Summary

A negative profit for a channel in Total Impact (TI) occurs when costs attributed to that channel exceed the revenue it receives. This can result from ad spend, refunds, shipping costs, or TI’s revenue redistribution, which shifts credit to the channels that played a bigger role in driving conversions.

Why This Happens

• Channel Costs Exceed Revenue

  • Ad spend, refunds, discounts, or shipping costs may be higher than the revenue allocated to the channel.
  • Channels with frequent returns or high CAC may show negative profit.

• Revenue Redistribution in TI

  • TI uses click-based and post-purchase survey (PPS) data to distribute revenue more fairly.
  • If Meta or TikTok is identified as a stronger acquisition driver, revenue may shift away from brand search or retargeting, reducing their profit.

• Multi-Touch Attribution Adjustments

  • Unlike last-click models, TI spreads revenue across multiple touchpoints.
  • A channel may keep costs but lose revenue, resulting in negative profit.

Example Scenario

1. A customer clicks a Meta ad, later searches for your brand on Google, and makes a purchase.
2. Shopify (last-click model) attributes full revenue to Google Search.
3. TI redistributes revenue, recognizing Meta’s role in demand creation.
4. Google keeps ad costs but loses some revenue, leading to negative profit.

How This Affects Reporting

• Some Channels May Appear Unprofitable

  • Retargeting channels (e.g., Google Search, email, SMS) may lose revenue allocation while keeping costs, creating negative profit.

• Prospecting Channels May Show Higher Profit

  • TOF channels (e.g., Meta, TikTok) gain more revenue as they are seen as demand creators.

• Refunds and High CAC Can Skew Profitability

  • Channels with higher ad spend, refunds, or discount-driven sales may struggle to show positive profit.

How to Interpret the Data Correctly

• Review Costs and Refunds for That Channel

  • High ad spend, returns, or shipping fees can make a channel appear unprofitable.

• Compare TI With Other Attribution Models

  • Use last-click or Triple Attribution to see how revenue is assigned differently.

• Understand That TI Prioritizes Demand Creation

  • Channels that create interest (TOF) may receive more credit than those that capture it (e.g., brand search).

By understanding costs, revenue redistribution, and multi-touch attribution, you can better interpret Total Impact’s profit calculations and make informed marketing decisions.