• Conversion data is gathered through browser-based tracking or Google Tag Manager tagging
• If Margin data is used, it’s calculated sporadically and manually using spreadsheets

• ROAS is simple to calculate, and teams are familiar with it
• This stage does not require cost data or complex set-up

The company can’t connect growth to bottom-line impact. Campaigns that look successful (based on revenue) may actually be losing money, while truly profitable campaigns may be overlooked.

Without profit visibility, inefficiencies compound. Leadership risks scaling a business that only works on paper.

Leadership starts investing in the infrastructure needed to track profit:

• Using true server-side tracking (no browser involved like with most Google Tag Manager setups)
• Cost data (or benchmark estimates) connected for each product
• Profitability metrics are generated from this data and tracked on a dashboard

• Profitability metrics are available to validate concerns around campaign and company successes
• More accurate and complete conversion data yields better results with the algorithms, even before POAS® is fully in use
• Profit data can be seen in real-time, cutting time spent on spreadsheets, and increasing reporting accuracy

Key available metrics

• Gross Profit
• POAS®
• Blended POAS®
• Contribution Margin
• Net Profit

Scaling prematurely or reverting to ROAS-first thinking. Profit-first strategies need to show consistent results before adding significant investment.

At the same time, Marketing must stay committed to the new metrics during this transition, rather than defaulting to more comfortable ROAS-based strategies.

Marketing validates that profit-focused campaigns are outperforming ROAS-based campaigns in terms of Contribution Margin. The majority of the budget is reallocated and ROAS-based campaigns are deprioritized.

Leadership begins using Contribution Margin as the key factor in budget planning and forecasting.

• Using true server-side tracking
• Cost data connected for each product, no longer using benchmark values
• Marketing’s primary KPIs are based on profit

• The company is aligned around Contribution Margin as the core measure of success
• Campaigns can be adjusted for profitability in real-time
• Campaigns can easily be prioritized for scaling based on profitability, with no need for guesswork
• Profit opportunities can quickly be capitalized on, and underperforming campaigns can instantly be identified and paused

Key available metrics

• Gross Profit
• POAS®
• Blended POAS®
• Contribution Margin
• Net Profit

Setting and forgetting. When everything is based on profit, it’s easy to think the campaigns are done, but this is not the case.

Teams speak the same profit-first language, and the use of POAS® and Contribution Margin has been standardized for planning, execution and reporting.

Leadership is continuing to build and test a playbook of optimization strategies, based on this foundation.

This Maturity Model shouldn’t be seen as a strict set of rules, but as a path to progress your company toward greater profitability.

Most e-commerce companies fall into Stage 1, because revenue and ROAS were the focus for decades. We now have the tools and the data to strive for something more effective.

If you’re interested in learning more about POAS® and how your company can start focusing on profitable growth, take a look at our complete guide: Mastering POAS® in Google Ads.

Or sign up for our free email course for step-by-step lessons.

ROAS (Return on Ad Spend): The amount of revenue you get back based on ad spend. If you spend €100 on ads, and get €200 in Revenue, you have a ROAS of 2 (Revenue / Ad Spend). ROAS does not account for variable costs (Cost of Goods, shipping, packaging and handling, payment fees, discounts).

POAS® (Profit on Ad Spend): The amount of gross profit you get back based on ad spend. If you spend €100 on ads, and get €200 in Gross Profit, you have a POAS® of 2 (Gross Profit / Ad Spend). As POAS® is based on Gross Profit, it does account for variable costs.

Blended POAS®: The combined POAS® of all your campaigns.

CPA (Cost per Acquisition): The amount it costs to convert a first-time customer.

Contribution Margin: Gross Profit minus Ad Spend. This is your total profit before accounting for fixed expenses (employee salaries, rent)

Product segmentation: Separating products based on performance (ROAS, POAS®, Traffic) to run specific campaigns.