# Profitability management (POAS / Margin)

### 1. Business value: Why manage by margin?

Traditional ROAS management can be misleading: a product that generates a lot of revenue but has a low margin may turn out to be unprofitable once advertising costs are deducted.

* **Real Profit Optimisation**: Focus your advertising investments on the products that contribute most to your bottom line.
* **Unified Business Vision**: Align your marketing teams with the profitability objectives of the finance department.
* **Algorithmic Resilience:** Provide algorithms (Google, Meta) with the most valuable signal so that they optimise your campaigns for profitability rather than gross volume.

### 2. Implementation methodology in Platform X

#### Step A: Margin data injection

To manage profitability, the platform needs to know the cost or margin of each product sold. This is done via the product catalogue.

* **Documentation**: [Product catalog | Commanders Act X](https://doc.commandersact.com/features/sources/sources-catalog/product-catalog)

#### Step B: Configuration of Enrichment

Link your transaction events (purchases) to your catalogue to retrieve the unit margin for each product at the time of sale.

* **Documentation**: [Configure Event Enrichment](https://doc.commandersact.com/features/enrichments/events-enrichment).

#### **Step C: Calculating conversion value (Data Cleansing)**

Use the cleansing module to dynamically calculate the total margin of the order (sum of product margins) and assign it to a new property, for example order\_profit.

* **Documentation**: [Using calculation functions in Data Cleansing](https://doc.commandersact.com/features/data-quality/data-cleansing).

#### **Step D: Setting up the Destination**

Configure your advertising connector to send the order\_profit value in the ‘Conversion Value’ field instead of the total basket amount.

* **Documentation**: [Destination Catalogue | Commanders Act X](https://doc.commandersact.com/features/destinations/destinations-catalog)​

#### **Step E: Validation via the Event Inspector**

Check that the outgoing hit to your partner (e.g. Google Ads) contains the calculated margin in the value field.

* **Documentation**: [Data Cleaning | Commanders Act X](https://doc.commandersact.com/features/data-quality/data-cleansing)

### 3. Typical use cases

1. **Google Shopping campaign arbitrage:** Identify ‘top-selling’ products that are actually ‘low-profit’ due to low margins. Reduce advertising pressure on these products in favour of high-margin products.
2. **Smart Bidding on Margin (Meta CAPI):** By sending the margin as a conversion value, Meta's ‘Value-based Lookalike’ algorithm will search for buyer profiles similar to those that generate the most profit for you.
3. **Profitability analysis by channel:** Use enriched profit data to compare the net profitability of your various acquisition levers (SEO vs SEA vs Social) directly in your BI tools.

### Need help with implementation?

Our experts will assist you in setting up your profitability calculations and sending these signals to your advertising agencies. **Contact our support team:** <support@commandersact.com>