Why ROAS Is Misleading for Trade Suppliers (And What to Measure Instead)

Why ROAS Is Misleading for Trade Suppliers (And What to Measure Instead): For trade suppliers, Return on Ad Spend (ROAS) is a dangerous metric. It only tells you half the story – the revenue you’re bringing in, not the profit you’re actually making. This creates a massive blind spot, completely ignoring the real-world costs of running your business, like profit margins, shipping fees, and import duties.

This guide will break down why leaning on ROAS is a mistake for anyone in the trade sector. More importantly, we’ll introduce you to profit-focused metrics that give you a true picture of your PPC campaign’s health.

Why ROAS Is Misleading for Trade Suppliers: The Hidden Costs Behind a High ROAS

Ever celebrated a brilliant 6:1 ROAS on your latest PPC campaign, only to find your overall profit margins are actually shrinking? It’s a frustratingly common scenario for UK trade suppliers who get hooked on this popular but deeply flawed metric. The problem is simple: ROAS creates an illusion of success by focusing only on revenue.

Think of it like this: your car’s speedometer says you’re flying along at 100 mph, but the fuel gauge is on empty and smoke is pouring from the engine. Your campaign might be generating revenue, but if all the hidden costs are silently eating away at your margins, you could be losing money on every single order.

The Blind Spots of a ROAS-Centric View

For a trade supplier, the costs that ROAS ignores are not small details; they are often the difference between profit and loss. Sticking to ROAS means you’re almost certainly overlooking:

• Product Profit Margins: A high ROAS on a low-margin product can be far less profitable than a modest ROAS on a product with healthy margins.
• Shipping and Logistics: For heavy goods, international freight, and warehousing, these fees can wipe out the gains from a supposedly successful campaign.
• Import Duties and Taxes: If you source goods from abroad, these are unavoidable costs that are completely invisible in a standard ROAS calculation.
• Returns and Restocking: The cost of processing returned goods can quickly turn what looked like a profitable sale into a net loss.

This narrow focus on revenue is especially risky in the current UK trade climate. ROAS often paints an overly optimistic picture, masking the tough reality of persistent goods deficits that chip away at long-term profitability, no matter how good your ad returns look.

For example, recent data from the Office for National Statistics showed the UK’s trade in goods deficit swelled by £3.9 billion to £60.5 billion over just three months, while the services surplus remained steady. This stark imbalance highlights why a metric that only sees revenue simply isn’t good enough for trade suppliers.

A high ROAS figure can give you a false sense of security. It measures how efficiently your campaign generates revenue, but it says absolutely nothing about whether that revenue is actually contributing to your bottom line. True success is measured in profit, not just pounds in the till.

Moving beyond ROAS means changing how you think and what you measure. Instead of asking, “How much revenue did my ads generate?” you need to start asking, “How much profit did my ads generate?”

This shift is fundamental to building a sustainable advertising strategy. It all starts with accurate measurement, and understanding the biggest tracking problems in trade marketing is the first step to getting it right. In the next sections, we’ll guide you past the ROAS illusion and introduce the metrics that reveal the true health of your PPC efforts, ensuring your ad spend drives genuine business growth.

Why ROAS Is Misleading for Trade Suppliers: How a ROAS-Only Strategy Erodes Your Profits

Diving deeper into the problem, a strategy built entirely around ROAS is more than just misleading for trade suppliers; it’s a direct threat to your bottom line. The core issue is that ROAS celebrates revenue at all costs. This creates a dangerous set of blind spots that can silently drain your margins and undermine your long-term stability. Let’s unpack exactly how this happens.

The first major flaw is its complete disregard for profit margins. For a trade supplier, not all revenue is created equal. A £10,000 order for a high-margin custom part is vastly more valuable than a £10,000 order for a low-margin commodity item that’s expensive to ship.

ROAS sees both orders as identical revenue successes. A campaign generating a fantastic 10:1 ROAS on a product with a razor-thin 5% margin could actively be losing you money on every single sale once you factor in operating costs. It’s a classic recipe for being “revenue rich” but “profit poor.”

The True Cost of Acquiring a Trade Customer

Secondly, ROAS completely ignores the total cost of customer acquisition (CAC). For B2B suppliers, the ad spend itself is just the tip of the iceberg. Your real costs are much higher and include a whole host of expenses that ROAS was never designed to see.

Think about the real-world costs of fulfilling a typical trade order:

• International Shipping & Freight: Transporting heavy or bulky goods can be incredibly expensive, with costs fluctuating based on fuel prices and global supply chain pressures.
• Warehousing & Storage: Storing large quantities of inventory comes with significant overheads, including rent, utilities, and staffing.
• Import Duties & Taxes: For UK suppliers sourcing goods from overseas, these unavoidable government levies directly impact the cost of every item sold.
• Currency Fluctuations: Changes in exchange rates can erode profits on international transactions, a cost that is completely invisible to ROAS.

Relying on ROAS alone is like trying to navigate a complex shipping route with only a compass. You might know your general direction, but you’re ignoring treacherous currents (freight costs), bad weather (currency changes), and the depth of the water below (your profit margin). This is where the strategy becomes actively dangerous.

This narrow focus is particularly hazardous for UK trade suppliers, as ROAS not only overlooks profit margins but can also be skewed by inaccuracies in national trade data. For instance, HMRC recently notified of data errors in 2025 that equated to 2.0% of total goods exports—a staggering £6.5 billion. A marketing team might see a 5:1 ROAS and celebrate, but if that’s based on inflated export volumes, the actual return could be plummeting. You can explore more on these UK regional trade statistics and their commentary.

Fostering Transactions Instead of Relationships (Why ROAS Is Misleading for Trade Suppliers)

Finally, an obsession with ROAS encourages a short-sighted focus on one-off transactions rather than cultivating profitable, long-term B2B relationships. In the trade world, the real value isn’t in the first sale; it’s in the repeat orders, the bulk purchases, and the long-term contracts that form the bedrock of a stable business.

ROAS is a transactional metric in a relationship-driven industry. It rewards the quick sale but fails to measure the lifetime value of a loyal trade partner.

A high ROAS might indicate you’re good at generating initial leads, but it says nothing about whether those leads are the right fit for your business. Are you attracting one-time buyers chasing the cheapest price, or are you building a pipeline of high-value accounts that will order from you for years to come? Focusing on generating quality leads over just quantity is a far more sustainable approach.

This is why ROAS is so misleading for trade suppliers. It’s not just a theoretical problem—it’s a practical one that eats away at profits from multiple angles. It pushes you to chase low-margin revenue, blinds you to your true acquisition costs, and distracts you from building the valuable customer relationships that actually drive sustainable growth.

Why ROAS Is Misleading for Trade Suppliers: Adopting Smarter Metrics for True Profitability

Chasing a high ROAS without thinking about profit is like meticulously polishing the bonnet of a car that has no engine. It might look impressive on the surface, but it won’t actually get your business anywhere. It’s time to look past these vanity metrics and start using smarter, profit-driven measurements that show you what’s really going on with your PPC campaigns.

Let’s break down the key metrics every trade supplier should be using instead. We’ll start with the basics and build up to the more advanced stuff, making sure each concept is clear and actionable, even if you don’t have a finance background.

Understanding Your Contribution Margin

First up, and arguably the most important, is your Contribution Margin. Think of it as the actual profit you bank from a single sale after subtracting all the direct costs tied to that specific order. While revenue is just the top-line number, contribution margin tells you how much cash is left to cover your fixed costs—like rent and salaries—and ultimately, what’s left over as pure profit.

The formula is nice and simple:
Contribution Margin = (Revenue from Sale) – (Variable Costs of Sale)

Variable costs are anything that goes up or down directly with your sales volume. This includes things like:

• Cost of goods sold (COGS)
• Shipping and freight charges
• Import duties and taxes
• Packaging materials

By focusing on contribution margin, you instantly change your mindset from “How much revenue did this ad bring in?” to “How much actual profit did this ad contribute?”

The Power Duo: CAC and LTV (Why ROAS Is Misleading for Trade Suppliers)

Next, let’s talk about the essential partnership between Customer Acquisition Cost (CAC) and Lifetime Value (LTV). These two work hand-in-hand to paint a clear picture of whether your customer acquisition efforts are sustainable in the long run.

• Customer Acquisition Cost (CAC): This is the total cost of winning a new customer, bundling up all your marketing and sales expenses.
• Lifetime Value (LTV): This is the total profit you expect to make from a customer over their entire relationship with your business.

A healthy business model for a trade supplier boils down to a simple rule: the profit a customer brings in must be significantly higher than what it cost you to get them. A solid benchmark for a sustainable LTV:CAC ratio is 3:1 or higher. For every £1 you spend getting a new customer, you should be making at least £3 in profit back over time. If your ratio is hovering around 1:1, you’re just treading water, and that’s no way to grow. You can go deeper and learn more about how to calculate Customer Lifetime Value in our detailed guide.

From Revenue to Profit Per Conversion

While LTV and CAC give you that big-picture strategic view, Profit per Conversion provides a direct, powerful link between your ad spend and your bottom line on a day-to-day basis. This metric calculates the real profit made from a single conversion, giving you a clear, pound-for-pound measure of how profitable your campaigns are.

This is especially critical for UK trade suppliers, where a good-looking ROAS can easily hide weaknesses in the goods sector. For instance, recent ONS data showed the UK’s services surplus grew to £54.3 billion, but the goods deficit remained stubbornly high at £58.0 billion. A supplier hitting a 6:1 ROAS might be patting themselves on the back, but that figure completely ignores how a struggling goods sector can squeeze real margins. Profit-per-conversion cuts through the noise and gives you a much more honest measure of business health.

This diagram shows how a fixation on ROAS can quietly chip away at a trade supplier’s profitability through low margins, high costs, and a short-term focus.

The image makes it clear: by ignoring your true costs and focusing only on revenue, you risk chasing sales that actually hurt your bottom line.

To make this practical, here’s a table breaking down the key profit-focused metrics you should be tracking.

Key Metrics to Replace ROAS (Why ROAS Is Misleading for Trade Suppliers)

These metrics shift the conversation from revenue to real, sustainable growth.

Essential Pipeline Metrics for Longer Sales Cycles

For many B2B trade suppliers, a lead doesn’t turn into a sale overnight. The process often involves quotes, negotiations, and credit checks. When you’re dealing with these longer sales cycles, you need to track pipeline metrics to see if your campaigns are working long before the final invoice is paid.

In a long sales cycle, relying only on final sales to measure PPC success is like trying to navigate a long-haul flight by only looking at the destination airport. You need waypoints to know you’re on the right track.

Two of the most important pipeline metrics to watch are:

• Marketing Qualified Leads (MQLs): These are leads who’ve shown enough interest to be considered promising, but aren’t quite ready for a sales call.
• Sales Qualified Leads (SQLs): These are the MQLs that your sales team has reviewed and confirmed are ready for a direct sales follow-up.

By tracking the conversion rate from MQL to SQL and the cost per MQL/SQL, you get crucial feedback on the quality of leads your PPC campaigns are generating. It helps you answer the most important question: is your ad spend attracting the right kind of prospects who are likely to become valuable, long-term customers?

Right, let’s stop talking theory and start putting this into practice. This is the crucial step where you break free from the ROAS trap for good. We’re not just changing what you report on; we’re fundamentally changing how you track, attribute, and optimise every single pound you spend on your PPC campaigns.

It all boils down to one non-negotiable foundation: rock-solid tracking. Without the right data flowing cleanly between your systems, trying to calculate real profit is pure guesswork. You might as well stick with ROAS.

Establishing a Solid Tracking Foundation (Why ROAS Is Misleading for Trade Suppliers)

To get the numbers you need for proper profit calculation, you have to build a seamless bridge between your ad platforms, your website analytics, and your CRM. Each one holds a different piece of the profitability puzzle.

• Google Ads & Google Analytics: These are your starting blocks. They track the initial click, the cost of that click, and what a user does right after they land on your site. They tell you what you spent and what happened immediately after.
• Your CRM System: For B2B trade suppliers, this is where the real magic happens. Your CRM is the treasure chest holding the actual transaction data—final order values, customer details for LTV calculations, and deal stages for pipeline metrics.

Connecting these systems is what lets you pass vital bits of information, like the Google Click ID (GCLID), from the moment an ad is clicked all the way through to the final sale recorded in your CRM. This creates an unbroken data chain that directly ties your ad spend to actual, tangible profit. If you want to get into the nuts and bolts of this, check out our guide on how trade suppliers can track PPC ROI from click to credit account.

Moving Beyond Last-Click Attribution

Once your tracking is watertight, it’s time to tackle attribution. The old-school last-click model, which gives 100% of the credit to whatever the customer clicked last, is hopelessly outdated for the complex B2B buying journey. A trade customer might see a social media ad, do a few brand searches, read a case study, and then finally fill out a quote form.

Last-click attribution is like giving all the credit for a goal to the striker who tapped it in, completely ignoring the defenders and midfielders who battled to get the ball up the pitch. It massively undervalues the crucial early and mid-funnel interactions that build awareness and trust.

To paint a far more accurate picture, trade suppliers need to adopt a more sophisticated attribution model. Here are a few to consider:

1. Time-Decay Model: This gives more credit to touchpoints closer to the conversion but still gives a nod to the earlier interactions.
2. Position-Based Model: A popular choice, this usually gives 40% of the credit to the very first touch, 40% to the last, and spreads the remaining 20% across the middle interactions.
3. Data-Driven Model: This is the top-tier option. It uses machine learning to figure out how much influence each touchpoint actually had, giving you the most accurate (but also most complex) view.

Optimising Your Campaigns for Profit (Why ROAS Is Misleading for Trade Suppliers)

With accurate, profit-focused data flowing in, you can finally start making genuinely smart optimisation decisions. This is where you gain a real competitive edge. Instead of just chasing a higher ROAS, you can now fine-tune your campaigns to maximise your actual bottom line.

This boils down to a few key actions:

• Smarter Bidding: Start adjusting your bids based on the predicted profitability of a lead, not just the chance of a conversion. You can confidently bid higher for clicks that lead to high-margin product enquiries.
• Budget Reallocation: Go find those campaigns with a fantastic ROAS but low profit contribution—the classic vanity campaigns. Shift that budget over to campaigns that might have a slightly lower ROAS but deliver significantly fatter profit margins.
• Sharpened Audience Targeting: Dig into your profit data to build a profile of your most profitable customers. Use these insights to refine your audience targeting and focus your ad spend on attracting more of these high-value clients.

Let’s look at a quick example. A UK-based tools supplier was consistently hitting their 5:1 ROAS target, but their profits were flatlining. After integrating their CRM and Ads data, they ditched ROAS and switched their main goal to a Profit-per-Conversion metric.

They quickly discovered their highest-ROAS campaign was for a popular but low-margin power tool. Meanwhile, a campaign for specialised, high-margin industrial parts had a lower ROAS but was generating far more actual profit. By reallocating their budget, they saw a slight dip in overall revenue but achieved a 25% increase in total profit within three months. That simple switch transformed their PPC from a revenue-generator into a true profit-driver.

Why ROAS Is Misleading for Trade Suppliers: Building a Dashboard That Tells the Whole Story

A proper profit-driven strategy needs more than just better metrics. It demands clear, insightful reporting that everyone in the business can actually understand. It’s time to ditch the narrow, often misleading view you get from the standard Google Ads interface and build a performance dashboard that tells the complete story of your profitability.

The goal here is to create a single source of truth. This dashboard should show you, at a glance, whether your advertising is generating sustainable profit for your business—not just hollow revenue figures. Using a flexible tool like Google Looker Studio, you can pull data from your ad platforms, analytics, and CRM to create a genuinely powerful, customised view.

Essential Components of a Trade Supplier Dashboard

Now, every business is unique. A dashboard for an e-commerce parts distributor will look worlds apart from one for a lead-gen supplier of industrial machinery. But even so, a robust dashboard for any trade supplier needs to visualise the core profit metrics we’ve been talking about. Certain elements are just universally crucial for seeing the full picture.

Here are four essential visuals to get you started:

1. Revenue vs. Profit Side-by-Side: This is the most fundamental chart you can have. A simple bar or line graph showing total revenue next to total profit (or contribution margin) for the same period instantly exposes any disconnect between the two.
2. LTV:CAC Ratio Trend Line: A line graph tracking your Lifetime Value to Customer Acquisition Cost ratio over time is vital. It answers the most important question for long-term health: are we acquiring customers profitably?
3. Profit Breakdown by Product Category: A pie chart or bar graph breaking down total profit by product line is a must. This immediately reveals which parts of your catalogue are the real profit drivers, versus those that might have a high ROAS but barely contribute to the bottom line.
4. Funnel Visualisation from Lead to Closed Deal: For suppliers with longer sales cycles, a funnel chart is non-negotiable. It should track the journey from an initial enquiry (MQL) to a qualified lead (SQL) and finally to a closed, profitable deal, showing conversion rates at each stage.

A great dashboard doesn’t just report numbers; it guides decisions. It should immediately answer whether your PPC campaigns are making you money and, if not, point you directly to the problem area.

Customising Your View for Your Business Model (Why ROAS Is Misleading for Trade Suppliers)

The key is to adapt these concepts to your specific reality. For example, an e-commerce supplier selling thousands of SKUs might add a table highlighting the top 10 most profitable products versus the top 10 highest revenue-generating ones. You’d be amazed what truths this simple comparison can uncover about where real value is created.

On the other hand, a B2B supplier focused on high-value leads for bespoke machinery could include a metric for “Pipeline Velocity,” showing how quickly leads are moving through the sales process. This connects ad spend not just to lead volume, but to the health and efficiency of the entire sales pipeline.

Ultimately, your dashboard becomes your strategic command centre. It’s where you stop being fooled by ROAS and start making decisions based on the metrics that actually matter. It transforms a confusing mess of data into a clear, actionable story about your business’s health and the true impact of your advertising spend.

Why ROAS Is Misleading for Trade Suppliers: Your PPC Profitability Questions, Answered

Making the jump from a simple ROAS model to a genuine profit-driven strategy can feel like a big step. It’s completely normal to have questions about how it all works in practice. Here are some straightforward, actionable answers to the most common hurdles we see trade suppliers face.

“My Data is a Complete Mess. Where Do I Even Start?”

This is a big one. Lots of suppliers worry their data isn’t clean enough to track profit properly. The secret is to start small and focus on what you can control. Don’t try to boil the ocean and connect everything at once.

First, just make sure your Google Ads account is properly linked with your website analytics. Then, focus on passing one single, vital piece of information—like a unique customer ID or an order number—from your website’s enquiry form into your CRM. This one connection is often all you need to start manually matching sales to ad campaigns. It gives you an initial, even if it’s a bit rough, view of profit-per-conversion.

Your goal on day one isn’t perfect data. It’s creating a single, reliable thread between an ad click and a final sale. You can build everything else out from there.

Once that basic link is solid, you can start layering in more data points, like product margins and delivery costs, to sharpen your calculations over time.

“How Do I Get the Sales Team On Board With This?”

Sales teams are often judged on hitting revenue targets, so they can be wary of any changes that might rock the boat. The best way to get them on your side is to show them how profit-driven PPC actually makes their job easier.

Explain that by focusing on metrics like Sales Qualified Leads (SQLs) and Customer Acquisition Cost (CAC), you’re optimising for lead quality, not just piling up quantity. This means the leads landing on their desk from marketing will be better qualified, more clued-up, and far more likely to close. Frame it as a true partnership: marketing’s job is to deliver fewer, but better, opportunities that help them smash their revenue targets more efficiently.

“What Tools Do I Absolutely Need to Get Started?”

You don’t need a complicated or pricey tech stack to kick things off. Most trade suppliers can get going with tools they already have.

• Google Ads and Google Analytics: For tracking the essentials – ad clicks, costs, and what users do on your site.
• A CRM System: This is where your real sales data lives, including final order values and customer details.
• A Spreadsheet Program: For your initial analysis, you can just export data from your CRM and Ads account and match them up in a spreadsheet to work out your basic profit metrics.

Honestly, the most important “tool” isn’t software. It’s the process you build to connect the dots between these systems, even if that process is manual to begin with.

At PPC Geeks, we help trade suppliers move beyond misleading metrics like ROAS and build PPC strategies that drive real, measurable profit. To see how we can transform your campaigns, get your free, in-depth PPC audit today at https://ppcgeeks.co.uk.