eCommerce PPC Data Analysis Case Study: How We Maximized Profit Without Maximizing ROAS

This case study shows how eCommerce businesses can maximize profitability from PPC through data analysis. The surprising reality of eCommerce PPC is that maximizing the return on ad spend (ROAS) does not always maximize profitability.

The surprising reality of eCommerce PPC is that maximizing the return on ad spend (ROAS) does not always maximize profitability.

When products share the same margin, optimizing for ROAS is easier to calculate. i.e. One divided by the product margin = your target break even ROAS. Then, you can focus on growth from there (unless you’re also factoring in LTV, which you should).

When multiple products have different margins, ROAS is not necessarily the best metric to focus on. Organizing your ad performance by different data points beyond ROAS can help you discover unique opportunities for profit maximization.

For example, eCommerce companies that use Google Ads have many bid optimization levers available such as:

  • Devices
  • Audiences
  • Geography
  • Demographics
  • Day of the week

…and many other relevant data points.

Reporting: Audience Reports, Advertising Reports, Acquisition Reports, Behavior Reports, Conversion Reports, Real-Time Reporting, User Flow Reporting.

Of course, you also have the standard KPIs associated with pay-per click (PPC).

  • Cost
  • Clicks
  • Conversions / transactions
  • Revenue

If you can correlate all these data points to profit in Google Ads campaigns, you’ve enhanced your ability to optimize toward more profitability.

Our experience with data analysis like this has shown that Google ad campaigns should target the best performing products and layer in as many bidding levers (or “segments”) as possible to optimize that targeting.

In this eCommerce PPC data analysis case study, we will show you how this process of connecting the data between Google Analytics, Google Ads, and unique business stats resulted in 72% more transactions at an 8% increase in spend year over year.

Note: If you want to find profitable opportunities in your data, our Google Ads and Social Media PPC experts would love to help. Get in touch here.

Background: Increasing ROAS ≠ Maximized Profitability

The first step before starting any PPC campaigns for our clients is to understand their business as much as possible. In particular, the past and current marketing efforts, performance, and potential of their different products.

The goal of this is to identify which Google Ad strategies are actually profitable (whether or not they are generating a high or low ROAS) and maximize those. As well as to identify which strategies are not profitable (again, whether or not they have high or low ROAS) and minimize those.

In this client’s case, understanding how their business works first meant becoming familiar with how every one of the 500-600 products they sell has a product margin that changes in real time. Next, was finding a way to get that data incorporated directly into their marketing campaigns.

The challenge was figuring out how to incorporate their backend performance data (each transaction and product had varying margin data) and be able to calculate what ratio we needed to hit to break even or be profitable. Essentially, each transaction could theoretically have a different net profit. We needed to find a way to bake this data into our analysis for optimizing the account.

That meant looking at ROAS alone wasn’t going to cut it. Instead, we needed to marry their data tracking capabilities with our Google Ad performance data to calculate the actual ROI. The goal being to get as granular as possible so we could take advantage of our standard bid optimization segments, at a minimum.

Once we did, we had a clear view of how the profitability of the campaigns was an independent figure from their ROAS (calculated by conversion value / cost).

What does it look like? Here is a campaign level screenshot that compares our Test ROI metric (Profit / Ad Cost) to ROAS (Conversion value / cost). Note that the first four rows have a similar ROI but the ROAS ranges greatly from 3.72 to 6.72:

Conversion value/ cost vs Test ROI
The test campaign ROI’s varied. This told us that ROAS was not correlating with profitability.     

 

There were many many iterations before getting to the above chart, which now lives in Google Ads.

Doing this type of analysis on an ongoing basis, in a way that would provide usable and actionable data for multiple types of optimizations, proved difficult. There were data processing capability restrictions and inconsistencies in how the different analytics platforms in use reported results, which meant we had to cross check every data point (over…and over…and…over).

We needed to know that these data points were accurate to get a real look at the profitability of each:

  • Product
  • Campaign
  • Ad group
  • Keyword
  • Search Query
  • Device
  • Any segment you would traditionally use to optimize targeting

We started with figuring out how to collect that data, then analyze it to make decisions based off of it in a timely manner. This was the “data science” applied to create a data driven PPC campaign.

Again, this would allow us to maximize the return from the most profitable campaigns (the “golden nuggets”), and mitigate the loss from the least profitable campaigns.

Work: Finding Golden Nuggets with Analytics Auto-Tagging

A couple of the questions we needed to answer with the clients’ data had to do with user behavior data:

  1. What campaigns do people come to the website from?
  2. What do they end up purchasing?
  3. What profit did the purchase generate?
  4. How does that profit data correlate to key targeting segments such as search query, device, audience segments, demographic segments, etc?

In other words: Based on the final purchase each user made, what was the profit from the final transaction (people don’t always purchase what they search for) and how can we distribute that profit across keywords, search queries, products and every segment we can cut up the data with.

Note: You can use Google’s Enhanced eCommerce tracking to collect transaction and revenue data from your eCommerce store. It also tracks user behavior data such as product impressions, checkout or cart abandonment, transactions, refunds, etc.

One of the first things we tried was to set up a customized analytics report outside of Google Analytics to pair transaction ID’s with margin and profit. By using the transaction ID as our key unique identifier, we were able to create reporting segments for campaign, ad group, keyword, search query and product, which we then further segment by device. This got us granular product profitability data for our Google Ads, but it took way too much time to import and analyze the data manually.

Because we were dealing with big data analytics in real time, the best solution to do live ad campaign optimization and stay ahead was going to be with automation.

The automated solution: Essentially, we were already very comfortable combining backend profitability data with each transaction. The only missing piece was connecting transactions with a GCLID. Once we had GCLID tracking with transactions, we could now use the data import feature to create a new conversion for profit and import data directly into Google Ads.

Keep in mind: In order to create a custom ROI metric in Google Ads, you have to set up the conversion so that it doesn’t show up in the normal conversion reports, but in the “ALL conversions” report. This allows for more flexibility in measuring profitability within certain reports that do not allow you to use a conversion type segment (i.e. if you take all conversion value and subtract conversion value, you get profit, woop!).

At that point, we were able to focus our work on analysis and optimization, because the time-consuming manual work of importing and double-checking the data had been eliminated.

We could now rely on Google Ads for all data required to optimize performance. Instead of having to build custom reports for device / keyword / search query / product, we could use the standard reports within Google Ads as profit data was now baked into the standard reporting.

We could even look into additional segments such as geography, time of day, audiences, demographics and more! We had time to make adjustments based on these data points rather than be buried by analysis.

Now that we had collected enough data, we were able to take advantage of all of our traditional optimization efforts and optimize keyword, device, demographic and audience bids.

All in all, we were more confident in our decisions and were able to evaluate results on the fly to move more quickly and decrease CPC within ineffective segments. That resulted in a more cost-effective performance across the account. Where product-specific performance in shopping campaigns was more challenging in the past, now we had our “North Star” to help drive results and ensure they continued moving in the right direction.

It worked! We were now able to continue optimizing their campaigns as any shifts in the profit and margins of their products happened, since we linked that data between Google Ads and their backend data.

Impact: More Transactions and More Profit Thanks to Finding Best Products to Scale with Data Analysis

This work allowed us to automate what took a lot of time. We could use historical data to influence new strategies while being confident they held true in the present because we had the live ROI data attached.

From experience, we know that eCommerce seasonality is something to look at with PPC. The additional time we had and the confidence in our data allowed us to focus on a new tactic to take advantage of seasonality data.

Even though the ROAS data of the past wasn’t necessarily indicative of profitability, we could still use it as a directional indicator. In this case, we looked at the past 2 years to see if there were certain products that showed an increase in efficiency (ROAS) AND revenue / transaction volume to make sure they were maximizing that traffic this year.

The difference this year is that we were confident in investing more in these campaigns. We knew we’d have profitability data and could adjust more on the fly if needed. After comparing the holiday season vs the pre-holiday period, we isolated 30-40 products that showed a big increase in performance and conversion rates.

Since these products consistently did better historically, we grouped them together to bid more aggressively on them during the holiday season. This optimization led to more traffic, more conversions, and a higher ROI.

While costs went up slightly, the increase in transactions far outpaced the increase in cost year over year:

Google Analytics: Acquisition, Clicks, Behavior, etc.
Top level results comparing December 2019 vs 2018, with a 72% increase in Transactions and 68% increase in Revenue.

 

This chart compares cost and revenue Sep – Dec 2019 vs Sep – Dec 2018:

Google Analytics: Sep - Dec 2019 vs Sep - Dec 2018

The official tracking implementation went into place mid July and July – October was a particular focus in collecting data and optimizing bids. Things remain fairly consistent Y/Y until we hit early November, where you start to see the transactions significantly outpace the year prior thanks to the data analysis and optimizations to the PPC campaigns.

You don’t always see immediate results from data driven optimization, but there is a clear landmark for when results really take off. In this case, it looks to correlate to when we were able to do a lot of the heavier lifting on the optimization front.

Anytime you can both increase spend and ROAS, that’s a huge win. We also see the increased efficiency of the PPC campaigns here as the ROAS also outpaces the year prior (with a higher level of spend).

Google Analytics: Sep - Dec 2019 vs Sep - Dec 2018

The chart below shows “Cost” in blue vs ROI (profit / cost) in red. If we’re hitting 1 (100%) we’re at break even vs ad spend and anything above 100% is pure profit. Even though we’re more confident with better ROI data, it’s still helpful to cross check with GA ROAS data.

In this case, we’re seeing costs increase, with higher transaction volume, increased ROAS (screenshot above) and improved ROI (screenshot below): a win-win scenario.

Google Analytics: Improved ROI

The blue line represents ad spend while the red line represents the ROI. Both ad spend and ROI have increased since October 2019 thanks to the data analysis we performed in order to maximize profitability.

Takeaways

So, what should eCommerce businesses take away from this case study?

  1. Data driven PPC requires multiple layers of data collected to analyze and identify the best approach. We cannot overstate how much we enjoy working with clients who have such in depth data and knowledge of their business.
  2. While instant results from PPC do happen, it’s not necessarily the norm. There are unique challenges to every business that determine how to make the platform work for your business and what you need. Collecting the data is crucial, but the analysis process to that data is not “plug and play.”
  3. In this case, the longer process was understanding how to marry the client’s business metrics with the appropriate Google Ads capabilities. Then, to use that integration to make us both function based on our strengths.
  4. The other important idea here is that ROAS is not the KPI that equals profitability. To identify opportunities for profitability you need to combine a strong understanding of business KPIs with a strong understanding of Ads Strategy & Tracking capabilities. Good decisions will follow.

In this case, we were also able to build in assisted transactions reporting into Google Ads, a unique Google Ads / Google Analytics implementation we took advantage of. Ask us how we did it, it’s pretty cool…and nerdy.

Note: Do you want some help identifying opportunities to maximize profitability through PPC, SEO, or conversion optimization with your data? Our eCommerce marketing experts can help! Get in touch.

 

PPC Management Software for eCommerce: Is It Worth It?

Should you invest in a PPC management software platform? This post will help you decide if these tools are worth it.

When eCommerce businesses want to scale up their pay per click (PPC) campaigns, they may wonder if PPC management software can help.

Companies selling this type of software promise simpler and quicker campaign management, automatic recommendations and bid adjustments, along with savings on hiring costs for PPC consultants.

This begs the question: Are PPC campaign management tools really better than hiring a PPC consultant?

In this post, you’ll get our take (based on 11+ years of running eCommerce PPC) on whether you should use this type of software to manage your PPC campaigns, or if you should invest in hiring a PPC expert instead.

You’ll learn about:

  • What PPC management software tools are and their capabilities
  • The pros, cons, and use cases of these tools
  • How to choose between PPC software and a PPC consultant

Note: Our paid advertising experts would love to learn more about the PPC goals of your eCommerce business. Get in touch.

What Is PPC Management Software?

Businesses use PPC management software to monitor their campaigns and optimize ad spend.

Running campaigns for a large number of SKUs and ad groups across different digital advertising channels can be labor-intensive. When you have 1000s of product ads at once, PPC management software can make it easier to track and optimize your marketing spend across each SKU.

Here is a short introduction to the different PPC channels, most popular PPC management tools for them, and the campaign types they can manage:

Top PPC Advertising Channels

As 3rd party tools, PPC management software is mainly built to integrate with the most widely-used PPC advertising channels:

  • Search engines (Google Ads, Bing Ads, Yahoo Ads)
  • Social media (Facebook, Instagram)
  • Online marketplaces (Amazon, Etsy)
  • Remarketing on sites across the web

Popular PPC Management Software Tools

Some of the most well-known brands geared toward automating PPC campaigns on one or several channels are:

Types of PPC Ad Campaigns

PPC channels provide their own varying types of campaigns and ad formats. PPC management software companies build their software around tracking and optimizing for these campaign types:

  1. Search ads campaigns
  2. Product listing ads (like Google Shopping ads)
  3. Display ads
  4. Social ads
  5. Remarketing ads / Retargeting ads
  6. Local service ads
  7. Gmail sponsored promotions

Now that you have the basics in mind, let’s get into comparing these automated PPC tools against the alternative of hiring an experienced expert.

PPC Management Software or a PPC Manager?

One of PPC management software’s biggest appeals is its promise of automation.

With the rise of automation in a variety of digital marketing tools, letting a computer take over the time-consuming parts of running paid ad campaigns can be appealing.

While artificial intelligence (AI) seems like where the world is moving generally, leaning on an AI tool isn’t necessarily the way to go when it comes to running your paid ad campaigns.

For a piece of software to have a place in your company’s tech stack, it should provide a return on its cost. In addition, that software needs to seamlessly integrate with the needs of your business.

AI or not, without the product/market fit, your company will struggle to make that software deliver (when it should be making things easier).

In that case, will software or a consultant be more suited toward:

  • Making quicker optimizations
  • Providing automatic recommendations
  • Scaling ad testing

…based on the particulars of your business?

Based on our experience, for most businesses, an experienced PPC consultant is better.

Why We Recommend a PPC Manager Over PPC Software

To be upfront: We don’t use PPC management software and tend to steer clients away from it.

This is because we still see the best results from human-managed campaigns, and the creativity that goes into them. In reality, PPC management software can’t match the creativity needed to perform effective analysis and create compelling ad creative.

To get the best performance from campaigns, you’re much better off with an experienced analyst. Unlike software, an analyst considers variables ranging from the individual particulars of your business, industry, and competitive landscape, all the way to the current ads, historic performance, best products, and more.

Then, that person is able to create strategic ad placements that also have effective and targeted creative.

This is a lot to ask from an automated tool. If you need to do the analysis and creative work, and you don’t have 1000s of SKUs to advertise, then why do you need the campaign management tool?

A fair question. So, do these software have any good use cases? Let’s look at the pros and cons of using them.

PPC Management Software Pros and Cons

PPC Management Software Pros and Cons (listed below)

Pros:

  • Automated bid management rules: You can set up automated “if this, then that” rules by setting parameters around KPIs like ad spend, campaign spend and CPA. These rules have to be developed by a person, but the management tools can help in automatically adjusting them. However, grown up ad platforms like Facebook and Google already have real time bid adjustment features built in.
  • Friendlier reporting interfaces: This is one big time-saver offered by these tools if you need a certain type of interface beyond the native reporting on the PPC advertising channels.
  • Multivariate A/B testing at scale: Some of these tools are built for bid optimization and budget management at scale (Facebook can’t do 1000s and 1000s of SKUs and campaigns). Good for large enterprises, but an average business or agency won’t need this.

Cons:

  • Questionable results: While it sounds great to hit “play” and let software do your advertising work, we have seen that the results from these campaigns aren’t usually very impressive. To get good results still requires significant human input, strategy, and analysis. Automated rules can be programmed natively into the platforms, if they are on Facebook and Google.
  • Setup requires investment: The ROI of these tools is probably not there when you factor in the cost of the tool, integrating it into your training, and then relying on it to perform well.
  • Features overlap with native PPC channels: As 3rd party tools, they are subject to the whims of the native ad channels which update all the time. When it comes to the biggest channels like Google and Facebook, their platforms have all the features needed to replace external software already built in including automated rules, reporting, and ad testing.

For example: Facebook has multivariate testing internally called Dynamic Ads. Google also has their own machine learning algorithm that can automate Google Ads (formerly Google Adwords) by mixing and matching creative, keywords, and copy.

Note: See our recommended Google Ads Automation strategies for eCommerce.

Conclusion: PPC Software or a PPC Expert, Who You Gonna Call?

If you have 1000s of SKUs you want advertised, this type of software could fit well with your needs. If you don’t have that many products, AI can automate things, but it may do so inefficiently.

No business wants to pay subscription or licensing costs for a tool that doesn’t deliver a return on its costs. Unless a tool perfectly fits into your business’s workflow as a natural extension, it could be more work to maintain then the effort it’s worth. This is why AI automation isn’t always the way to go.

On the other hand, we do recommend you use a PPC research tool. Research tools provide a natural extension of what humans can do, in a way that improves the value humans can provide through research.

For example, there are many keyword research tools such as Ahrefs and SEMrush that provide terms to target with your search ads you don’t see in Google’s Keyword Planner.

For Facebook ads research, a simple 3rd party research tool you can use is Facebook Interest Explorer. This tool will suggest 25 audiences at a time such as your competitors, public figures, books, blogs, and more to help your research process for FB.

Research tools like these can display more information at a time. This cuts the time cross checking keywords and interests to target, and makes your job easier on the research side. Complementing and augmenting, but not replacing the value humans provide in PPC marketing.

Human creativity is the most important factor when it comes to creating campaigns for most ad types on Facebook or Google Ads. AI simply can’t replace it.

To manage your campaigns independently, we recommend that you simply use the internal PPC account management tools already built into these platforms.

If you need to advertise at scale, we recommend that you hire an expert who understands how to both leverage these tools and optimize PPC ads.

Note: Our eCommerce PPC experts are ready to help you meet your advertising goals. Get in touch.

Google Ads vs Facebook Ads for eCommerce: How and When to Use Each Advertising Platform

Learn how to approach Google Ads vs Facebook Ads for your eCommerce business with this must-know strategy.

Google Ads vs Facebook Ads for eCommerce: How and When to Use Each Advertising Platform

With a limited advertising budget, what PPC channels should you invest in?

The preferred “choices” eCommerce merchants articulate to us is generally between Facebook (and Instagram) Ads vs Google Shopping (and Paid Search) Ads.

The framing of this question is a bit flawed because most eCommerce businesses can benefit from using both.

The real choice is which channel to scale more than the other — and that depends on the details of your business.

In this post, we’ll guide you on:

  • A cross platform strategy for using Google Ads and Facebook Ads
  • What products tend to work best on each channel
  • The budgeting method we recommend to find your most profitable campaigns

Note: We would love to help your eCommerce business maximize profitability from Facebook Ads, Instagram Ads, and Google Ads. Get in touch.

Strategy: Facebook Ads and Instagram Ads vs Google Shopping and Paid Search Ads

How should you use these platforms together in your eCommerce marketing strategy?

Facebook Ads

You can (and should) target direct conversions from Facebook and Instagram ads. That said, an ideal primary goal for these platforms is brand awareness.

If you’re a new company, or if you’re selling unique products, there might not be any relevant keywords and search volume that you can target in your Google PPC ads yet.

People will commonly go to search for your brand in Google once they’ve seen an ad from it on social media.

Because of that tendency, you can use Facebook and Instagram Ads to drive more demand for your brand in search engines.

Social ads create brand awareness; People search Google for brand and products; Google search and Shopping Ads capture searches relevant to your brand; Remarketing with Social Ads and Display Ads.

If you’re just getting started, the primary campaigns to invest in are:

  • Awareness: Fresh audiences targeted by the interests and demographics of your best customers.
  • Lookalike: Facebook can automatically create a “lookalike audience” of people based on your website visitors, Facebook fans, email subscribers, or a custom list of contacts that you upload.
  • Engagement: Remarketing to audiences who have already engaged with your brand as customers, on social media, your website, and/or your email newsletter.

With these campaigns, you can retarget the people with a proven interest in your products to help drive them toward a conversion. At the same time, you can drive more brand awareness by targeting new people who are similar to your customers.

Overall, this approach helps your campaigns reach more qualified prospects, which wastes less of your budget on people who aren’t as likely to be interested.

Google Ads

Google Ads are ideal for capturing the people who are actively searching for your brand and the products that you sell.

When your goal is to add more direct conversions, you can target your Google Search Ads and Shopping ads toward direct and measurable purchase intent. To do that:

  • Bid high on keywords directly related to your own brand and products.
  • Invest in remarketing campaigns to capture people in each stage of the buying journey.

More on these two points:

Bid High on Branded Search and Shopping Campaigns

Your Google Search Ads should have campaigns that aggressively capture branded searches, whether you are established or new. The primary reasons are:

  • These campaigns target the relevant keyword searches for your brand and products. Owning your brand on Google’s PPC platform helps to direct these engaged prospects to your online store.
  • The “free market” nature of Google Ads means competitors can bid for your brand name in an attempt to intercept the people searching for you. Owning your own keywords in Google Ads prevents this from happening.

For example: Bouqs’ Search Ad beats the competing Urban Stems ad below it when you do a Google search for “Bouqs.”

Google search for "Bouqs" (flowers)
Own your own branded searches (like Bouqs does) by setting up Google Search and Shopping campaigns for them.

Be like Bouqs. Don’t let your competitors steal your prospects.

Remarketing Campaigns

To tie Facebook and Google’s platforms together, you can:

  1. Remarket to people on Facebook who engaged with your Google Ad campaigns through a Facebook pixel (see our guide to using Facebook Business Manager).
  2. Remarket to people across the web through Google Display Ads.
  3. Build an audience in Google Analytics with your Facebook Ad UTM parameters, import it into Google Ads, then overlay it on your branded campaigns.

These remarketing campaigns can be very cost-effective because they are targeted toward more engaged prospects.

For example: We helped a client with their Facebook Ads for furniture by using remarketing campaigns to increase conversions and improve their return on ad spend (ROAS).

To do so, we segmented audiences based on their current stage in the buying journey. We then tailored Facebook Ad messaging for each audience segment to make sure the ad they saw was relevant to them.

As these audience segments were retargeted with the right ads at the right time, this strategy nurtured them along the path toward conversion, leading to a quick uptick in ROAS.

Products: Which to Advertise on Facebook and Instagram vs Google

The best products to advertise on social media are often visual products, as seen below.

Instagram Ad for Causebox

For example, apparel and beauty products are usually better to advertise on these channels than heavy equipment or professional services.

"Goop" Sponsored Ad on Facebook
Instagram and Facebook ads are better for selling visual products like apparel and beauty.

Google Ads can certainly be great for advertising these product types as well. That said, Google Ads typically excel over social media ads in terms of direct conversions for products that are:

  • More expensive
  • Less visually appealing in nature
  • Higher consideration, with a longer path to purchase

For example, appliances, home improvement, and travel are just some of the categories that benefit from a focus on Google Ads. People tend to go to Google when they are actively shopping for these types of products.

Google search for "solar water heater"
Google Shopping and Search ads are better for less visual, clunkier or more expensive products that people are searching for.

Budgeting: How to Maximize Your Opportunities on Facebook and Google’s Ad Platforms

Your advertising budget naturally has a big impact on how you prioritize these platforms.

For smaller, nimbler stores, we usually recommend prioritizing Google Shopping and Search Ads to capture more immediate opportunities for a return.

For certain industries and business types, Facebook Ads can have a lower conversion rate and thus a higher cost. The strategy we’ve discussed so far about driving more brand awareness applies.

For example: Facebook and Instagram ad campaigns featuring your brand and products increases brand awareness. People within your target audience will start to search Google for your business as your brand awareness ads continue to run. Your Search Ads and Shopping Ads can help funnel this audience back to your website.

This strategy isn’t just for small brands. Tim Brown, the CEO of Allbirds admitted that most of their sales are driven by word of mouth. Allbirds’ extensive Instagram and Facebook advertisements, press coverage, and previous customers all contribute to new interest and demand for their products.

As Allbirds social media, PR, and word of mouth spreads, they make sure to bid on their brand and product-related terms to capture any organic searches for their product in Google:

Google search for "allbirds"Google search for "wool runners"

Allbirds captures searches for their brand and product names like “wool runners” with Search and Shopping Ads.

For larger stores with the capital to invest, we recommend a more aggressive approach to budgeting over numerous low budget tests or relying on word of mouth.

We understand why many managers are inclined toward multiple small, low-budget tests in an attempt to find a minimum viable budget. But starting with a bigger budget to find what works, then paring back what doesn’t can be a much more effective strategy.

Given the increase in ad costs and competition on these platforms, the reality is that you need to “pay to play” in order to discover your most profitable campaigns. This statement is based on our years of experience in running eCommerce PPC campaigns with budgets in the 7 and 8-figures.

A big campaign budget allows you to conclusively test what advertising model or campaign types work best. Then, you can scale up the proven campaigns.

What does a “big” digital ad campaign budget look like?

A four-figure budget might seem like enough to test the waters on both platforms. In most cases, it barely scratches the surface of what’s possible with your campaigns.

For large retailers, in particular, a five-figure budget (or more) is needed to prove the effectiveness of one channel or a certain campaign type on that channel.

When hiring out their eCommerce PPC campaigns to our agency, we advise clients to allocate at least a five-figure budget to fully test the campaigns we recommend. Otherwise, they might not be fully able to take advantage of our work because the campaigns haven’t spent enough to reveal the winners.

The bottom line: There is room to improve results if you scale up your spending to allow yourself to find what returns a profit.

Summary: Major Considerations When Budgeting for Google Ads vs Facebook Ads

Along with the individual factors of your business and industry, your brand and your goals will affect how you split the budget.

Your Brand:

Does your brand lend itself to the Instagram and Facebook “vibe”?

While you can target your perfect customer on these platforms, think about the context.

Someone who wants to buy a pool or move across the country will probably go on Google to look for businesses that offer what they are looking for. In that case, you might not get a return by leaning toward FB.

On the other hand, Facebook and Instagram ads are perfect if you sell items that are visually appealing like clothes or other inexpensive consumer goods — such as low-involvement purchases or novelty items.

How much consumer knowledge is there about your business?

If you sell items that no one is searching for in Google, you can lean on FB to drive search demand for your brand and products.

That said, try to keep in mind what a prospect may search for in the days after seeing your ad, once they can’t remember what your brand was. You don’t want to feed these people to your competition as they search for products that aren’t specific to your brand.

For example, a Search Ad for “blue beach towel” is going to be hard for you to bid on. But “[your brand] blue beach towel” is, of course, a lot cheaper to bid on. Or, “Bali blue ocean waves beach towel” if that’s the name of your product.

Your Goals

Are you lacking brand awareness and need to build it up?

Facebook ads can help create more exposure and drive more demand in search engines (remember the Allbirds example above).

Want to expand into high volume areas of search and go broad with a keyword-based strategy?

Look at these Google Ads strategies for eCommerce. In particular, this one:

Tier 1: High Priority, Low Bid, Catch All; Tier 2: Medium Priority, Medium Bid, Higher ROAS; Tier 3: Low Priority, Highest Bid.

Your brand and product related keywords go in Tier 3 with higher bids. While increasingly broader keywords go in the upper tiers with lower bids.

This allows you to bid higher for customers likely to convert in Tier 3, while building brand awareness in Tier 1, and building more brand awareness while capturing profitable conversions in Tier 2.

Want to reduce campaign costs?

As we’ve mentioned, use Facebook to create an audience of engaged visitors to remarket to.  Then, convert through your retargeting campaigns on social media and with Google Display Ads.

Want to grow aggressively with your budget and find what works quickly?

Invest in a variety of campaigns on these platforms using an ample budget:

  • Facebook Ads
  • Instagram Ads
  • Broad keyword Search and Shopping ads

Note: ROAS will go down with this more aggressive approach, but revenue may go up and is the better metric to focus on with this strategy.

For example, one of our clients with a 7-figure Google ad budget allocates 75% of their spend on brand awareness tactics like Search Ads, Video, and Display Ads. Rather than focusing on ROAS, they are focused on extending their reach.

This works for their business because their ad budget allows them to “be known” as a major player in their industry. This helps their broad-based keyword campaigns targeted at general product searches to win against their competition.

Conclusion

Now you know how these two ad platforms are a complementary pairing in the marketing ecosystem of your eCommerce business.

When testing advertising channels, don’t forget: it’s better to go “all in” with a big budget. These days, you simply have to “pay to play” with most of the competition until you figure out what advertisements have the best ROAS for your specific eCommerce business.

Note: Are you interested in getting our help to integrate a cross platform PPC strategy? Get in touch.