steve Hutt:
Well, that’s it for today’s episode. I’d like to thank you personally for being a loyal listener of eCommerce Fastlane. It’s my hope this podcast is offering you a ton of value through growth strategies, tactics, and exclusive insider tips on the best Shopify apps and marketing platforms—all with my personal goal to help you build, manage, grow, and scale a successful and thriving company powered by Shopify.

Steve Hutt:
Thanks for investing some time today and listening to the show. I’m so proud and excited that you have a growth mindset and are a constant learner. I truly appreciate you and your entrepreneurial journey. Enjoy the rest of the week and keep thriving with Shopify.