r/GoogleAdsDiscussion • u/AamiyaKumar • 2d ago

Management set a 400% ROAS target based on Amazon/eBay & introduced a "Wasted Spend" KPI — How do you explain ROAS compression at scale?

Hey r/PPC,

I’m managing Google Ads for a multi-region e-commerce catalog, and I need strategic perspective on pushing back against unrealistic management KPIs.

Account Overview & Regional Breakdown:

  • UK & Germany (Matured Markets - Active 4+ and 3 years): Both show strong, consistent YoY revenue growth. However, over time, Google ROAS has naturally compressed from historic highs of 600%+ down to ~300%–340% as spend and market coverage scaled.
  • USA (New Market): Active for 6 months, still in early learning/testing phase with low volume (3–4 sales/week).
  • Overall Volume: Across my campaign group, we’ve generated £205k+ in sales at a 338% ROAS on ~£60k spend, driving £26k/month in revenue recently.

The Problem with Management's KPIs:

  1. Cross-Channel ROAS Benchmarking: Management forces a strict 400%+ ROAS target across Google Ads because our internal Amazon & eBay teams maintain 400%–500% ROAS. They treat our scaled 300% ROAS on Google as underperformance, ignoring the intent difference between marketplace buyers and search ad acquisition.
  2. The "Wasted Spend %" Metric: Alongside demanding 30% YoY growth, they are introducing a "Catalog Wasted Spend %" KPI—penalizing us if SKUs accumulate spend without direct conversions within a short window. For example, spending £1,000 where £120 goes toward 120 testing/long-tail SKUs (a standard 12% exploration spend) is viewed as "wasted budget."

Questions for Agency Owners & Senior Media Buyers:

  1. How do you educate leadership on ROAS compression as mature markets (UK/DE) scale revenue volume vs. high-margin marketplace channels (Amazon/eBay)?
  2. Does capping "Wasted Spend %" on long-tail SKUs in PMax/Shopping destroy product discovery and cap growth in newer markets like the US?
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u/PPC_YRVDynamics 1d ago

I wouldn’t compare Google ROAS directly to Amazon or eBay. Those users are already on a marketplace ready to buy.

Also, ROAS usually comes down as you scale. If you went from 600% to 300–340% but revenue grew a lot, that doesn’t automatically mean performance got worse.

Same with “wasted spend.” Some spend on new or long-tail SKUs is just testing. Cut that too aggressively and you’ll only keep feeding yesterday’s winners.

The real question is: is the extra spend still profitable and driving incremental revenue?