Google Ads promotions can inflate ROAS while squeezing merchant profits
· 9h ago · Originally reported by Search Engine Land
Search Engine Land explains how promotional activity run through Google Ads can make return-on-ad-spend look better than it really is. Discounts credited within conversions boost reported ROAS, but the underlying margin can shrink, leaving advertisers with weaker profits despite stronger campaign metrics.
Why it matters
ROAS is a common yardstick for ad budgets, and this shows it can paint an overly rosy picture. Advertisers who judge campaigns on ROAS alone may keep spending on promotions that actually reduce their bottom line.
Explain it like I’m new here
It's like bragging you sold lots of lemonade because you gave it away cheap — the sales chart looks great, but your piggy bank is emptier.
Read the original at Search Engine Land
Terms in this story
ROAS (return on ad spend)
ROAS (return on ad spend) is the revenue generated by advertising divided by the money spent on that advertising, usually shown as a ratio like 4:1 or 400%.
Conversion
A conversion is a valuable action that an advertiser wants people to take after seeing or clicking an ad, such as a purchase, sign-up, app install, call or form submission.
Advertiser
An advertiser is the company, organisation or person that pays to place ads in order to sell products, build a brand, recruit, or spread a message.
Campaign
A campaign is an organised set of ads with a shared goal, budget, audience and time period, run across one or more channels and measured against defined KPIs.
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