While many remain optimistic about the economy, economic uncertainty has absolutely impacted marketing budgets and strategies in 2025. Many marketing departments are being forced to do more with less, with efficiency goals on the rise.
With consumer habits continuing to change, running paid media the same way is almost certain to not yield the same results.
Unfortunately, many eCommerce advertisers with linked Merchant Center accounts leave money on the table by only looking at surface-level metrics. In this article, we’ll go into a hidden gem of data that will allow you see your ads’ impact on your company’s bottom line, and optimize them accordingly.
Tracking Return On Ad Spend, or ROAS, is a great start in measuring the efficiency of your eCommerce ads, but that simple equation (Revenue/Cost) leaves out a lot of key data points. ROAS ignores all costs other than ad spend, like direct product costs (cost of goods sold), shipping, and assembly costs.
Efficiency within Google Ads is one thing, but campaigns with high ROAS can have very low profitability, and vice versa.
In order to track and monitor profit metrics directly in Google Ads, you have to first send cart data to Google Ads. This gives Google more accurate information regarding not just the size of an order (i.e. conversion value) but also what items were purchased. It’s not uncommon for someone to click an ad featuring a specific product and then buy something else in the same session. Understanding what products are likely to result first time purchases, upsells, and cross sells will help you make better use of your audience and your inventory, both physical and in the marketing sense.
Here are some resources for how to configure your tags to make sure they’re capturing cart data:
Cost of Goods Sold is the wholesale price of each item in your inventory. It’s an optional column in your Google Merchant Center feed, but one that necessary to see profit data in Google Ads.
You can calculate cost of goods sold in a few different ways. The most direct way is to take the cost of the item or its raw components to you (i.e. at cost), plus all costs related to producing each product (shipping costs, assembly costs, production costs, etc.). These aren’t the same as your business’s typical operating expenses (rent, payroll, utilities), which are not typically tied to any one specific product.
As a formal financial term, COGS can also be determined by adding the metrics above minus ending inventory, or all of the products at the end of a fiscal period that have not or cannot be sold to calculate tax liability. But we don’t need to be concerned with that part for paid media. Let’s keep it simple.
While many companies have limited inventories that make adding in this data simple, or large financial teams have the expertise and can dedicate the time to these calculations, many do not.
If that’s you, don’t worry. If needed, you can also use feed rules to calculate COGS data in bulk. For example, if a bike shop knows that all of the bikes its sells for a certain brand have a 50% average profit margin, then you can calculate COGS with the following formula:
COGS = Revenue - (Revenue * Gross Profit Margin)
Let’s take a bike that costs $2,000 for example. If the Gross Profit Margin is 50%, then we can calculate COGS this way:
COGS = 2000 – (2000*50%) = $1,000
Don’t let perfection be the enemy of progress. Relatively accurate data can serve you much better than no data at all. Plug this formula into your feed with a calculated rule and start managing your campaigns better today.
Here are the profit metrics you will be able to see in Google Ads under Columns once your feed has COGS data and some sales have started to trickle in, along with their definitions according to Google:
Gross Profit - The profit you made from orders attributed to your ads minus the cost of goods sold (COGS).
Gross Profit Margin - The percentage gross profit you made from orders attributed to your ads, after taking out the cost of goods sold (COGS).
Lead Gross Profit - The profit you made from products sold as a result of advertising the same product, minus cost of goods sold (COGS).
Cross-sell Gross Profit - The profit made from products sold by advertising for different products. For example, if someone clicks a product listing ad on Google Shopping but buys something different
There are tons of ways to start using this data to improve both campaign performance and your bottom line. Here are a few methods for quick wins:
Depending on your retail vertical, figuring out the best promotions to run and when can sometimes be a full-time job. Google seeks to solve that with Automated Discounts in Merchant Center. Knowing your profit tolerance can help you wisely set thresholds for maximum discounts, allowing Google to offer the best prices to customers who are most likely to buy.
By implementing COGS along with adding a column that tells Google the minimum price you’d like an item to be sold for, you can ensure that you’re not leaving any conversions on the table.
Here at Concept, we operate at the unique intersection of being able to build customer-driven eCommerce websites while optimizing paid campaigns. Whether you need to increase conversion rates on-page, or create ad copy and creative that drives sales, the team at Concept can help. If you have a store or ad account you’d like audited, don’t hesitate to reach out.