The Algorithm Isn't Broken. It's Just Not Working for You.
You've noticed it. Spend concentrates on products you wish it wouldn't. Your high-margin items sit untouched while cheap, commoditised SKUs eat budget like there's no tomorrow.
This isn't a bug. It's the system working exactly as designed.
Google's machine learning optimises for the objective you give it. Usually that's conversions or conversion value. The algorithm finds the path of least resistance to hitting that target.
The problem: path of least resistance rarely equals path of highest profit.
Why Low-Margin Products Win
Think about it from the algorithm's perspective.
A £15 product with thin margins converts easily. Low consideration, impulse purchase, lots of search volume. The algorithm can generate conversions quickly and cheaply.
A £150 product with strong margins requires research. Longer consideration cycle, fewer searches, more competition. The algorithm has to work harder for fewer conversions.
Which one do you think gets prioritised when the objective is "maximise conversions"?
The algorithm isn't stupid. It's optimising brilliantly for the wrong thing.
The Hidden Cost of Letting Google Decide
Every pound spent on a low-margin product is a pound not spent on a high-margin one.
If your £15 product has 10% margin and your £150 product has 40% margin, you need 24 sales of the cheap product to match the profit of one expensive one.
But the algorithm doesn't know that. It sees two conversions as equal.
If your campaigns lack profit signals, Google will always favour volume over value.
What's Actually Happening in Your Account
Open your product performance report. Sort by cost, descending.
Now cross-reference with your actual margin data. Not revenue. Margin.
In most accounts we audit, the top 20% of spend goes to products in the bottom 30% of profitability.
That's not an exaggeration. We see this pattern in nearly every ecommerce audit.
The Feed Problem Nobody Talks About
Your shopping feed is the algorithm's only source of product information.
If every product looks identical in terms of signals, Google has no reason to favour your best margins. Title, description, product type, custom labels... these are the levers that tell the algorithm where to push.
Most feeds are flat. Same structure, same attributes, minimal differentiation.
A feed audit reveals exactly where these signals are missing.
Fixing the Spend Distribution
You have two options:
Option 1: Give Google better signals
Use custom labels to segment products by margin tier. Pass profit data through value rules. Structure campaigns so the algorithm can only push spend within profitable boundaries.
This works, but requires ongoing maintenance as margins and inventory shift.
Option 2: Remove algorithmic freedom
Take products with poor margin economics out of Performance Max entirely. Run them in Standard Shopping with manual CPCs or tight ROAS floors.
Let the algorithm optimise what it's good at. Control what it isn't.
The Question to Ask Yourself
If you looked at your top 50 products by ad spend, would they be your top 50 by profit contribution?
If not, the algorithm is making commercial decisions you haven't approved.
Book a strategy call to discuss how we'd restructure your spend allocation.
Need to understand where your spend is actually going? Start with an account audit.