Ecommerce · Profit on ad spend
The account looked fine. It was barely making money.
Revenue was reasonable and ROAS looked acceptable. Net profit was £9,500. Switching the primary KPI from revenue to profit took it to £40,500.
The situation
This was not a broken account. Revenue was reasonable, the campaigns were delivering, and on a standard ROAS report everything looked acceptable. That is exactly what made it dangerous.
Underneath, net profit on paid was £9,500. Costs were eating the margin across every product line, and because the account was being judged on revenue returned rather than profit kept, nothing in it was pointed at the number the owner actually banks. Profit on ad spend sat at 1.18x. For every pound spent, the business was keeping eighteen pence.
ROAS tells you what came back. It tells you nothing about what you kept. Plenty of accounts hit their ROAS target every month and still make the owner poorer.
What I did
Margin data went into the account, and the account was rebuilt around it.
Make POAS the primary KPI
Profit on ad spend replaced return on ad spend as the number the account was optimised and reported against. That single change reframes every decision underneath it, because a campaign that looks strong on revenue and weak on margin stops getting rewarded.
Restructure around profit-driving products
Campaigns were rebuilt so the products carrying real margin got their own structure and their own budget, instead of competing for spend against high revenue, low margin lines that flattered the reporting.
Automate low-margin exclusions
Products that could not carry their acquisition cost were excluded automatically rather than reviewed manually every month. Automation matters here because margin shifts with pricing and supplier costs, and a rule keeps up where a monthly audit does not.
Let profit, not revenue, decide where budget goes
With margin visible at product level, budget moved toward what the business actually earns on. POAS went from 1.18x to 1.56x, so every pound of spend went from keeping eighteen pence to keeping fifty six. Spend did grow across the engagement, but each pound of it came back worth three times more.
Worth being upfront about
This only works if the client can give you accurate margin data per product. Without it, POAS is guesswork dressed up as rigour. It also means accepting that revenue may grow more slowly than it would under a pure ROAS strategy, because you are deliberately declining sales that do not pay. Some clients find that uncomfortable until they see the profit line.
Before and after
What made the difference
No new products and no new markets. The same trading operation, pointed at profit instead of revenue, produced £31,000 more of it and kept 56p in the pound instead of 18p.
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