How to use POAS in Google Ads

Strategy 1: Revenue-based tracking guided by Profit

Strategy 2: Profit-based tracking and evaluation

Strategy 1: Rule-based tracking using Shopping Booster for Google Ads 

 

Strategy 1: Revenue-based tracking guided by Profit

For companies with low or identical profit margin across the entire catalog, it can be a good idea to optimize campaigns based on Revenue / ROAS (Revenue on ad spend), but evaluate and make decisions based on Profit. ProfitMetrics makes this possible by tracking both Revenue and Gross Profit as separate conversion actions inside Google Ads at the same time. 

Here is how to do it

1. Set up "Conversion Booster for Google Ads" and make sure to set the Click-through, view-through, and engaged view conversions windows to the same as your existing tracking for equal comparison.
2. Keep your existing tracking as Primary and all "PM"-related conversion actions as secondary for 14 days or any other interval that you might want to compare. 
3. At the end of the period, compare the number of conversions and value reported for "PM Revenue - Browser" + "PM Revenue - Conversion Booster" and check the POAS of your campaigns by looking at the "PM Gross Profit" column within that period.
4. Once you have enough data to confirm the tracking is working, you can set both "PM Revenue - Browser" and  "PM Revenue - Conversion Booster" as Primary conversion actions and set all other conversion actions to secondary. Alternatively you can create a custom goal to not impact any existing campaign structure that you do not wish to change.
5. Google Ads will now measure conversions using ProfitMetrics accurate Server-side tracking, and allow you to see the Gross Profit and POAS (Profit on ad spend) generated by each campaign.
   1. Are you looking to scale at any cost? Try aiming for a POAS of 1 or below.
   2. Are you looking to scale but still break even? Try aiming for a POAS of 1
   3. Are you looking to increase the profitability as much as possible? Check the existing POAS of your campaigns over the comparison period and set a new goal that you can work towards achieving. Now, it's up to you to evaluate the performance of your campaigns, make adjustments, and test different approaches based on your primary strategic goal.

 

Strategy 2: Profit-based tracking and evaluation

For companies with varying and differentiated Profit Margins, you can consider switching to a profit-based strategy, optimizing based on Profit / POAS (Profit on ad spend), and evaluating and making decisions based on Profit. ProfitMetircs makes this possible by tracking both revenue and gross profit as separate conversion actions inside Google Ads. 

Here is how to do it

1. Set up "Conversion Booster for Google Ads" and make sure to set the Click-through, view-through, and engaged view conversions windows to the same as your existing tracking for equal comparison.
2. Keep your existing tracking as Primary and all "PM"-related conversion actions as secondary for 14 days or more to gather a comprehensive amount of data before starting the transition. We call this the comparison period.

   Skip this step if you are starting with a new or inactive Google Ads account

3. At the end of the comparison period, compare the number of conversions and ROAS reported by your existing tracking with the PM POAS column within that period. 
4. Now, it's time to transition from Revenue-based bidding to POAS-based bidding by setting "PM Gross Profit - Browser" and "PM Gross Profit - Conversion Booster" as Primary conversion actions and all other conversion actions to secondary. Alternatively, you can create a custom goal to not impact any existing campaign structure that you do not wish to change.
   

   WARNING: Switching to a profit-based bidding strategy will inevitably lower the value reported for each conversion. Since all accounts and campaigns are different, it is impossible to know how Google's ads algorithm will react to this change. We recommend monitoring the account closely and reacting quickly in case the number of reported conversions drops or the amount spent increases significantly.  One way to mitigate this risk is to look at the average daily budget spent during the comparison period and set a daily limit to match this amount.

    

5. Once you have set the two "PM Gross Profit" conversion actions to primary, you will need to adjust your campaign goals, as what was previously a ROAS of 5 might now be a POAS of 1.5. We call this process "Transition", and there are different tactics that can be used to make a successful transition.

   1. No transition
      If your campaigns are nor using a ROAS or value-based bidding strategy, but optimize for the Maximum number of clicks or maximum number of conversions, you do not need a transition. Simply setting "PM Gross Profit - Browser" and "PM Gross Profit - Conversion Booster" as Primary conversion actions and all other conversion actions to secondary.
   2. Hard transition
      A Hard transition is when you simply change your target ROAS to the POAS reached during the comparison period. For example, if your target ROAS was 5 and your campaigns reached a POAS of 1.5 during the comparison period, change your target ROAS to 1.5. You are now asking Google to generate an average profit of 1.5 for every unit spent.
   3. Gradual transition
      A gradual transition is where you slowly decrease your target ROAS from the existing goal to the POAS reached during the comparison period. If your target ROAS was 5 and your campaigns reached a POAS of 1.5 during the comparison period, you can lower your target ROAS by around 10% every second day until you reach the new goal of 1.5. The process would look something like this:
      
      Start: 5 
      Day 0: 4.5
      Day 2: 4.0
      Day 4: 3.5
      Day 6: 3.0
      Day 8: 2.5
      Day 10: 2.2
      Day 12: 1.8
      Day 14: 1.5
      
      This process slowly tells Google to lower its target until it generates a return of 1.5  in Profit for every 1 spent.

Strategy 3: Rule-based tracking using Shopping Booster for Google Ads 

This is the most advanced and highly customizable strategy that utilizes ProfitMetrics Shopping Booster for Google Ads to automatically label products based on their performance or any custom ruleset you can think of. We provide three basic templates that you can use to get started. Please note that these templates are only starting points and need to be adjusted to your business-specific situation.

How it works.

1. Set up "Conversion Booster for Google Ads" and make sure to set the Click-through, view-through, and engaged view conversions windows to the same as your existing tracking for equal comparison.
2. Set up "Shopping Booster for Google Ads" and make sure to select a Lookback window that works for your specific business in terms of seasonality and sales periods.
3. Choose one of our pre-built templates or build your own ruleset.
   
   1. POAS Booster
      This automation automatically labels all products as Highly profitable, Profitable, Unprofitable and No traffic based on the POAS and number of conversions each product generated during the Lookback window.
   2. ROAS Booster
      This automation automatically labels all products as Highly profitable, Profitable, Unprofitable and No traffic based on the POAS and number of conversions each product generated during the Lookback window.
   3. Order-based Break-even ROAS Groups
      This automation automatically labels all products as Highly profitable, Profitable, Unprofitable and No traffic based on the POAS and number of conversions each product generated during the Lookback window.