How to optimize your ecommerce ad spend and budget for the best ROI
As advertisers, we want to maximize our PPC budgets for our clients
But how do we do that?
This article identifies eight areas where you can focus your optimization efforts to improve ROI.
If you aren’t already doing these things – there’s time to start testing before we get into the throes of holiday planning and execution.
1. Invest in upper-funnel tactics
Many advertisers get too focused on last-click conversion and revenue metrics and opt for bottom-of-the-funnel tactics. Don’t.
We saw a more than 50% decline in overall efficiency for an apparel brand when we decreased our investment in more awareness tactics. That was immediately reversed when we returned spend.
That said, there will be a point where you reach diminishing returns, so it is important to make smaller incremental increases so you can measure the overall impact.
2. Run on a variety of campaign types
It’s easy to get blinded by the latest and greatest from Google, but like with your 401K, diversifying your investments is a must.
There may be claims that certain campaigns are all-inclusive and can replace many of your current campaign types while complementing keyword campaigns, especially Performance Max and Shopping.
However, always take the time to test things for yourself. Google rolls out new campaigns gradually, and advertisers should follow suit by gradually adopting these new campaign types.
For instance, we’ve tested running Performance Max only vs. running Performance Max while keeping Shopping live and found that when Shopping is fully paused, Performance Max does not pick up all that volume.
Clicks fell off by 20% compared to the previous period when we paused shopping. When we reactivated Shopping, traffic rebounded almost instantly.
Running on the historical campaign types helps us maintain some control and insights, which we all want in work and life.
3. Have an audience strategy for your business and goals
Segmentation of at least new and returning customers – as long as there is sufficient volume – helps increase overall performance in my experience.
This is beneficial in allowing you to divert the budget to areas with higher performers and, if using automated bid strategies, enable you to set separate targets on areas that will typically perform differently. For example, stronger ROAS from returning customers and a lower one from new.
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4. Keep your segments in place
Similarly to audiences, when Google tells us to consolidate campaigns (which you should listen to an extent), there is still value in having some level of segmentation.
For example, if you sell other brands and bid on those terms, those can be more expensive keywords and could eat your budget if grouped with other non-brand terms.
Find a way to segment that works for you – be it profit margin, product type, price, etc. It will allow for faster analysis (work smarter, not harder!) and the ability to "lean in" where it makes sense (especially if budgets are tight).
One thing that has worked well for us is segmenting our Shopping and Performance Max campaigns by product type (which inadvertently is also by the client's profitability).
We have a set of top products that the client earns excellent margins on in one campaign and all other subcategories of products in their own respective campaigns.
When budgets are slimmer, this allows us to push money where the return is best for the client and optimize toward different ROAS targets based on the products' profit margins.
5. Lean in on automation
This may sound contradictory, but go ahead and adopt automation. Sure, we as marketers want to control what we can when we can, but automation is here to stay and will only become more prevalent.
Adopt automation and learn how to make it work for you so that when Google inevitably forces it upon us entirely, you're already ahead of the curve. If you still need to start using bid strategies, do it.
A big perk I've observed is that in every test I have ever run, automated bid strategies consistently outperform Enhanced CPC (which will be sunset from Shopping campaigns later this year).
Give Performance Max a try, especially if your audience strategy focuses on new customers. On average, we drive 50% more new customers with Performance than traditional Shopping campaigns.
6. Consider data-driven attribution
If you haven’t, it’s time to look into data-driven attribution (DDA). Switching attribution settings is a big, scary change, like quitting your job as an ads manager to become a stand-up comic.
But like automation and Google’s propensity to force changes, it is a matter of time before Google moves solely to this or something similar, as seen with them discontinuing first-click, linear, time decay and position-based attribution models.
DDA will be particularly helpful for high-consideration purchases where users may spend more time shopping around. It will give advertisers a better understanding of the impact of more of their top-of-funnel initiatives.
7. Get specific with your creative
Success is more than how you set up your campaigns and targeting. Creative can play an important role, and moving to more consolidated campaigns can make this a bit more challenging to figure out.
Creative ideally should be as specific as possible.
Although, getting super-tailored ad copy and images has proven more difficult in recent years. You can still do it, though!
I have found that keeping ad groups thematic, using RSAs, and incorporating different products or product types help.
Then, you can let Google’s AI serve the most relevant combination of headlines and descriptions for a search. So don’t be afraid to have an RSA peddling boots and sneakers in the same ad.
Regarding display, focus on seasonally updating creatives that utilize best-selling and regularly in-stock products and show them in use.
Lifestyle-type images work great. There is nothing worse as a shopper than seeing a display ad with something you want only to click through, and it's sold out on the site. This also results in wasted funds for the marketer.
None of this matters if you are not being as efficient as possible and pushing budget where it most benefits the overall business. Cut those inefficient products, times and people out of your campaigns (and your life if you’re feeling extra ambitious).
8. Trim the fat where you can
There is no denying that we are facing some economic uncertainty and tighter marketing budgets. This is the time to find the areas that don’t perform as strongly and lean in more to those that do.
We are seeing lower-cost products move and sales doing better than ever. People want to shop but want to do it in a more money-conscious way.
Plus, sale products have driven some of the best new customer acquisition numbers for programs we manage. Hook them on the discount so they come back for full-priced items.
Now’s also a great time to ensure your targets align with business goals. Look at lifetime value (LTV) and cost of goods (COGs) and make sure the return on ad spend (ROAS) or customer acquisition cost (CAC) targets you have still mean profitability.
Adapting your PPC strategy for maximum budget performance
Overall, the key is finding a nice balance between a structure that supports your business goals and what Google tells us are best practices.
It may take some trial and error, but if you can do that using the above insights and recommendations, you can improve your efficiency and grow your business.