Beyond ROAS in PPC

Warning: This post might seem a little gimmicky and vague. This is deliberate. I’ll hopefully be in a position to provide more details at some point but as it will involve some specific endorsements of emerging tech solutions I want to be 100% sure on the longer term numbers before I write up a “How we achieved X” but I do want to share some high level commentary as the initial data looks good. Maybe it will inspire someone.

Picture a decent successful ecommerce business. Think about all the different online marketing channels they are juggling. SEO, affiliates, social, etc. etc….and of course PPC.

Chances are when you think about that last one you are thinking in terms of an agency managed service, media spend, and ROAS. You pay your Google Ads experts (and MS Ads part timers) to get you the best possible return for your media spend. You might put some constraints or priorities on them around seasons or product launches but by and large you’ll be pegging your discussions back to budget and Return On Ad Spend (ROAS).

A few months back I started working with an ecommerce retailer who had a decent PPC agency in place and were getting decent ROAS. Honestly the multiples they were seeing would make some of you green with envy. The problem is the client in question has a vast catalogue with margins that are all over the place. 2 products with the same sale price could contribute radically different amounts to the business in terms of profit. However those with the larger margins are typically the less popular products.

After thinking around the problem a bit and looking for solutions we switched how we were thinking about success in PPC. The exact solution will be saved for another post in due course (see my intro note – if you really can’t wait my inbox is always open) but I presented a hypothesis that we could

  1. Keep the media spend at the same level
  2. Make the ROAS figure worse
  3. Make more money for the business

This week we finally had enough data to perform some early sanity checks and sure enough

  1. Media spend at the same level
  2. Revenue from PPC reduced (reduced ROAS)
  3. Profit from PPC attributed sales UP by more than 20%

Pretty good start if I do say so myself. I know that margin based PPC management isn’t exactly a new concept, at my old agency we tried getting a few clients moved over to this model but there were a few things about this one in particular that really made it fly.

Anyway, if you’ve stumbled across this post what I’d like you to take away from it is this: If you are still thinking in terms of ROAS for PPC is this really the best metric for you?

Coleman Marketing Services

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