This blog will show you why you can’t seem to crack channels other than your hero channel. Let’s CRACK some channels!
Commonly, it’s a brand with low 8-figures in revenue trying to go from something like $10m - $20m in revenue to $50m+.
At Karta Ventures, we’ve seen this play out dozens and dozens of times. It goes something like this…
Let’s say you run a DTC brand built on Meta. Mr. Zuckerberg has built your business to $15,000,000 a year in revenue.
You decide to launch a new channel. Your media buyers are thrilled. They’ve always wanted to spend on YouTube.
Thirty days in, platform reporting shows you are nowhere near what you see on Meta; if in-platform performance is this bad…how can you possibly justify keeping it running?
You compare it to Meta, which shows a blended 5x ROAS and looks like a hero. So you slash the new channel, as it’s only performing 20% as well as Meta.
Oops, big boo boo!
Say you run a brand selling a product with a longer consideration cycle. The time from first exposure to purchase looks like this:
20% buy within 30 days of first hearing about you
40% buy in days 31–90
25% buy in days 91–180
15% take 180+ days
If only 20% of your eventual purchasers convert inside 30 days of first exposure, even if the new channel ultimately performs identically to Meta, your best possible observed ROAS inside a 30-day evaluation window is ~20% of the long-run number.
So if Meta’s true long-run 5x translates to only 1x inside 30 days, pulling the plug at Day 30 is like giving up on your new apple tree two days after planting the seeds.
To understand this better, we’ll be using our word of the day; adstock.
Adstock is the residual, decaying effect of advertising exposures on current and future sales. Ads load memory, familiarity, mental availability, and intent into the market. That stored intent bleeds into purchases over time.
If you only credit conversions that happen inside a short attribution window like 7DC, you ignore the tail of revenue that that spend unlocked. Mature channels, Meta in our example, are benefiting from years of accumulated adstock.
New channels have zero adstock, of course they look worse at day 30.
Need to figure out your consideration cycle? You can do this a few ways…
Run a survey and ask how long your customer knew about you before purchasing
Use a multi-touch attribution system. Most have directionally correct data but it’s not very reliable.
You can use upstream data like branded search impressions.
Geolift/holdouts paired with MMM are the gold standard, but very expensive and hard to do if you’re not pushing $75m+ in revenue.
Let’s walk through an example with numbers.
Assumptions:
Meta 180 day ROAS = 5.0.
Purchase lag distribution from surveys and our multitouch attribution system:
0–30 days: 20%
31–90 days: 40%
91–180 days: 25%
180+ days: 15%
Gross margin = 60%.
New channel spend test = $50,000 over first 30 days.
30-Day Dashboard Results:
Observed revenue so far ≈ 20% of long-run.
Expected long-run revenue = (Spend)(True ROAS) = ($50,000)(5.0) = $250,000.
Observed 30d revenue = (20%)($250,000) = $50,000.
Observed 30d ROAS = $50,000 / $50,000 = 1.0x.
If you cut now, you "prove" ROAS is only 1x and shut it off.
You forfeit the remaining $200,000 revenue that would have rolled in over the next 5+ months off that spend.
At 60% gross margin, that’s $120,000 gross profit gone. Worse, you never build the cumulative awareness base that would have fed future repeat and referral volume.
I am most comfortable scaling when lag-adjusted ROAS ≥ hurdle, quality metrics in-line or better, and I keep seeing channel-specific CAC falling with more spend & optimization. During the test tracking quality metrics is a good way make sure you’re at least headed in the right direction. Session length, email capture rate, quiz completions, cost per incremental branded search session, etc…
A helpful way to view this all if you’re a visual learner is to build a spreadsheet showing cash velocity and gross profit payback.
A simple model could include something like…
Spend outlay at Day 0 = $50,000
Gross profit recovered by Day 30 → $30,000 (60% of $50k rev) → -$20k cash delta
Gross profit recovered by Day 90 cumulative → +$90k total GP (30k+60k) → +$40k net vs spend
By Day 180 = +$127.5k cumulative GP
Full tail = +$150k cumulative GP → 3.0x gross profit return
You now have everything you need to judge new channels sanely: lag buckets, maturity multipliers, cash payback ladder, and quality metrics. Use them and you’ll stop nuking the very spend that breaks you out of your plateau.
Run an 8-figure consumer brand? If you’ve never considered outside capital, let me change your mind…
At Karta Ventures, we invest in 8-figure consumer brands, and help entrepreneurs reach their goals faster - while cutting risk required to get there.
We’re hands on operators that get help you reduce cost, improve quality, and grow revenue through our battle-tested playbook built on more than a decade of hardcore DTC operating experience and dozens of 8 figure brands.
It’s not uncommon for us to increase net income by 130% - 150% within 120 days, while unlocking cash within your business.
Our ability to tailor the perfect deal for each founder we work with and move exceptionally fast is unmatched because we have no limited partners to answer to - our capital is our own earned through exits & cash flow from our portfolio of consumer brands.
We have the operating experience required to truly understand your business at a fundamental level in a way no 25 year old Associate at a VC or PE firm can.
Since 2018, we have invested 8 figures of our own capital in everything from growth equity rounds, to turnarounds & special situations.
We welcome complex opportunities that others are unable or unwilling to tackle.
Drop us an email via our site contact form on www.kartaventures.com.
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