Framework
Spend Governance Principles
Six principles for protecting your advertising investment. A framework for accountability in paid media.
Why Governance Matters
Most ecommerce brands leak 20-40% of their ad spend to waste, campaigns that don't drive incremental profit. Spend governance isn't about reducing investment; it's about ensuring every pound works as hard as possible.
Every Pound Has a Job
Each unit of spend should have a clear purpose: acquisition, retention, or brand building. Unallocated or 'test' budget without hypothesis is waste waiting to happen.
Practical Implications
- No 'always on' campaigns without clear objectives
- Every campaign maps to a business goal
- Regular pruning of underperforming spend
Profitability Before Vanity
ROAS, impressions, and clicks are intermediary metrics. The only metric that matters is contribution to profit after all costs are accounted for.
Practical Implications
- Build reporting around contribution margin
- Factor in product costs, not just ad spend
- Account for operational costs in CAC calculations
Incrementality is Non-Negotiable
If you'd have made the sale anyway, the ad spend was wasted. Every major channel and campaign type should be tested for true incrementality.
Practical Implications
- Regular holdout tests on brand campaigns
- Geographic incrementality studies quarterly
- Question any campaign that 'can't be turned off'
Transparency Creates Trust
Hidden costs, unclear attribution, and black-box reporting destroy trust and enable waste. Full visibility isn't optional.
Practical Implications
- Complete access to all ad accounts
- Clear breakdown of fees and markups
- Honest reporting on what's working and what isn't
Speed to Insight Matters
The faster you can identify underperforming spend, the less you waste. Build systems for rapid detection and response.
Practical Implications
- Daily monitoring of key efficiency metrics
- Automated alerts for anomalies
- Weekly optimisation cycles minimum
Scale Follows Proof
Only scale what's proven to work. The graveyard of failed campaigns is full of ideas that were scaled before they were validated.
Practical Implications
- Pilot new initiatives with limited budget
- Define success criteria before scaling
- Have a kill switch for underperformance
Warning Signs of Poor Governance
- • "We've always run that campaign" as justification for spend
- • No one can explain the incrementality of brand campaigns
- • ROAS is the primary success metric without margin context
- • Budget increases happen without performance benchmarks
- • Reporting focuses on activity rather than outcomes
- • No regular review of channel-level profitability
Implementation Checklist
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