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Based on total goal value and Ecommerce revenue, not margin, the AdWords ROI and Margin metrics could be misleading.
To calculate the return on your marketing efforts, it’s important to know your actual margin for Ecommerce transactions and goal values.
Let’s say that your website sells tennis raquets for an average of $100USD, with a profit margin of $10USD not counting marketing expenses. If you spend $50 dollars in AdWords for each sale/conversion, the AdWords will show a very positive ROI and Margin, because it’s basing its calculations on total revenue.
In reality, however, you’d be losing $40 on each raquet (not counting the positive offset of phone sales).
Know your margins, and evaluate the effectiveness of your marketing campaigns based on margins and not on total revenue.
