Margin Bidding vs POAS in Google Ads: Why Grouping by Margin Isn't the Same as Bidding for Profit

Grouping your campaigns by product margin feels like smart strategy, but it's not the same as actually bidding for profit, and the difference is costing you. 

In this episode of the Google Ads Unleashed Podcast, host Jeremy breaks down a real audit finding that exposes why static margin-based campaign structures can't account for the factors that determine whether an order is truly profitable.  Shipping costs by location, bulk purchase quantities, return rates, and basket complexity, and why only feeding profit as a conversion value into Google Ads can actually solve this. 

Learn why a low-margin product isn't necessarily unprofitable, why a high-margin product hitting your ROAS target can still lose you money, and why the nuance between margin bidding and POAS is one of the most misunderstood distinctions in ecommerce Google Ads.

Get your free 30 minute strategy session with Jeremy here: https://www.younganddigital.marketing/

Scale your store with 1:1 coaching: https://www.younganddigital.marketing/1-2-1-coaching

Transcript

Welcome back to Google Ads Unleash, guys. Hope everyone is doing fabulously this Monday and is actually staying cool. If you're hearing something in the background, it's my fan because otherwise I'm going to die in this little uh office of mine. And today I want to talk about something that is pretty short and sweet, but something you really need to be aware of with your sort of measuring setup. So, you only get in what You get out what you put in, right? With Google Ads and of course conversion tracking is one of those. And with a recent audit I've done, and this is a listen of the podcast actually with two recent audits, I've been thinking about again how important this is and how uh important this can be. So I've had two audits which I've done. One was for sort of a labelizing product hero setup, right? Which is great. Someone had the right idea that they wanted to create buckets on our highly profitable orders. Uh they want to create buckets on uh products that are uh selling unprofitably or below a certain row target. They also wanted to uh make sure that they are pushing products which are not getting any ad spend. Then on the other side I had a setup of a large catalog where basically the client had the right idea. They grouped their catalog by the margin of the products. So for instance 20% margin, 40% margin, 50% margin and so on and slap different row t targets on it. So, you're getting the right data out by the data you put in and strategy you put in. Right? So, obviously all of this is a massive improvement compared to like a catch all campaign or something, but it's not nuanced enough and I just really want to make you aware in this episode to think about um what kind of strategy you use with the outcome that you want to achieve and what kind of nuances you have to think about. So, I've been debating with this client that and arguing that POS is better and that they need to do this. And why is that? Because with any kind of setup, especially when you have that many products, the it is extremely difficult to account for certain factors with that current static setup that you can only really sort of find out if you pump profit as a conversion value into Google Ads. Let me explain. So, for instance, with a static setup, a product that has a low margin, right? does not actually mean that it doesn't generate profitable orders. Right? You may make 20 cents on every dollar or every 20 p on every pound you spend with a product that only has a 10% margin, but the same applies to one that has a 50% margin. Just because they have different margins, they don't really require different bidding in in in that. They require the right data that something can be optimized towards or bucket in via product hero. doesn't actually mean that it's hitting it just means that it's hitting a certain rorowass target. It doesn't mean that for that product in that instance a rorowass of let's say three is your benchmark is actually good. You may still be losing revenue. Only profitable can do that. You may have a product that may have a low margin but is bought in large quantities. Usually we've got a store for instance where very often screws and so on are purchased. There's not a lot of money in screws but who buys one screw, right? They buy thousands of of screws suddenly it becomes extremely profitable. Okay. We also had in this instance uh um a an issue where basically someone the orders that you've been charged for are relatively similar like the price that they pay but the actual profit of each order is different because depending on whether someone's having their parcel sent to Alabama versus New York or upstate New York is wildly different. the static sort of uh setups do not actually account for those outside factors, but proper power setups actually do account for this. And there are many other things such as maybe return rates, right? Or for instance a few other factors that you may want to uh sort of factor in. And I think this episode serves as a stark reminder that when I've done this audit and now I've been in discussion with the prospects back and forth about this is that you have to always always always understand what is the right tactic that I could use and with that I mean what is the right for instance way of tracking conversions or the right way of setting up campaigns or scripts or whatever in order to achieve the outcome I want to achieve with my strategy right that I want to get towards And yeah, I just wanted to say that um margin bidding is not pas is not margin bidding and whatever you're trying to achieve with your ads. You got to think creatively about how to get there and the right setup to do so. I'm not saying that the other setups are bad, but everything always has nuances and nuances is what this job is about. And if you want to have a chat about your setup, If you know you're running into similar issues, wondering whether your setup's the right one, get in touch, Jeremy. Marketing. You can also go on LinkedIn, Jeremy Google Ads. You find me there, Jeremy Young Ads. You'll also uh be able to just book a one-to-one with me via the website, Young Digital. Marketing. I want to make everyone aware we of course are a Google Ads agency for e-commerce businesses. We help you um manage your ads or we can also So teach you how to do it. So recently we've launched a new service. There's going to be a new landing page on the site soon. So have an eye on it. Going to be launching a done with you service where we set you up for success so that you can think like us. And with that, I wish you a pleasant rest of the week and wish you a happy and productive one as well.