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From Revenue to Profit
Until recently, users in Google PPC campaigns could only optimize for "revenue." To get an overview of actual profits, they tracked the "cost of goods sold" metric, which included expenses for purchasing or producing the sold products.
However, marketing specialists couldn't use this data for campaign optimization. In the past, Google preferred more expensive products with high revenue, which often had low margins, potentially leading to financial losses for merchants. The low-margin factor wasn't intentionally overlooked, but it was not considered during campaign optimization.
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New Feature: Profit Optimization
Google has finally caught up with the times and is introducing profit optimization directly within Google Ads settings. This feature is currently in beta, so if you want to give it a try, reach out to your Google contact and request access.
What Do You Need to Set It Up?
Only two things!
1.
The product feed must include the "cost of goods sold" element, meaning the purchase or production price of each product
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2.
The conversion code must include product-level sales data, such as Merchant ID and details for each purchased item (name, price).
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Don't need profit optimization? Real data still pays off!
These metrics are worth using anyway, as they provide insights into what products customers actually purchased, not just what they clicked on.
We're also testing profit optimization and will soon share the first results of our tests!