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If you’ve ever been thrilled by the click-through rates on your Google Ads, only to be disappointed by the actual sales: Welcome to the club. This “clicked vs bought” phenomenon is a sneaky little challenge that can make your campaigns look more impressive than they perform—and could be costing you more than you think! Stick around to see how this ties into Google Ads profitability optimization.
The hidden chaos in your Google Ads
Which of your products are truly profitable, and which might be dragging you down?
Do you really know the answer? Let’s break it down.
This is what you want. This is what you get!
There’s a sneaky little challenge hidden in your Google Ads we like to call the clicked vs bought phenomenon.
It happens when shoppers are lured into your shop by clicking on your high-margin designer handbags, only to buy a more budget-friendly alternative from a lesser known brand instead.
What’s the problem with that?
While it’s generally true that winning a sale is better than no sale at all, it comes at the detriment of sustainable business growth.
For starters, you would’ve gained more profits if your shoppers actually bought the high-margin designer bags they initially clicked on.
To make matters worse, Google assigns the order value to the clicked product, not the items they actually purchased. This way, your ad spend is credited to drive revenue, but not necessarily profitability.
This, of course, also means you might be overspending on ads that simply don’t convert. No matter how impressive their CTR is!
Want more clarity? Hand over your data!
Now, Google is aware of this discrepancy. Which is why they offer two key data integrations to optimize your campaigns for gross profit:
- Conversions with Cart Data: This allows Google to see not just the value but also the composition of each order.
- COGS attribute: Adding the Cost of Goods Sold (COGS) to your feed allows Google to calculate the gross profit on a per-product basis.
But here’s the catch: Advertisers are understandably hesitant to share this kind of data for several reasons –
- Data sensitivity: COGS is one of your most critical business data points. Sharing it could expose your profit margins, making you vulnerable if this data were compromised.
- Loss of competitive edge: If Google uses aggregate data to enhance its bidding algorithm across the board, this could potentially level the playing field of competitors.
Better: Keep your data, reap the rewards! Key to Google Ads profitability optimization
Here’s the good news: You can reap all the benefits of gross profit optimization – and then some! – without handing your sensitive data to Google!
How? By using the multi-dimensional first-party data that’s right at your fingertips!
For example: By analyzing the margin impact of products that are clicked versus those that are actually purchased, you can adjust your strategy towards profitability –
- Optimize underperformers: Reevaluate and enhance the offers, landing pages, and recommendations for products that are consistently dragging down your profit margins.
- Campaign-level adjustments: Redirect your ad spend toward products that consistently deliver higher profits, while cutting back on those that don’t. This ensure every coin spent is working hard to boost your bottom line.
Don’t let Google have all the fun with your data!
We ain’t gonna lie: You can do all of this yourself, but the amount of data-crunching is simply unfeasible.
Which is why our software automates the data heavy-lifting for you. Our AI model scores your entire inventory based on your most critical business data to ensure every product gets exactly the budget and target it deserves.
The best part: You keep all your critical data-points in-house while benefitting from campaigns that target real profits, not just revenue.
Intrigued? Get in touch with us and our PPC experts will show you a free demo!
Interested to learn more about Profit Optimization in Google Ads? Listen to Mike Ryan’s recap on profit optimization, right after the GML 2024 announcement here on YouTube.
