Platforms report sales before returns unless you tell them otherwise. For a shop with a high returns rate, that gap can turn a healthy-looking campaign into a loss. This article gives the steps from Google's documentation, explains what returns data does to bidding and shows how to report return-adjusted ROAS. It belongs to the chain in ROAS looks good, profit doesn't.
Retraction vs restatement: what's the difference?
Google's help page on adjusting conversions describes two types of adjustment, using the example of items returned at different times1:
- Retraction. The conversion is removed. Use it when a whole order is returned or cancelled.
- Restatement. The conversion stays, but its value changes. Use it when part of an order comes back, or the value changes after the sale.
The page works with order IDs: the adjustment carries the same order ID as the original conversion, with the Google Click ID as a fallback when no order ID is available1. So the first requirement is to send an order ID with each conversion in the first place. Without it, matching a return to a conversion gets much harder.
Our view of the flow: take the returns and cancellations your shop or returns system records, match them to order IDs, and send them to Google as retractions or restatements on a regular schedule. Google's page also recommends uploading adjustments at least 24 hours after the original conversion1. Beyond that, pick a cadence your returns process can sustain. A feed that runs every week beats a daily feed that stops.
Example (illustrative): An order of 100 is placed. Two weeks later, one item worth 40 is returned. A restatement changes the value from 100 to 60. If the full order comes back, a retraction removes the conversion.
Platforms report sales before returns unless you tell them otherwise.
Which time limits does Google document?
Google's help page gives two windows. Adjustments can be made within 54 days, and for automated bidding to read them, retractions and restatements should arrive within seven days of the conversion being recorded1. Secondary sources do not always match: one Google Ads agency's article gives 55 days2. Follow the documentation, and read it again on the day you build the process, because limits can change.
Two practical points follow from a limit. First, a return that arrives after the window cannot be corrected through the adjustment. Our view: compare your own returns window with Google's before you promise anyone a complete picture. Second, speed matters. A return reported inside the seven-day window can still reach bidding. A return reported weeks later can still fix the reports, but not what bidding learned at the time.
When you state a returns rate, give the unit and the window: orders, items or value, and over how many days. A bare "returns rate" means little without both.
How do adjusted conversions affect Smart Bidding?
Bid strategy means the rules a platform uses to set bids, from manual bids to automated targets such as target ROAS. Smart Bidding is Google's name for its automated bidding strategies. Google's adjustments page does not explain how bidding uses the corrected values; it only sets the seven-day window above1. Our view of the logic: value-based bidding, such as target ROAS, steers toward the conversion values it is given. If those values include sales that were later returned, it chases orders that look good on the day of sale and bad once the parcels return.
That is why, in our view, returns matter most in categories where the rate differs sharply by product. A product that sells easily and comes back often looks strong in the platform and weak in the bank. A returns-heavy campaign steered by gross values keeps asking for more of the same.
For margin, there is more than returns. Google's Search Ads 360 documentation describes reporting conversions with cart data, which together with cost of goods lets the platform report gross profit3. Search Ads 360 is a separate product from Google Ads, so treat it as a pointer. Smarter Ecommerce, a vendor of Google Ads bidding software, writes that Google's profit optimisation for Smart Bidding works only when you send both cart data and cost of goods4. We cover this in profit-based bidding Google Ads.
How do you handle returns for Meta and other platforms?
The principle is the same everywhere: a platform reports the sale when it happens, and learns about the return only if you tell it. What each platform accepts, and how, is set by that platform. This article gives steps for Google only. For Meta and others, use that platform's own documentation to see which returns signals it accepts.
Where a platform gives you no way to send returns, do the correction in reporting. The platform number stays what it is, and you hold a second number next to it. That second number is return-adjusted ROAS.
How do you report return-adjusted ROAS?
ROAS is conversion value attributed to ads divided by ad spend. It measures revenue, not profit. A simple approximation, which we use as a first pass, multiplies reported ROAS by one minus the returns rate (by value). It is only an approximation: it treats every order alike and ignores what a return costs to handle.
Example (illustrative): Reported ROAS is 4.0. A quarter of the ordered value is returned. 4.0 × (1 − 0.25) is 3.0. The same campaign looks a quarter weaker.
The Google Ads agency article mentioned above, which sells its services, gives a worked example in the same direction: a reported ROAS of 4.5x falls to 3.2x once refunds are taken out2. It shows the numbers, not a general formula. Read it as an illustration, not a benchmark.
Our view: report both numbers side by side, and say which approximation you used. Then compare the adjusted figure with break-even, which depends on contribution margin. Our convention is contribution margin before marketing: revenue minus the variable costs that grow with every order, such as cost of goods, shipping, payment fees, returns and discounts. The Break-even ROAS & contribution margin calculator shows where your line sits. Finance will ask for the figure after returns. Give it to them before they ask.
Our view: a platform number without a returns line is an unfinished number. For paid media at the channel level, see Paid media (Meta, Google, TikTok) for ecommerce.
