The quick-fire rules of profit bidding. Come back to these whenever you are unsure.
Spread the cost
If you need to calculate things like customer service fees, handling fees or general business costs, work out what they are, work out your orders, and put a very small levy on each sale.
Hedge if you are not sure
Some data is better than no data, but if you are not sure about something, go with half. E.g. if you think your returns rate is 4% but you are not sure, go with 2%.
Cluster data like returns rate
If the data isn’t clear or it’s thin per product, e.g. you only had 1 return for 1 SKU, it is not statistically relevant. Calculate it at the category level instead.
Accept less profit margin on expensive products
Profit targets don’t scale as your products get more expensive. 10% of a £1,500 product needs a much higher ROAS than 3%, so it wins far fewer sales. A smaller percentage of a big price is still a lot of profit per sale.
Some cost tracking is better than no cost tracking
By putting in just some costs, you are at an advantage over your competitors. Start with purchase price, payment fees and returns, and add the rest over time.
Grouping products with 1 ROAS will really limit reach
One average ROAS over-bids your thin margin products and holds back the ones that could afford to bid harder. Give every product its own bid.
Needing to group into campaigns is a myth
You don’t need to lump products together for Google to have enough data. Google’s bidding learns from the whole campaign, so every product can have its own ad group and its own bid.
Use your free time to focus on your feed quality
Once bids and upkeep run themselves, spend the time you get back on titles, images and product data. A better feed wins more auctions at the same bid.
Don’t switch your conversion value to profit margin
Keep reporting revenue to Google, and bid a ROAS that is calculated from your margin. Switching the value you track is disruptive, resets Google’s learning, and makes you rely even more on tracking.
Account for VAT / tax
VAT is never yours to keep. Work out margins without it, and make sure your ROAS bid is on the same basis as the conversion value your tracking reports.
Account for shipping revenue
What customers pay for delivery covers your delivery cost. It isn’t profit, so don’t count it as margin, and track any subsidy you pay on top.
Adjust for consent / tracking accuracy
If your tracking misses sales, your ROAS looks lower than it is. Lower your ROAS bids to match what Google can actually see, but only when you are confident in the number.
Avoid changing ROAS bids more than 10% (relative) at any one time
Big jumps can cut your traffic or overspend overnight. Move 5% to 10% at a time and give each change at least a week.
Build campaigns by price groups
Price groups make it easier to steer budget towards your more expensive products, and they keep buyers with similar consideration times together.
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