When it comes to e-commerce, few levers are as tempting as discounts. They can drive quick spikes in sales and often make your paid campaigns look more efficient on the surface. But the real question is: do deeper discounts always lead to better ROAS, or is there a point where the returns flatten out?

We analyzed data across 100 e-commerce brands to find out.

Discount vs ROAS

Looking across 100 e-commerce brands, we saw a strong positive relationship between discounts and ROAS. On paper, it looked like the bigger the discount, the higher the efficiency of paid ads. In other words, customers were much more likely to convert when promotions were running.

Correlation = +0.82:  A strong positive relationship.

In this data, months with higher discount spend generally do show higher ROAS.

Likely because discounts increased conversion volume dramatically, enough to outweigh the margin loss (at least in raw revenue ÷ ad spend).

Discount vs AOV

However, there was another side to the story. Average order value (AOV) actually went down slightly as discounts went up. So while ads were driving more conversions, customers were not necessarily putting more into their carts. That means margin was being sacrificed to drive higher volume.

Correlation = - 0.18: A weak negative relationship.

Meaning: larger discounts tend to pull average order value down slightly, but not consistently.

Customers may be buying more often at lower price points, rather than larger baskets.

There is no universal “right” level of discounting. The sweet spot depends on your baseline demand, your margins, and your goals. For some brands, a moderate promotion might be enough to unlock higher conversion rates without crushing profitability. For others, discounts may mask underlying problems and lead to unsustainable growth.

The key is to know how discounts are impacting your ROAS, your AOV, and your overall profitability.

ThoughtMetric gives you the tools to connect the dots. You can track ROAS, AOV, spend, and discount dollars all in one place. That makes it easy to see if your campaigns are truly becoming more efficient or if discounts are simply inflating the numbers.

By looking at these metrics side by side, you can identify your brand’s discount “sweet spot” and make smarter decisions. You will be able to run promotions with confidence, knowing whether they are driving sustainable efficiency or just giving away margin.

Discounts can be a powerful tool, but they are not a guaranteed path to better ROAS. With the right data in front of you, you can move beyond guesswork and build a discounting strategy that works for your brand.

Want to see how discounts are really affecting your ad performance? Book a demo with ThoughtMetric and make your decisions with confidence.