Have you ever heard about low ROAS products? Is the revenue lower than the budget you spent on your campaign? That means that your ROAS is low and your focus should be on excluding the low ROAS products.

For your business to earn a higher revenue, you will have to identify low ROAS products or optimize if there is potential for their growth. This guide provides all the information to know how to exclude or optimize them.

What Is ROAS and Why Should You Care?

ROAS (Return on Ad Spend) is a digital marketing metric that measures the revenue generated for every dollar spent on advertising. It’s calculated as:

• Measures advertising effectiveness: It helps you understand which campaigns, channels or ads are performing well and generating revenue.
• Optimizes budget distribution: Knowing your ROAS allows you to distribute budget to high-performing ads and cut losses on underperforming ones.
• Improves profitability: An impressive ROAS guarantees that your advertising investment enhances your profitability.
• Informs strategic decisions: Assists in determining where to amplify efforts, whether to explore new advertising platforms or refine targeting and creative elements.
• Benchmarks success: ROAS differs across industries and business models, yet consistently monitoring it over time guarantees enhanced marketing efficiency.

For example, a ROAS of 3:1 (or $3 revenue for every $1 spent), is considered good, but the ideal number depends on your margins and costs.

Now imagine a company spends $5.000 on an advertising campaign in a single month. In this month, the campaign results in revenue of $10.000. Therefore, the ROAS is a ratio of 2:1, as $10.000 divided by $5.000 = $2. Therefore, for every $1 spent on advertising, the company generated $2 in revenue.

Revenue: $10,000 → ROAS = $2 or 2:1.

Why Excluding Low ROAS Products Leads to Higher Average ROAS

Excluding low ROAS products can lead to a higher average ROAS. It removes underperforming items that are dragging down the ad performance. Here’s why this works:

• Eliminates budget waste: Low ROAS products consume ad spend without generating sufficient returns. By cutting them out, more budget is allocated to high-performing products.
• Focuses on high-performers: When you shift your budget toward products with historically strong ROAS, you improve the overall revenue-to-spend ratio.
• Improves ad algorithm performance: Platforms like Google Ads and Meta Ads optimize based on past data. When you remove low ROAS products, the algorithm focuses on products that already perform well, leading to better targeting and lower cost per conversion.
• Enhances profitability: If a product barely breaks even or loses money, continuing to advertise it lowers overall profitability. By excluding it, you ensure your ad spend contributes to a healthier bottom line.
• Reduces customer acquisition cost (CAC): Low ROAS products may attract less valuable customers or require excessive discounts. Excluding them helps focus on higher-margin products that bring in more profitable customers.

For example, imagine you have 3 products before exclusion. Let’s name them: Product A, Product B and Product C. Product A is $6 ROAS, Product B is $3 ROAS and Product C is $1 ROAS. That means the average ROAS is (6+3+1)/3 = 3,33.

Now you exclude Product C, that is not working well. After excluding, you have a new average ROAS that is (6+3)/2 = 4,5. This works way better.

How to Identify and Exclude Low ROAS Products in Google Ads (depends on your margins)

The key to improving ROAS is making sure which products are underperforming based on your profit margins. Here’s a guide to identifying and excluding low ROAS products effectively in Google Ads.

First you need to determine your target ROAS. You can use this formula: Break-even ROAS = 1/Profit Margin. For example: If your profit margin is 40%, your break-even ROAS is 1 ÷ 0,40 = 2,5.

Then you have to identify low ROAS Products in Google Ads. To do this, go to Google Ads → Reports → Predefined Reports → Shopping → Item ID Performance. The report shows ROAS per product if you’re running a Performance Max or Shopping campaign. Sort by ROAS (Conversion Value / Cost), look for products with a ROAS below your break-even point.

After this step, you can exclude low ROAS products by using Google Merchant Center. It is a free Google tool that will help you with the exclusions. First go to Merchant Center → Products → Exclude Specific Products.

Then rellocate the budget to high ROAS Products. Consider creating a separate campaign for high ROAS products with a higher budget and better bids. And, after that, you only have to monitor the ROAS performance and adjust exclusions to new trends.

When Should You Exclude vs. Optimize Low ROAS Products?

Not all low ROAS products should be immediately excluded. Some can be optimized instead. The key is understanding why a product has low ROAS and whether it has potential for improvement.

• Exclude if the product is unprofitable long-term: If the product’s ROAS is consistently below your break-even ROAS. Despite testing different strategies, the product remains unprofitable.
• Exclude if low demand or seasonal downtrend: If search volume and sales are low (for example: winter jackets in summer). Look at Google Trends and past seasonal performance.
• Exclude if poor product-page experience: High bounce rates, low conversion rates or poor reviews indicate that users don’t trust or want the product. Check Google Analytics and your site’s behavior reports.
• Exclude if high refunds or customer complaints: If the product attracts negative feedback, returns, or chargebacks, even a good ROAS can hurt overall profitability.
• Exclude if limited inventory or low margins: If stock is running low, you might want to prioritize high-margin products instead. Low-margin products with low ROAS should be cut to avoid wasting budget.

Use Google Merchant Center exclusions or Google Ads product exclusions at the campaign level.

• Optimize if there‘s potential for growth: If a product has strong clicks but low conversions, it might need better landing pages, pricing or targeting. A product with temporary low ROAS but past good performance might just need adjustments.
• Optimize if high clicks but low conversions: Check for cart abandonment issues, slow site speed, or poor UX. Try A/B testing different product images, descriptions and pricing strategies.
• Optimize if wrong audience or bidding strategy: If the product is showing to the wrong audience, adjust your targeting. Test Target ROAS or Manual CPC instead of broad automated bidding.
• Optimize if poor product feed quality: Update product titles, descriptions and images to improve CTR. Add negative keywords to prevent irrelevant searches.

Conclusion

For best revenue, you must properly manage your advertising budget. You can reduce unnecessary ad spend and direct resources toward high-performing items by identifying and removing poor ROAS products, which will increase your overall return on investment.

Not every product with a poor ROAS should be eliminated right once, however, some may be optimized with better targeting, improved product pages or improved bidding techniques.

The key is to continuously monitor and adjust your campaigns. Use Google Ads reports, Merchant Center exclusions and strategic budget reallocation to ensure that your advertising efforts drive sustainable growth.

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