Product Metrics

Search

Glossary

Glossary

Plain definitions of the metrics and Google Shopping terms behind product-level ad decisions. Each entry gives a formula where one exists, a worked example in euros, and what the term means for one product.

Return and margin metrics

  • ACOS vs ROAS

    ACOS is ad spend as a percentage of ad revenue, while ROAS is ad revenue divided by ad spend, so each is the inverse of the other.

  • Blended ROAS

    ROAS on total revenue and total ad spend, instead of one campaign’s numbers.

  • Break-even ROAS

    The lowest ROAS at which a product covers its costs: 1 ÷ its margin.

  • COGS

    Cost of goods sold (COGS) is what it cost you to buy or make the products you sold in a period.

  • Contribution margin

    Contribution margin is the revenue from a sale minus its variable costs, such as product cost, shipping, payment fees and returns.

  • Cost per acquisition (CPA)

    Cost per acquisition (CPA), also called cost per action, is ad spend divided by the number of conversions it brought, such as sales.

  • Gross margin

    Gross margin is the share of revenue left after subtracting the cost of goods sold, shown as a percentage.

  • Gross vs net margin

    Gross margin is the share of revenue left after the cost of goods sold, while net margin is the share left after every cost.

  • Marketing ROI

    Marketing ROI is the profit your marketing earns after its cost, shown as a percentage of that cost.

  • Markup vs margin

    Markup is profit as a share of cost, while margin is profit as a share of the selling price, so margin is always the smaller figure.

  • MER

    Marketing efficiency ratio: total revenue divided by total marketing spend, across every channel.

  • POAS

    Profit on ad spend: profit divided by ad spend, so 1 is break-even.

  • ROAS

    Return on ad spend (ROAS) is the revenue your ads generate for every euro you spend on them.

  • ROAS vs ROI

    ROAS divides the revenue from ads by ad spend, while ROI divides the profit left after costs and ad spend by that spend, so only ROI counts margin.

  • Target ROAS

    The average conversion value you tell Google Ads to aim for per unit of ad spend.

  • Variable cost

    A variable cost is a cost that rises and falls with the number of orders you take, such as product cost, shipping and payment fees.

Customers and measurement

  • CAC

    CAC stands for customer acquisition cost: the marketing spend in a period divided by the number of new customers it brought.

  • CAC vs CPA

    CPA divides ad spend by every conversion, while CAC divides it by new customers only, so CPA looks cheaper whenever returning customers buy too.

  • Cohort analysis

    Cohort analysis groups customers by a shared starting point, such as the month of their first order, and follows each group over time to compare what they do.

  • Cross-selling

    Cross-selling is selling a related product alongside the one a customer is already buying, such as running socks with a pair of running shoes.

  • Data-driven attribution

    Data-driven attribution is a Google Ads attribution model that shares the credit for a conversion across the ad interactions before it, based on your account’s own data.

  • Incrementality

    Incrementality is the share of your sales that happened because of your advertising and would not have happened without it.

  • Last click attribution

    Last click attribution gives all the credit for a conversion to the last click before it, and none to the clicks that came earlier.

  • LTV

    Lifetime value: what a customer brings in over time, as revenue or, better, as profit.

  • Market basket analysis

    Market basket analysis finds which products are bought together by counting how many orders contain each combination of products.

  • nCAC

    New customer acquisition cost: ad spend divided by the new customers it brought.

  • Predicted LTV

    An estimate of what a customer will bring in over a set period, as opposed to observed lifetime value, which is what they have already brought in.

  • Repeat purchase rate

    Repeat purchase rate is the share of customers who ordered in a period and placed two or more orders in that same period.

Shopping and Google Ads

  • Conversion value

    Conversion value is the amount you tell Google Ads a conversion is worth, such as sales revenue or profit margin.

  • Custom labels

    Custom labels are five attributes in a product feed, custom_label_0 to custom_label_4, that you fill with your own text to group products in campaigns.

  • Google Merchant Center

    Google Merchant Center is a free Google tool where a shop uploads and manages its product data, so its products can appear on Google Shopping and across Google.

  • GTIN

    A GTIN (Global Trade Item Number) is a unique number that identifies a product that can be priced, ordered or invoiced, usually shown as a barcode.

  • Maximize conversion value

    Maximize conversion value is a Google Ads Smart Bidding strategy that helps you get the most conversion value from your budget.

  • MPN

    An MPN (manufacturer part number) is the code a manufacturer assigns to identify one product among all the products it makes.

  • Performance Max

    A Google Ads campaign type that serves ads across Google’s channels, using the Merchant Center product feed for shops.

  • Product feed

    A product feed is a file or data source that lists your products, one per row, with attributes such as ID, title, price and availability.

  • Smart Bidding

    Smart Bidding is a set of Google Ads bidding strategies that use Google AI to optimise for conversions or conversion value in every auction.

  • Supplemental feed

    A Google Merchant Center supplemental feed is a secondary data source that adds details to, or overrides details in, the products of your primary feed.

Inventory and pricing

  • Days of inventory

    Days of inventory, also called stock cover or weeks of cover, is how many days your current stock lasts at your recent selling rate.

  • Inventory turnover

    Inventory turnover is how many times you sell your average stock in a period, calculated as cost of goods sold divided by average inventory value at cost.

  • Lead time

    Lead time is the time between placing an order with a supplier and receiving the stock, usually counted in days or weeks.

  • Price elasticity

    Price elasticity of demand is how strongly the units you sell respond to a price change: the percentage change in quantity divided by the percentage change in price.

  • Reorder point

    The reorder point is the stock level at which you place a new order, so the stock you hold lasts through the supplier lead time with a buffer left.

  • Safety stock

    Safety stock is the extra stock you hold beyond expected demand, so a sudden rise in sales or a late delivery does not leave you out of stock.

  • Sell-through rate

    Sell-through rate is the share of the units available in a period that you sold, written as a percentage.

  • Slow-moving inventory

    Slow-moving inventory is stock that sells much more slowly than the rest of your products, so it stays on the shelf and ties up money.

  • Stockout

    A stockout is when a product has no units left to ship, so a shopper who wants it cannot buy it.

Tracking

  • First-party cookie

    A first-party cookie is a cookie set by the site the visitor is on, such as your shop, rather than by another domain.

  • GCLID

    A GCLID, short for Google Click Identifier, is a parameter that Google Ads auto-tagging adds to the landing page URL after someone clicks your ad.

Product Metrics terms

  • Full Signal Tracking

    Server-side delivery of every purchase to Google Ads from an endpoint on your own domain, with five conversion actions: revenue, profit, new customers, returning customers and lifetime value.

  • Growth-share matrix

    The growth-share matrix, or BCG matrix, is a Boston Consulting Group framework that divides businesses into four types by market share and market growth.

  • Product Segmentation

    Product Metrics ML puts each product in one of six segments, by volume and return, and writes it to a Merchant Center label.

Examples use illustrative data. Written by Berend Vrakking, founder of Product Metrics.