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Profit Bidding: how to increase ecommerce margins

De’Longhi is a leading Italian company in the small household appliances sector, known for its coffee machines, kitchen products, and home comfort solutions. Founded in 1902 in Treviso, De’Longhi is synonymous with innovation and excellence. With a presence in over 120 countries, it proudly represents the Made in Italy all over the world.

  • Client
    De' Longhi
  • Sector
    Consumer Electronics
  • Areas od Expertise
    Marketing & Media

1. Goals 

The project aimed to optimize the management of advertising campaigns by shifting the focus from a strategy based solely on ROAS (Return on Advertising Spend) to one centered on POAS (Profit on Advertising Spend), with the goal of maximizing profit margins on advertising investments.

Relying solely on ROAS to optimize campaigns has several limitations. ROAS measures the relationship between revenue and ad spend but overlooks key factors such as a company’s profitability and COGS (Cost of Goods Sold). A high ROAS does not necessarily indicate a profitable campaign; when product margins are low, even a high ROAS can result in losses.

We therefore supported the De’ Longhi team in transforming ADV campaigns into a strategic business asset that drives real business value. Specifically, the main objectives of the project were to:

  • Increase return on advertising investment (ROI) by focusing on profit margins
  • Attract a more economically relevant audience for the company
Evolution of the advertising approach

2. Our Approach

To achieve these goals, we worked closely with the De’Longhi team following a structured three-step approach:

  • Technical implementation: The De’Longhi team gathered the necessary internal data and coordinated the relevant departments to set up a conversion tag for tracking net profit from sales. This tag was then implemented as a new conversion action to optimize campaigns.
  • Management and monitoring: Once the conversion tag was in place to capture profit data, we conducted an analysis and verification phase to ensure that the recorded conversion values aligned with expectations. This process helped identify and correct any anomalies that could have negatively impacted campaign performance.
  • Switch to optimization: Once the reliability of the data was confirmed, campaigns were optimized using net profit as the main conversion parameter, moving beyond the traditional approach based on gross revenue.

3. Key Wins

The implementation of a Looker Studio dashboard enabled continuous monitoring of the new strategy’s impact on profitability. In the activated countries, ecommerce sales margins increased by an average of 9% year over year.

Thanks to Profit Bidding, De’Longhi was able to:

  • Increase the final margins by reducing the impact of product costs on the revenue generated from advertising campaigns
  • Turn digital campaigns into a strategic lever for improving the company’s profitability

 

+9% ecommerce sales margins YoY