How Do I Actually Know If Google Ads Is Profitable for My Brand?

Ever had your agency hit you with “Great news! Your ROAS is 5x – cheers all round!” only to later realise your actual profits seem mysteriously skinny? Welcome to the club. Measuring true profitability from Google Ads for your eCommerce brand isn’t about staring at the Google dashboard and wishing for the best. It’s about lifting the curtain, crunching the right numbers, and ignoring the vanity stats. Let’s make sure you’re actually turning a profit, not just putting imaginary money in Google’s pocket.

The Problem with The “Big Number” Game

You know the spiel: ROAS, impressions, CTR, conversions by the bucketload. But does any of it actually mean your brand is better off at the end of the month? There’s a massive difference between “Looks good on a slide deck” and “Money you can actually reinvest (or, dare we say, pocket).”

The classic trap:

• Google Ads reports you made £100,000 in “conversion value”

• You spent £33,000 on ads

• Ta-da! ROAS of 3.0. Champagne time?

If only. That topline doesn't even hint at what you get to keep.

The Only Formula That Matters: Real Profit

Let's keep it painfully honest. This is the only equation worth sweating over:

Profit = Revenue from Ads – (Google Ads Cost + Cost of Goods + Cost of Talent/Fees)

Plug in the ACTUAL numbers, not the ones your agency cherry-picks. Here’s a breakdown:

Metric	Example Value	What It Means
Revenue from Ads	£100,000	What Google tells you
Google Ads Spend	£33,000	Vendor cost (your money gone)
Cost of Goods Sold	£40,000	All-in costs per item
Agency Fees/Talent	£5,000	Salaries, freelancers, etc.

So you made: £100,000 – (£33,000 + £40,000 + £5,000) = £22,000 actual profit.

Not feeling the fireworks yet, are you?

Beyond the Dashboard: Stop Trusting the Bare Minimum

If you only look at Google’s default data, you’re seeing about 10% of the real story. Here’s where most agencies fudge things up:

• Ignoring Cost of Goods Sold (COGS): If “conversion value” is just gross sales, you’re giving yourself a participation trophy.

• Not Including Agency Fees and Hidden Talent Costs: That “friendly” retainer or freelancer makes a BIG dent in the numbers.

• Assuming All Conversions Are Equal: Selling a £10 T-shirt is not the same as a £100 pair of boots — but automated reporting often blurs this.

• Blaming Bad Results on “the market” or “seasonality”: It’s always easier than facing hard truths.

Want to see what real, honest reporting looks like? Read how we break it down: Profit Over Vanity – Why JudeLuxe’s Signal-Based Approach Makes Sense for Your eCommerce Success

Metrics That (Actually) Matter

If you want to be ruthlessly effective, you need to track a set of profit-focused figures:

• Gross Profit & Gross Profit Margin: Yes, you can now add COGS to your Google Merchant Centre, and Google Ads will show columns for both. Does your agency do that? If not, ask why.

• Net Profit per Campaign: Custom columns in Google Ads now allow for “Gross Profit minus Ad Spend” at asset/campaign level.

• ROAS (But After COGS, Please): Your “net ROAS” = (Conversion Value minus COGS) divided by Ad Spend. If your ROAS is 5, but profit margin is 10%, you’re probably just working for Google’s shareholders.

• CPA (Cost Per Acquisition): Useful if you actually know your break-even point. For some, CPA is a vanity stat unless you layer COGS and margin over the top.

You’ll need to tinker with custom columns and perhaps send more data via your feed, but it’s the only way to go from “looking good” to “making bank”.

Should You Trust Google’s Built-In Profit Columns?

Generally, yes — if you’re sending clean COGS data. You’ll spot new metrics like:

• Gross Profit

• Gross Profit Margin

• Lead Gross Profit

• Cross-sell Gross Profit

But don’t just turn it on and hope for the best — sense-check each value against your real accounts. “Garbage in, garbage out” applies. Fix your data first!

Example: eCommerce Brand Reality Check

You sell trainers. Last month:

• £120,000 in tracked conversion value from Google Ads

• Spent £40,000 on Google Ads

• COGS: £50,000

• Agency Fee: £4,000

Profit: £120,000 - (£40,000 + £50,000 + £4,000) = £26,000.

Your “official” ROAS says 3.0; your nets-on-the-table cash margin is more like 22%. Is that good enough for your brand? Depends on your overheads, season, risk appetite, and – let’s be realistic – how much you like eating noodles for lunch when things go wrong.

But Wait — What About Lifetime Value and Repeat Orders?

True profitability isn’t always instant. If 1 in 3 customers come back and buy again, your first-sale profit isn’t the whole story. Include a fair chunk of LTV (Lifetime Value) in your calculations — cautiously.

Some agencies fudge this by pretending everyone’s coming back for more. Only count LTV uplift you can prove with historic data. Set up proper CRM tracking, and build this into your “max allowable CPA”.

Frequently Overlooked (But Deadly) Profit Killers

• Shipping & Returns: Returns eat margins alive. How much of your ad-attributed revenue scurries back out the door?

• Discount Codes & Promotions: Subtract these from profit calculations, or risk believing your marketing is a perpetual money printer.

• Attribution Window Shenanigans: Are you double-counting sales that would’ve happened anyway? Ask for a “what-if-we-didn’t-spend-here” analysis.

Tactical Optimisation Moves

Here’s what your in-house team or agency should be ruthless about:

1. Segment Campaigns by Margin

Group products/services by actual profit margin. Increase spend on the most profitable, throttle the rest.

2. Use Custom Google Ads Columns

Subtract COGS and agency fees for a live profit view per campaign or asset group.

3. Exclude Chronic Margin Killers

Stop pouring ad spend into products that look good in conversions but never deliver when the profit sheet lands.

4. Set Smarter Bidding Targets

Don’t let Google’s “recommended ROAS” run the show. Set your own, based on your unique margin structure, or you’ll wind up scaling unprofitably.

5. Test Attribution Models

Try data-driven or position-based attribution, not just last-click, to see a truer profit distribution.

Practical Template: Profitability Calculator

Here’s a quick template — start with a Google Sheet or bolt it onto your regular reporting flow.

Metric	Value
Revenue from Ads	£______
Ad Spend	£______
COGS	£______
Agency/Talent Fees	£______
Returns/Discounts	£______
“Real” Profit	£______

Pro tip: Factor in returns with the real data, not wishful thinking.

Final Word – Audit, Don’t Assume

If your current reporting is a glossy ROAS deck with none of the hard numbers above: you’re flying blind. Start asking for these calculations from your agency, or build them into your own reporting stack. Challenge every “success” until you can see true, line-by-line profit driven by Google Ads — and only then decide what to invest next month.

Ready to go profit-first? Or want a no-nonsense audit? Find more brutally honest eCommerce growth tips on the JudeLuxe blog.