Profit or Bust: Why Smart eCommerce Brands Are Kicking Unprofitable Products from Their Ad Campaigns

jax5027
Aug 11
5 min read

Raise Your Hand If You Love Wasting Ad Spend. Anyone? Thought Not.

If you’ve ever scrolled through your Google Ads dashboard and winced at the products happily chugging through their click budgets—while bringing in the grand total of zero profit—you know the pain. In 2025, smart eCommerce brands aren’t just trimming the fat. They’re performing full-on product surgery, mercilessly booting anything that can’t pull its own financial weight from their campaigns.

The days of “advertise everything and let Google sort it out” are gone. Welcome to the ruthless, data-first world where every penny must justify its existence, and sweet, unprofitable darlings are dropped faster than an algorithm update nobody asked for.

Why Are Ad Budgets Under Attack?

Let’s chat context: In 2025, the eCommerce landscape is like a beautifully curated Instagram feed hiding a million existential crises in the comments. Sure, the market’s set to hit a casual $4.8 trillion globally, but competition is off the charts. Costs are climbing everywhere—supply, shipping, customer acquisition, even the cost of our collective sanity.

Performance marketing is feeling the squeeze, too:

Digital ad costs are going up (again).
Privacy updates from Google, Meta, and their friends mean your targeting is less sharp.
Your marketing efficiency ratio (MER) needs to fall within 20–33% of revenue, or you’re basically paying Amazon for the privilege of running a business.

If you’re not watching every product’s performance like a hawk hopped up on analytics, you’re probably burning money on products that aren’t just unhelpful—they’re actively harming your overall account efficiency.

The Biggest Lie in PPC: “Everything Sells with Enough Budget”

You’ve heard the whispers: “Just spend more, scale, scale!” Sorry, not in this economy. The world’s savviest brands aren’t buying what the platforms are selling. No, you can’t make every product a hero with a few more clicks. In fact, chasing revenue from duds is like asking your leakiest bucket to star in your next ad campaign.

Consider this: that “one more chance” you gave to the £4.99 phone case with a sub-0.5 ROAS didn’t just cost you directly. It also robbed your best-sellers of their chance to shine (and your budget, naturally). If the majority of your conversions and profits are coming from your top 10–20% of products, why are the other 80% coasting along for a free ride?

The Brutal Economics of Ad Spend

Let’s break it down to cold, hard numbers. In a world where eCommerce profit margins still dance in the 50–70% range (if you’re doing it right), the forces eating away at those margins are relentless:

Supplier price hikes—because, of course.
Shipping chaos and surcharges (enjoy those new Brexit tariffs).
Platform fees that feel suspiciously like a schoolyard shakedown.

On top of that? Your digital marketing costs are higher than ever. Flinging ad cash at “brand-building” SKUs that never convert is a luxury you can’t afford. Especially when even well-optimised campaigns are routinely ambushed by “Performance Max” creativity.

The Smart Brand Playbook: Data Doesn’t Lie (But It Might Ruin Your Day)

Here’s where smart eCommerce brands prove their mettle—they obsessively interrogate their data and act without mercy.

1. Ruthless ROAS Review

If a product dips below your minimum acceptable ROAS (and I mean truly below—not just “one bad day”), it’s out. Think of it as Love Island, but with spreadsheets. No more second chances.

2. Contribution Margin ≠ Gross Profit

A product might look good on paper after COGS, but add up ad spend, fulfilment, returns, and a never-ending stream of “can I have a discount?” DMs, and suddenly ROI starts looking more like RIP. Only products boosting your actual contribution margin deserve to stay.

3. LTV Is Your Secret Weapon

OK, sometimes you keep a product around because it brings in your best customers—the ones who’ll come back and buy all the high-margin stuff. But you’d better have data to back up the “gateway drug” strategy, or it’s time for tough love.

4. Segment and Conquer

Smart brands segment campaigns by hero SKUs, new product testing, and clearance inventory. Why? Because each segment has wildly different roles, goals, and bid strategies. When your worst-performing clearance items start eating the same ad budget as your bestsellers, everyone loses.

But… “Shouldn’t We Give Every Product a Fair Shot?”

Here comes the tough love: eCommerce is not a charity, and Google Ads is not a democracy. Product “potential” means nothing if every click is a cost centre. You invested in the inventory, the photo shoot, the witty description—none of it matters if it never converts at a profit.

Data doesn’t get sentimental. Neither should your ads.

Ask yourself (or your PPC manager) these beautifully cynical questions:

Am I clinging to underperforming products out of nostalgia, not logic?
Is this product cannibalising my ad budget and limiting my overall marketing efficiency?
What would a merciless investment analyst do with this SKU?

If your answers make you uncomfortable—you’re in the right mindset.

What Does “Unprofitable” Really Look Like? (It’s Not Always Obvious)

Not all product losses are as clear as a negative ROI in your shopping feed. Watch out for:

Hidden losers: Products that get clicks but never convert (thanks, curious window shoppers).
“Loss leader” addiction: Promos designed to attract users that end up never converting beyond the discount.
High-maintenance nightmares: Products with excessive return rates or customer service headaches.
Budget hogs: Items that get a weird amount of impressions/clicks due to broad matching, but never deliver value.

Your mission is to spot, isolate, and professionally ghost these budget drains.

How to Fire a Product from Your Ad Campaigns (Without Burning Everything Down)

Ready to go full Marie Kondo on your product feed? Here’s how the pros do it, without accidentally de-listing your bestsellers:

Audit Regularly: Review product-level performance weekly, especially your bottom quartile by ROAS and conversion rate.
Create Exclusion Lists: Build negative product feed rules (by SKU, ID, or category) in your campaign manager—especially for PMax and Shopping.
Pilot Instead of Pray: New launch? Segment it in a controlled campaign with limited budget until proven profitable.
Model Contribution Margin After Ad Spend: Don’t just look at sales. Subtract return rates, fulfilment, and customer support costs.
Loop in Merchandising/Ecom Teams: Killing a product in ads doesn’t have to be permanent, especially if inventory or pricing gets an overhaul.

Long-Term Wins: Fewer Products, Bigger Profits, Saner Life

This shift isn’t about pessimism—it’s about efficiency. Smart eCommerce brands know investors and acquirers care less about “number of products” and more about profitability, recurring revenue, and sustainable margins. A tight, high-performing product portfolio means:

Higher campaign ROAS, lower wasted spend
Stronger brand authority and customer clarity
Increased business valuation and investor appeal

The brands writing the rulebook in 2025? They’re lean, mean, and every line item in their ad account is on trial for its continued existence.

The Future of PPC: Less Spray-and-Pray, More Surgical Strike

If you take anything from the state of paid media in 2025, let it be this: hope is not a strategy, but surgical ruthlessness just might be.

So, next time your product manager wants to “just give it a bit more budget for visibility,” smile, nod, and introduce them to the wonders of negative product targets.

Want to keep your spend working for you and not your underachieving inventory? Time to cut the clutter. Or as we like to say: Every pound should fight for its place—or get out of the way.

For more detailed eCommerce PPC strategies and how to make your ad spend actually work for you, check out more articles on the JudeLuxe blog. Or, if you’d like some brutally honest help, you know where to find us.

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