Case Study
Unlocking Profitability for a Leading Activewear Brand
By shifting the focus from top-line revenue to bottom-line profit, Pattern provided a leading activewear brand with the advanced reporting capabilities necessary to make strategic, margin-protecting media investments, ensuring sustained and profitable growth.
Region
Australia
Category
Performance Apparel
Key Challenges
A leading global activewear brand was heavily reliant on Revenue ROAS (ROAS) as the sole metric for measuring the success of its Google Ads performance. This traditional approach, which measures returns based only on revenue, failed to account for a critical financial component: the Cost of Goods Sold (COGS).
As a result, ad spend was being optimised based on top-line revenue, often obscuring the actual profit generated by specific campaigns and products.
The brand needed a way to calculate and optimise based on Gross Profit per ad dollar to make truly informed decisions and protect margins, especially during crucial trading periods.
PATTERN
Our Approach
Gross Profit ROAS (POAS) Integration
Pattern successfully addressed this challenge by integrating the brand’s complex product margin and COG data directly into the Google Ads reporting structure.
This allowed for the calculation of an advanced, definitive metric: Gross Profit ROAS (POAS) (Profit on Ad Spend). By incorporating the advertising cost and the product’s COGS, POAS provided a clear, profitable signal for optimisation and budget prioritisation.
Results
Data Driven Optimisation
Analysing campaign and product performance using both ROAS and POAS over a four-month review period (August 19 – December 15) revealed critical, anonymised insights:
1. Re-evaluating Campaign Type Efficiency
Analysis across the different campaign categories showed that profitability was often much closer than the Revenue ROAS figures suggested. Each category below is ranked on the scale of lowest to highest revenue and profit out of the three.
Campaign Category | Revenue ROAS (ROAS) | Gross Profit ROAS (POAS) | Key Finding |
Category 1 (Shopping) | Middle | Lowest | ROAS & POAS were largely aligned. |
Category 2 (Performance Max) | Lowest | Middle | ROAS & POAS were largely aligned. |
Category 3 (Search) | Highest | Highest | Stood out for profitability, but the ROAS increase versus other main types was higher (+15%) than the POAS increase (+3%). Profitability was closer than the revenue figures suggested. |
The efficiency of Brand campaigns looked “over-inflated” on ROAS, while POAS showed they were only marginally higher than the account average. Conversely, Non-Brand campaigns looked less inefficient than their ROAS suggested, due to a higher Gross Profit Margin.
2. Identifying High ROAS, Low POAS Products (Profit Leaks)
Pattern’s new reporting quickly flagged products that looked successful based on revenue but were significantly underperforming on profit.
Analysis focused on products that delivered a POAS that was 15%+ below the average POAS for the core Category 1/2 campaigns.
- Insight: ROAS and POAS are not always aligned. Several products had very high Revenue ROAS figures (up to 415% above average) but returned a POAS that was significantly below average (up to -44% below average). These products, due to a high COG, were acting as profit drains.
- Action: Pattern flagged these high-COG, low-POAS items for potential price review and immediate adjustment of ad spend and bidding strategy to protect the brand’s margin.
3. Discovering Low ROAS, High POAS Products (Hidden Gems)
The profit analysis revealed a crucial set of “hidden gems” – products that looked inefficient based on Revenue ROAS but delivered exceptional Gross Profit ROAS (POAS).
A group of products was identified that delivered a POAS that was 15%+ higher than the Category 1/2 average.
- Insight: ROAS and POAS are not always aligned. These products often had a lower Revenue ROAS (up to 34% below average), but due to a low COG, they had high gross margins and superior profit contribution, with POAS figures up to 77% above average.
- Action: Pattern recommended aggressively increasing media investment behind these high-margin items to capitalise on their strong underlying profitability and drive efficient growth.
4. Protecting Profit During Peak Season
Analysing weekly trends showed that while Revenue and Profit largely moved together towards and through the peak season, there were important moments of divergence:
- BFCM weeks saw a similar slight drop in ROAS versus the 4-month average.
- A spike in ROAS in the weeks building up to BFCM was not quite met with the same growth in POAS.
- September was noted as a particularly strong period for profitability.
- Action: This advanced reporting capability allows Pattern to analyse the exact campaign and product mix driving any variance, enabling proactive optimisation to protect profit targets during future high-volume sales periods.
Next Steps
Ensuring Sustained Profitability
The integration of Gross Profit data is not a one-time fix but the foundation for a continuous, profit-led optimisation strategy. For any brand reading this, these actions define the future value of a partnership with Pattern:
- Elevate Internal Metrics Priority: Initiate discussions to permanently prioritise Gross Profit ROAS (POAS) over traditional Revenue ROAS across all marketing and executive teams, establishing a clear, profit-centric mandate for future media spend.
- Establish Automated Profit Reporting: Implement a permanent, real-time method for automating Gross Profit data into platforms like Looker Studio. This ensures that our teams, and the brand’s, are always optimising against the single source of truth: profit.
- Systematise Profit-Led Analysis: Continue to surface profit data on a regular basis. This continuous feedback loop guarantees that bid adjustments and budget shifts always favour high-margin products and campaigns, permanently eliminating profit leaks and maximising returns.
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