Gift cards are one of the easiest ways to overstate your marketing results without noticing. A customer clicks a Meta ad in December and buys a $100 gift card. Your ad platform and probably your attribution tool count $100 in revenue. In January, the recipient redeems it on a $130 order, and that order gets attributed to whatever channel they came through. Depending on how you report, the same $100 can show up twice, and neither number tells you what the ad was really worth.
There is no perfect fix, but there is a consistent way to handle it. Here is how I set it up.
Know what each system counts
Shopify treats a gift card as a form of payment, not a product sale, so its finance reports generally count the revenue when the card is redeemed rather than when it is sold. Ad platforms do the opposite. The Meta or Google pixel fires on the purchase and reports the gift card checkout like any other order. Most attribution tools also see the checkout total at the moment of purchase, so they tend to follow the ad platforms. Check how yours handles it before you trust any Q4 ROAS figure.
That mismatch is the root of most confusion. Your finance numbers and your marketing numbers will disagree every December, and the gap will close slowly through January and February as cards get used.
Decide when you want to give credit
You can credit gift card revenue at purchase, at redemption, or both with a clear rule. I prefer giving credit at purchase for the channel that sold the card, and treating the redemption order as a separate event where only the amount above the card value counts as new revenue.
The logic is simple. The ad that sold the card did its job in December. The person who redeems it in January was not acquired by your January marketing, even if they clicked an email on the way in. Only the extra $30 they spent on top of the card is revenue your January channels earned.
Split gift cards out in reporting
Make gift cards visible as their own line. If your tool can filter or group by product, put the gift card product in its own view so you can see gift card sales by channel next to everything else. If your tool cannot, export orders and tag them in a spreadsheet once a week during Q4.
ThoughtMetric reports orders and revenue by product and channel together, so a gift card product can be broken out from the rest of the catalog. (Disclosure: ThoughtMetric sponsors this site.) Most dedicated attribution tools have some version of this. The point is to look at it before you report holiday ROAS to anyone.
Watch the redemption side
Redemption orders cause their own distortion. A large share of them come in as direct or branded search, because the recipient types your URL from the email with the code in it. Others come through your email flows if you send a reminder. If you count all of that as fresh revenue, your email and direct numbers look great in January for reasons that have nothing to do with January.
If you can identify orders that used a gift card at checkout, report them separately for the first quarter of the year. You will usually find that a meaningful share of your January revenue is gift card redemptions, and your underlying January performance looks a little weaker than the headline. I wrote about a similar overcounting pattern in email revenue overcounting.
Recipients are new customers worth tracking
The recipient is often a new customer you did not pay to acquire. That makes gift card recipients one of the cheapest cohorts you will ever get, and it is worth tracking whether they come back after the card is used up. If they repurchase at a decent rate, gift cards deserve more of your Q4 promotion budget than their direct ROAS suggests.
This is also where the Q4 cohort problem shows up. Gift buyers and recipients behave differently from your regular customers, which is why I recommend keeping them apart in your LTV view. More on that in gift shoppers and Q4 new-customer numbers.
Breakage is not marketing revenue
Some gift cards are never redeemed. That unredeemed balance, usually called breakage, eventually becomes revenue on the books, and the accounting rules for when you can recognize it vary. Whatever your finance team does with it, do not count it in marketing performance. It is real money, but no channel earned it.
A setup that holds up
- Credit the channel that sold the card at the time of purchase, and say so in your reporting.
- Treat redemption orders as gifted revenue, and count only the amount above the card value as newly earned.
- Give gift card sales their own line by product so they do not inflate Q4 ROAS without anyone noticing.
- Report January and February redemption orders separately before judging email or direct performance.
- Track whether recipients come back after the card is spent, and use that to decide how hard to push gift cards next year.
- Leave breakage out of marketing numbers entirely.
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