Google Ads for E-Commerce: The KPIs Your Agency Must Be Tracking
KPIs are a double-edged sword in performance marketing. Chosen poorly or viewed in isolation, they systematically lead you astray. We show you which metrics your agency really needs to track - and why many of the seemingly important numbers push you to optimise in the wrong direction.
KPIs are a double-edged sword in performance marketing. Chosen well, they give you clear orientation on the state and trajectory of your campaigns. Chosen poorly or viewed in isolation, they systematically lead you astray.
Why KPIs are particularly treacherous in e-commerce
E-commerce comes with a particular challenge: the easily measurable numbers are often not the strategically relevant numbers. Revenue, ROAS and conversion rate are quick to pull up, but on their own they say nothing about profitability, customer quality or long-term business development.
On top of that, the ad platforms themselves have an interest in certain numbers looking good. ROAS attribution from Google or Meta is generous, and platforms happily claim credit for revenue that would have happened without the advertising anyway.
The KPIs that really count
ROAS and cost-revenue ratio
ROAS (Return on Ad Spend) is the baseline metric in performance marketing. But the critical question is: what ROAS do you need for your shop to advertise profitably? That depends on your margin. A shop with a 70 percent margin needs a completely different minimum ROAS than one with a 20 percent margin.
ROAS after returns
In many industries, the return rate sits between 20 and 40 percent. A ROAS of 5, based on gross revenue, looks fantastic. After deducting a return rate of 35 percent, the real ROAS is only 3.25. That's a dramatic difference.
CPA and CPC in context
CPA (Cost per Acquisition) describes what a new purchase costs you. CPC describes what a single click costs. A rising CPC isn't automatically bad if the conversion rate rises in parallel.
New customer vs. existing customer orders
A KPI missing from many agency reports: how much of your ad budget generates genuine new customers, and how much flows into campaigns that mostly just serve existing customers?
Customer lifetime value
CLV describes the total value a customer generates over their relationship with your shop. Without CLV you're missing a fundamental reference point: how much are you allowed to spend on acquiring a new customer?
Impression share and the reasons you lose it
Impression share belongs in the standard repertoire of strategic reviews. It shows what share of the available impressions you actually capture, and why you're losing share.
Search lost to brand
If your agency shows you an impressive ROAS that consists largely of brand traffic, that's misleading. A serious analysis clearly separates brand and non-brand.
The KPIs that are often overrated
Clicks alone say little. A campaign with ten times more clicks but a miserable conversion rate is not a good campaign. CTR matters in narrow contexts, but a high CTR says nothing about profitability.
If your agency report spends pages celebrating CTR, Quality Score and impressions, but only mentions contribution margin, new customers and ROAS after returns in passing, that's a signal the agency is clinging to surface metrics instead of the real business.
Conclusion: the right KPIs decide between success and an illusion of it
Choosing the right KPIs is not a purely technical question - it's a strategic one. A good e-commerce advertising agency thinks beyond pure platform numbers and integrates margin, returns, new customers and customer lifetime value into its KPI system.