Which channel to fund: is it working, or just busy?

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1. For the instructor

This is a ready-to-run 75-minute class you can teach cold, with no prep. Students meet an invented online store that is trying to decide which marketing channel to put more money into. The catch they will discover: the loudest, highest-revenue channel is quietly losing money, and a quieter one is the real earner. By the end, a table of students can look at three channels and say — with arithmetic they can do in their heads — which one to fund and why.

What’s in the pack: this run-of-show (section 4), the teaching points you need (section 5), a group exercise (section 6), a full facilitator answer key (section 7), debrief prompts (section 8), a printable student handout (section 9), a stretch task (section 10), and a slide outline you can present straight from (section 11).

Running it in a mixed room: every term is defined the first time it appears, and the only maths required is multiply, subtract, and divide. Put students in pairs or table groups of three to four so the confident ones explain to the rest — that talking-it-out is the learning. There is a low floor (everyone can finish the core three-channel table) and an optional ceiling (section 10) for fast tables.

One honest line to say out loud at the start: this is teaching material, not a certification and not a credit-bearing course. It is a session to practise a way of thinking, nothing more.

A note on the clock. The run of show is a tight 75 minutes with little slack — in a 30-40 student room budget ~85 minutes in practice (set-up, table-forming, and report-backs always run long). If you fall behind, cap report-backs at two tables and cover two discussion prompts. Protect the group exercise and the answer-key debrief — those are the session.

Further reading for you or keen students: the self-paced “Decide” course this builds on, is-this-channel-working (“Is this channel working? ROAS, and the margin it hides”).

2. Session at a glance


Audience	Mixed-ability undergrads incl. non-business majors; basic arithmetic only
Class size	12-40
Total time	75 minutes
Materials	Printed handout (section 9); whiteboard or slides (section 11); no computers needed

By the end students can:

Compute a channel’s ROAS and say plainly why it is a revenue number, not a profit number.
Turn revenue into contribution using a margin, and judge a channel on the money it keeps.
Find a channel’s break-even ROAS and use it to decide which channel to fund and which to cut.

Further reading (a self-paced version of this idea): the Decide course is-this-channel-working.

3. The case

Meadowlark Home is a composite (invented) online store that sells rugs, throws, and cushions. All figures below are illustrative — built for clean classroom arithmetic, not taken from or claimed about any real company.

Every order Meadowlark ships looks like this:

Per order	Amount
Revenue (what the customer pays)	$80
Product cost	$36
Packing and shipping	$8
Card fees and returns	$4
Left over (“contribution”)	$32

So out of every $80 sale, Meadowlark keeps $32 — that is 40% of the sale. The other 60% is already spent on the product, the shipping, and the fees before a single advertising dollar is counted.

Last month Meadowlark ran three advertising channels. The growth lead wants to pour next quarter’s extra budget into the one with the biggest sales number — Meta — and says “it’s our best channel, look at the revenue.” The finance lead disagrees. Your students have to settle it: which channel should get the money?

Channel	Ad spend	Sales (revenue) it drove
Meta ads	$30,000	$60,000
Google Shopping	$10,000	$45,000
Influencer posts	$8,000	$20,000

4. Run of show

8 min — Hook: pose the situation. Put the three-channel table on screen and ask the room for a show of hands: “Which channel is the best? Which would you give more money to?” Most will pick Meta (biggest sales). Write the vote on the board — you will return to it.
10 min — Teach ROAS (section 5, part 1). Define it, compute it live for all three channels, and make the key point: ROAS is built from revenue, and revenue is not money kept.
12 min — Teach contribution and break-even ROAS (section 5, parts 2-3). Work Meta’s number on the board together so every table has seen the method once before they try it.
25 min — Group exercise (section 6). Tables fill in the handout for all three channels, decide which to fund, and write a one-sentence reason. Circulate and use the “stuck table” nudges in section 7.
12 min — Debrief (section 8). Two or three tables share their call and reasoning; run the Socratic prompts; re-take the opening vote and discuss what changed.
8 min — Wrap and stretch. State the one-sentence takeaway, hand the stretch task (section 10) to fast tables or as a take-home, and close.

Total: 75 minutes.

5. Teaching points

Teach only these three ideas — they are all the decision needs. Define each term as you say it.

1. ROAS (return on ad spend). ROAS is the sales a channel brought in divided by what you paid to run it. Spend $30,000, get $60,000 of sales, and the ROAS is $60,000 ÷ $30,000 = 2.0 — two dollars of sales for every dollar spent. For the three channels: Meta 2.0, Google Shopping $45,000 ÷ $10,000 = 4.5, Influencer $20,000 ÷ $8,000 = 2.5. Every channel is “above 1.0,” so every dashboard calls all three winners. The trap: ROAS is a revenue number. Revenue still has to pay for the product, the shipping, and the fees before it can pay for the ad. ROAS tells you a channel was busy; it does not tell you the channel made money.

2. Contribution. Contribution is what a sale keeps after the costs of making that sale — here, $80 − $36 − $8 − $4 = $32 per order, which is 40% of the sale. So of every revenue dollar a channel brings in, only 40 cents is left to pay for the advertising and then add profit. To judge a channel, compare the contribution it earned (40% of its revenue) against what it cost (the ad spend). Taking “40% of” a number means multiplying it by 0.40: 40% of $60,000 = 0.40 × 60,000 = $24,000. So Meta earned $24,000 in contribution, minus $30,000 spent = −$6,000. The “best” channel lost six thousand dollars.

3. Break-even ROAS. You do not have to redo the whole subtraction each time. A channel breaks even when its contribution just covers its spend, which works out to break-even ROAS = 1 ÷ margin. At a 40% margin that is 1 ÷ 0.40 = 2.5. So the rule to tape to the dashboard: at Meadowlark’s margin, any channel below a 2.5 ROAS loses money and any channel above 2.5 makes money. Now the three channels sort themselves instantly: Google 4.5 (above — earns), Meta 2.0 (below — loses), Influencer 2.5 (exactly on the line — keeps nothing). The margin sets the bar; the ROAS only tells you whether you cleared it.

6. Group exercise

The task: you are Meadowlark’s analyst. Using the handout (section 9), work out for each of the three channels how much money it actually kept, then decide which single channel should get next quarter’s extra budget — and write one sentence defending the call.

Work in tables of three to four. Steps:

(5 min) For each channel, write its ROAS = sales ÷ ad spend.
(8 min) For each channel, compute money kept = (40% × sales) − ad spend. Fill the handout column.
(4 min) Mark each channel earns / loses / breaks even against the 2.5 break-even ROAS. Check it agrees with your “money kept” column.
(5 min) Decide: which one channel gets the extra budget? Which, if any, would you cut?
(3 min) Write your one-sentence reason, ready to say to the room.

Everyone should reach the same numbers; the discussion is about the call and how you say it.

7. Facilitator answer key

The call: fund Google Shopping. Cut or fix Meta. Hold the influencer channel flat. Here are the numbers your tables should reach, using money kept = (40% × sales) − ad spend:

Google Shopping: 40% × $45,000 = $18,000, minus $10,000 spend = +$8,000 kept. ROAS 4.5, well above the 2.5 break-even. This is the real earner and the one to fund.
Meta: 40% × $60,000 = $24,000, minus $30,000 spend = −$6,000. ROAS 2.0, below 2.5. It has the biggest sales number and loses money — funding it more would double the loss. The cost of the obvious choice is $6,000 a month, and more if scaled.
Influencer: 40% × $20,000 = $8,000, minus $8,000 spend = $0. ROAS exactly 2.5, right on the break-even line: lots of activity, nothing kept. Do not scale it; watch it or try to lift its margin. The cost of treating it as a “winner” is real money spent to stand still.

Where does the 2.5 break-even ROAS come from? (Derive it for the room.) A channel breaks even when the contribution it earns just equals what it costs: margin × sales = spend. Divide both sides by spend: margin × (sales ÷ spend) = 1. But sales ÷ spend is the ROAS, so margin × ROAS = 1, which rearranges to break-even ROAS = 1 ÷ margin. At a 40% margin that is 1 ÷ 0.40 = 2.5. That is the whole reason the number is 2.5 — it is derived, not decreed, so you can answer “why 2.5?” cold.

A legitimate alternative — cutting the influencer channel too. If a table decides to cut the influencer channel as well (not just hold it flat), mark that right, not wrong. At exactly break-even it keeps $0 while tying up $8,000 that could be earning elsewhere, so cutting it and moving that money toward Google is a rigorous, defensible call. The only genuinely wrong answers are funding Meta or calling the influencer channel a scale-up “winner.” Reward the reasoning, not a single “correct” verb.

Why the recommended call is defensible: the decision rests on money kept versus spend, not on the sales headline. Google is the only channel that clears the break-even ROAS with room to spare, so the extra budget earns the most there. The common wrong turn is picking Meta because its revenue is largest — that is exactly the trap; its ROAS of 2.0 sits below the 2.5 break-even, so every extra dollar loses about 20 cents of contribution. A second wrong turn is calling the influencer channel a “keep” because its ROAS beats 1.0 — but at exactly 2.5 it keeps nothing. To steer a stuck table: ask “of the $80 sale, how many dollars does Meadowlark actually keep?” (answer: $32, or 40%), then “so on this channel’s sales, is 40% of the revenue bigger or smaller than what you spent?” That one comparison unlocks every row.

8. Discussion & debrief

Run these after tables have shared their calls:

The room first voted for Meta. What number made it look best, and why was that number misleading?
Meta and Influencer both had a “positive” ROAS above 1.0. Why did one still lose money and one keep nothing?
If Meadowlark’s margin were only 25% instead of 40%, what would the break-even ROAS become — and would any of these channels survive it? (Answer: 1 ÷ 0.25 = 4.0, so only Google would.)
What one piece of information, missing from the sales dashboard, flipped the whole decision?
Is “cut Meta” the same as “Meta is worthless”? What could you try before cutting it?

One-sentence takeaway: a channel that is busy is not the same as a channel that is working — judge it on the money it keeps against what it costs, not on the sales it books.

9. Student handout

Meadowlark Home — which channel gets the budget? (All figures illustrative; Meadowlark is an invented company.)

Every order: revenue $80, minus product $36, packing/shipping $8, card fees/returns $4 = $32 kept, which is 40% of the sale.

Break-even ROAS at a 40% margin = 1 ÷ 0.40 = 2.5. (Below 2.5 a channel loses money; above 2.5 it makes money.)

Fill in the table:

Channel	Ad spend	Sales
Meta ads	$30,000	$60,000
Google Shopping	$10,000	$45,000
Influencer posts	$8,000	$20,000

Your decision. Which one channel gets next quarter’s extra budget? __________________

Which channel, if any, would you cut? __________________

Your one-sentence reason:

10. Stretch

For fast tables or as a take-home — no new maths teaching required:

The margin is not fixed. A sale bought with a 20%-off code carries only a 25% margin, not 40%. Re-work the break-even ROAS at 25% (it becomes 1 ÷ 0.25 = 4.0). At that margin, which of the three channels still makes money? What does that say about scaling a discount-led channel?
What would flip the call? Meta’s growth lead insists it can be saved. By how much would Meta’s sales have to rise, at the same $30,000 spend, before it stops losing money? (Find the sales figure where 40% × sales = $30,000.) Is that a realistic jump?
One sentence to a boss. Write the single sentence you would say to a manager who argues “the channel with the most sales is obviously the one to fund.”

11. Slides

Slide 1 — Which channel gets the money?

Meadowlark Home, an online rug and cushion store, has extra budget for one channel.
Three channels ran last month. Which is the best?
Presenter note: take a show-of-hands vote and write it on the board before revealing anything.

Slide 2 — The three channels

Meta: spent $30,000, drove $60,000 of sales.
Google Shopping: spent $10,000, drove $45,000.
Influencer posts: spent $8,000, drove $20,000.
Presenter note: most rooms pick Meta because its sales number is biggest. Hold that thought.

Slide 3 — ROAS: the number every dashboard shows

ROAS = sales ÷ ad spend. “Two dollars of sales per dollar spent” = ROAS 2.0.
Meta 2.0, Google 4.5, Influencer 2.5 — all “above 1.0”, all look like winners.
But ROAS is a sales number. Sales still have to pay for the product first.

Slide 4 — What a sale actually keeps

$80 sale − $36 product − $8 shipping − $4 fees = $32 kept = 40% margin.
Only 40 cents of every sales dollar is left to pay for the ad and add profit.
Judge a channel on money kept = 40% × sales − ad spend.

Slide 5 — The break-even ROAS

Break-even ROAS = 1 ÷ margin = 1 ÷ 0.40 = 2.5.
Below 2.5 a channel loses money; above 2.5 it makes money.
Meta 2.0 (below), Google 4.5 (above), Influencer 2.5 (exactly on the line).

Slide 6 — The reveal: money kept

Google: 40% × $45,000 − $10,000 = +$8,000.
Meta: 40% × $60,000 − $30,000 = −$6,000 (the “best” channel loses money).
Influencer: 40% × $20,000 − $8,000 = $0 (busy, keeps nothing).

Slide 7 — The call

Fund Google Shopping — the only channel keeping real money.
Cut or fix Meta; hold Influencer flat, don’t scale it.
Presenter note: re-take the opening vote here and discuss what changed.

Slide 8 — The takeaway

Busy is not the same as working.
Judge a channel on the money it keeps against what it costs — not the sales it books.

12. Sources & license

Data honesty. Meadowlark Home and every figure in this session are composite — purpose-built for clean classroom arithmetic, not drawn from or claimed about any real company. Full provenance and concept references are in SOURCES.md alongside this file.

License and disclaimer. This module is offered for free classroom use under the license maintained at company/legal/classroom-license.md — see that file for the governing terms; no license wording is invented here. In plain English: this material is provided as is, it is not a certification and not a credit-bearing course, and it makes no guarantee of any grade, job, or other outcome. Instructors should adapt it to their own room and use their own judgement.

Instructor teaching material, provided as-is. Not accredited, not a certification, and not affiliated with or endorsed by any university. Uses composite (invented) companies and illustrative figures.