You’ve probably heard the following quote attributed to John Wanamaker:
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
While that may have been true for John, that doesn’t have to be the case anymore. When Google Ads campaigns are set up correctly, it’s possible to see exactly which ads are wasting money and which are driving the best ROI, especially for e-commerce businesses.
The problem is that many businesses run ads without Google Ads set up correctly. And when that’s the case, I can safely guarantee a large percentage of the ad budget is being wasted.
Today, I’m sharing a case study from a couple of years ago because it’s a classic example of what happens with, versus without, Google Ads conversion tracking. The difference is quite remarkable.
We started working with an e-commerce business in the scaffolding industry. This business was already advertising with Google Ads and they came to us for help because they were not happy with their results to date.
When we reviewed their account, we immediately saw a problem. They had installed basic conversion tracking so they knew the number of sales each month from Google Ads, but they didn’t know the actual revenue from those sales!
In other words, they were trying to optimize the ads as if every sale was worth the same amount for their business. Now, that would be OK if all of their products were the same price, but their products ranged from a hundred dollars to thousands of dollars. That’s a big difference when it comes to calculating your ROI from Google Ads.
Understandably, our client was not sure about how to improve performance because of the lack of proper conversion tracking data. And that led to inaction and incorrect action…
The One Small Change That Led To Big Improvements
Let’s take a look at the graph of Cost versus Total Conversion Value from the months before we took over the accounts versus when we started managing the ads with proper tracking.
As you can see, our client did not have revenue tracking before we started working together so they were forced to treat all conversions equally. Then, you see the red line shoots up because we installed revenue tracking.
Look closely at what happened after that. I told you it would be remarkable :)
The month before we started managing the account, our client spent $11,016 and generated $48,535 in revenue in 1 month.
Then, you see the red line steadily climbs from $48,535 up to $87,628 in September. That’s an increase of 81%!
But that’s not all…
Look at the blue line, which represents the cost of Google Ads. You see that line steadily decreases to $8,100. That’s a decrease of 36% in ad costs that generated 81% more revenue!
You might want to read that again so it sinks in :)
Our client generated 81% more revenue from their ad campaigns by spending 36% less. Sorry, not sorry, Google!
What Was the Secret to These Results?
Here’s the best part of this case study. At this point, you’re probably thinking that we did some complex multi-variate split testing, along with sophisticated bid optimization algorithms…
Sure, we did all the ad management best practices and that contributed to the overall success. But the real secret to this account’s success was so simple I’m almost embarrassed to admit it.
The big improvements were made by turning off “losing” campaigns and investing more money into the “winning” campaigns.
That’s it. That’s the secret to optimizing Google Ads campaigns.
Forget what John Wanamaker said because that quote is no longer valid in our world today. If you’re wasting half of your budget, then you absolutely can determine which half by installing proper conversion tracking.
Once you do, and you know exactly which keywords and ads are driving leads and sales, then the rest is fairly simple to maximize your return on investment.