This is the first piece in a series about the misalignments that quietly damage growth in modern e-commerce. These aren’t just tactical issues—they’re structural disconnects between teams, tools, and targets. In this post, we’re focusing on how ad spend, especially in feed-based channels like Meta and Google, often drifts away from the strategy; what actually drives profit, supports inventory strategy, and builds long-term brand value.
This is something most brands could and should be in control of, but they aren't, and it is costing millions or worse.
Short-term survival is about cash flow. Long-term survival is about profitable sales.
You get cash flow by turning products into cash. That means selling through your inventory. But to keep cash after all fulfillment, marketing, and return costs, you need to go beyond breakeven. Contribution Margin 3 is a good place to look.
You get profitable sales by building your brand, earning loyal customers, keeping solid price points, and selling through your full range, not just your hits.
Everyone understands this in theory.
However, most people are unaware of how their ad spend is actually managed. Especially feed-based ads, such as Google Shopping or Meta catalog ads.
These algorithms are fast and smart. Best in the world. However, they primarily optimize for revenue without established guardrails. That means every sale tips the system in favor of that product.
And that often leads to problems:
- Best-seller trap – When your top product sells out, the algorithm stalls. Sales dip while the system re-learns. You’ve just wasted budget on something that didn’t need help. And the algorithms lose momentum when the products sell out, which often happens when you get the broken size curve.
- Ignored slow movers – Products that need support never get it. So you end up stuck with unwanted stock at the end of the season. Discounting is your only option—and by then, it’s too late to build demand.
- Chasing cheap sales – Algorithms love low-priced, fast-selling products. But those drive small baskets and thin margins. Suddenly, most of your spend is going towards, for example, accessories instead of your core offer. Hurting both order profitability and the brand.
So, how do you fix it?
Start by knowing where you stand. And to do that, you need to look at short-term data. Not months. Days or weeks.
At the product level, track:
- Inventory (current and projected)
- New customer %
- Profit per order
When you compare those to your ad spend, you’ll likely find a mismatch.
We’ve written more about this topic in our Marketing Measurement blog post and how it ties into smarter spend allocation.
You could, at least in theory, build this in a spreadsheet if you’re motivated:
- One table for orders, product IDs, discounts, taxes, and shipping address
- One for product attributes and COGS
- One for fulfillment cost by product and country
- One for daily inventory per variant
- One for daily ad spend per product (could be simplified by skipping all details about ads and markets)
- And one final view to tie it all together
Then automate it.
Yeah, it’s a lot. And if you’re selling across many markets or have a wide range, it gets messy fast.
You could also try feeding smarter data into your ad platforms with your feed management tool. That can help. (At Dema, we do this, and can base it on almost any data, making it very powerful.) But unless you’re also measuring how it works daily, you’re still guessing.
And when short-term sales drop (which they might if you stop chasing cheap wins), you need another way to steer. That’s where Marketing Mix Modeling (MMM) helps. Link here to my Co-Founder Marcus great blog post about why the D2C and retail industry needs to work with MMM.
Why do you need all this data connected?
Because you care about sell-through, profit, and acquiring the right customers, if your data is split up, you only optimize part of the story, and that always backfires.
I've seen it happen over and over. It’s avoidable.
We built Dema to solve this. But even if you're not using Dema, please, do something.