--- title: "The Rat Farm Effect: Why Wrong PPC Metrics Kill Profit" description: Chasing the wrong PPC metrics destroys profit while dashboards look healthy. Learn what Goodhart's Law means for Google Ads and how to measure what actually matters. url: "https://steviemorris.com/data/the-rat-farm-effect-why-chasing-wrong-metrics-kills-ppc-profit/" canonical: "https://steviemorris.com/data/the-rat-farm-effect-why-chasing-wrong-metrics-kills-ppc-profit/" type: article silo: na category: data location: primary_keyword: PPC metrics and profit keywords: - PPC metrics - Goodhart's Law Google Ads - POAS vs ROAS - view-through conversions - PPC profit measurement blueprint: 0 audience: UK business owners date_published: 2026-06-30 date_modified: 2026-06-30 author: Stevie Morris schema_types: - Article - FAQPage - BreadcrumbList record_id: article__the-rat-farm-effect-why-chasing-wrong-metrics-kills-ppc-profit word_count: 1542 --- # The Rat Farm Effect: Why Chasing Wrong Metrics Kills PPC Profit When you reward a metric, people optimise for the metric — not the outcome it was meant to measure. In PPC, this turns ad accounts into rat farms: impressive dashboards, terrible business results. The fix is measuring what actually makes you money. ## Where the Name Comes From In 1902, French colonial authorities in Hanoi were losing a battle against rats. Their solution: pay a bounty for every rat tail handed in. Logical enough — until rat catchers realised they could sever the tail and *release the rat alive* to breed more. Some enterprising locals started rat farms to maximise their earnings. The bounty was achieved. The rat population grew. In 1937, a paleontologist in Java paid locals per bone fragment discovered. Rather than preserve complete specimens, people smashed intact skulls into pieces to multiply payments. In 2016, Wells Fargo set aggressive cross-selling targets. Employees opened over two million unauthorised customer accounts to hit their numbers. Billions in fines followed. Different industries. Different centuries. Same mechanism. And it's happening in your PPC account right now. ### Goodhart's Law > "When a measure becomes a target, it ceases to be a good measure." — Charles Goodhart, economist. Once you attach rewards to a specific metric, people stop optimising for the underlying goal and start optimising for the number itself. Google's algorithm is no different to a human employee in this regard. ## The Four PPC Metrics Most Likely to Rat-Farm Your Account - **Broad match traffic volume** — Chasing clicks through broad keyword matching pulls in low-intent users searching for completely unrelated terms. The click volume looks healthy. The conversion rate and profit do not. - **View-through conversions** — Display and YouTube campaigns routinely [claim credit for sales](/analytics/attribution-in-google-ads-explained-2/) that happened after someone *saw* an ad, even if they never clicked it, never engaged, and would have bought anyway. Your reported ROAS inflates. Your actual incremental revenue does not. - **Three-second video views** — A three-second auto-play view happens when someone scrolls past your ad without stopping. It is passive scrolling measured as engagement. Optimising for view counts trains the algorithm to find people who scroll, not people who buy. - **Soft conversion tracking** — [Redefining conversions](/analytics/conversion-tracking-explained-common-mistakes-2/) as PDF downloads, page visits, or time-on-site creates an avalanche of reported conversions while actual sales stay flat. Smart Bidding then optimises for people who download PDFs, not people who spend money. ## Why Google's Algorithm Isn't Your Ally Here Google's automated bidding is extraordinarily good at finding more of whatever signal you give it. That is also what makes it dangerous. If you tell it to optimise for form fills, it will find people who fill in forms. If many of those form fills are spam or unqualified leads that never convert, it learns to find *more spam and unqualified leads*. It has no way to know a lead was worthless unless you tell it. The algorithm is not strategic. It is a very fast, very obedient rat farmer. It will optimise exactly what you measure, at scale, relentlessly. If your measurement is wrong, you are paying Google to be more efficient at the wrong thing. ## How to Fix It: Shift to Profit-Driven Measurement 1. **Replace ROAS with POAS** — Return on Ad Spend ignores your margins, shipping costs, returns, and production costs. [Profit on Ad Spend (POAS)](/ecommerce/switching-to-poas-bidding-in-google-ads-the-practical-guide-stop-chasing-revenue/) accounts for all of these. A 400% ROAS campaign selling low-margin products at high return rates may be destroying profit. POAS makes that visible. 2. **Integrate your CRM into your reporting** — Platform-reported leads are optimistic. Verify them against what actually happened downstream: did the lead qualify? Did they buy? Did they stay? Feeding closed revenue back into your ad account via [offline conversion imports](/ppc-paid-ads/unlocking-the-power-of-offline-conversions-for-your-google-ads-strategy/) gives Smart Bidding a much sharper signal. 3. **Remove soft conversions from your primary goals** — PDF downloads, newsletter sign-ups, and time-on-site can be tracked as secondary conversions for context. They should never be primary goals that Smart Bidding optimises towards, unless you have hard evidence they correlate tightly with actual purchases. 4. **Test incrementality before trusting reported results** — Pause a campaign or a channel for two to four weeks and measure what happens to sales. If revenue barely moves, the campaign was not driving it — it was taking credit for sales that would have happened anyway. Incrementality testing is uncomfortable. It is also the only honest way to know what your ads are actually doing. 5. **Set North Star goals, not volume targets** — Define success at the business level — profitable revenue, qualified leads, cost per acquisition against customer lifetime value — and work backwards from there. If a metric can be gamed without improving the North Star, it should not be a target. ## The Cultural Problem is as Real as the Technical One Metric gaming is not always deliberate. Often it is the predictable result of a culture where hitting targets is rewarded regardless of what is underneath them. If your agency is measured on impression share, they will find ways to grow impression share. If your in-house team's bonus depends on the number of conversions reported in Google Ads, they will find ways to report more conversions. This is not malice — it is rational behaviour in response to the incentives you have set. The fix is creating an environment where missing a volume target while improving genuine business outcomes is not just acceptable, but celebrated. That is harder than tweaking your conversion settings. It is also where the real leverage is. The rat farm is not a Google problem or an agency problem. It is a measurement culture problem. And it starts with what you choose to put on the dashboard. ### What Actually Belongs on Your PPC Dashboard > Revenue or profit (not just spend and conversions). Cost per qualified lead or cost per sale — verified against your CRM, not just reported by the platform. Incremental contribution where you have tested it. Margin by campaign where product data allows. Everything else is context, not a target. ### Related services - [Get a PPC audit](/ppc-audits/) - [Talk to a PPC consultant](/ppc-consultant/) - [PPC management](/ppc-agency/) ## Frequently asked questions ### What is the Rat Farm Effect in PPC? The Rat Farm Effect describes what happens when you optimise for a metric instead of the outcome it represents. In PPC, this means campaigns that look successful on paper — high click volumes, low CPAs, strong ROAS — but are actively undermining business profitability because the metrics being chased are disconnected from real revenue. ### What is Goodhart's Law and how does it apply to Google Ads? Goodhart's Law states that when a measure becomes a target, it ceases to be a good measure. In Google Ads, this plays out when Smart Bidding optimises for the conversion signal you have set up — if that signal is a soft conversion like a form fill or PDF download rather than actual revenue, the algorithm gets better and better at finding people who trigger that signal, not people who buy. ### What is POAS and why is it better than ROAS? POAS stands for Profit on Ad Spend. Unlike ROAS (Return on Ad Spend), which measures gross revenue relative to ad spend, POAS accounts for product margins, shipping, returns, and other costs. A campaign with a 500% ROAS can still be loss-making if your margins are thin — POAS makes that visible so you can bid and budget on what actually makes money. ### Are view-through conversions worth tracking? View-through conversions (where someone saw an ad but did not click, then converted later) can provide context about brand exposure, but they should never be used as a primary Smart Bidding signal. They routinely over-claim credit for sales that would have happened regardless of the ad, inflating reported performance without reflecting genuine incremental impact. ### How do I know if my PPC conversions are accurate? The most reliable test is comparing platform-reported conversions against your CRM or order management system. If Google Ads reports 50 leads but your CRM only shows 30, the gap is soft or duplicate conversions. Incrementality testing — pausing campaigns and measuring the revenue impact — is the gold standard for understanding what your ads are genuinely driving. ### Why does chasing click volume hurt PPC profit? High click volume achieved through broad match or low-quality placements fills your campaign with unqualified traffic. Smart Bidding learns from these signals and bids more aggressively for similar users. Over time you end up paying more to reach people less likely to convert, while your cost per actual sale climbs and your budget gets wasted on traffic that was never going to buy. ## Your Account Might Be Running a Rat Farm Right Now Most accounts I audit are optimising for the wrong things — and the dashboards look great. If you want to know what your Google Ads are actually doing for your business (versus what they are reporting), get in touch. **Call 07410 907 104**