Opinions expressed by Entrepreneur contributors are their own.
I've been a digital marketer for over 30 years, living by the mantra of making data-driven decisions that maximize return on advertising spend (ROAS). Like any good marketer, you'll always be testing and tinkering with your ad campaigns to optimize your copy, creative, landing pages, and messaging to get the best results in the form of your highest ROAS or lowest cost. low customer acquisition rate (CAC).
But something happened to one of my businesses in the last few months: Over optimization the campaign caused the wheels to fall off the bus. I had never seen this before and thought this case study is worth sharing with you so you don't make the same mistake again.
Connected: Forget Google and Facebook. Use these marketing tips instead.
Situation
We had been steadily growing our Restaurant Furniture Plus e-commerce business over the past few years. The growth strategy was almost entirely Focused on Google Ads, where if we wanted to grow revenue, all we had to do was spend more money with Google year after year. We have also grown our annual advertising budget from $100,000 to $2,000,000 over the last few years.
Things were largely going well. As we scaled ad spend, our revenue grew along with it in a fairly steady fashion. We were not overly optimized in our efforts; we simply managed the campaign with some high-level metrics to make sure we were going in the right direction.
These metrics included our ROAS and Cost Per Lead (CPL), which were largely flat over the years, ignoring one-off market anomalies – such as COVID 19 in 2020. We biased CPL over CAC as we could easily connect Google Ads to our Call Rail tracking data at the campaign level and we couldn't connect our CRM data to Google at the time.
But after updating our CRM to one that better enabled direct data linking to Google Ads, we felt the campaign could work more profitably if we engaged a more sophisticated marketing agency with more experience in running content-based campaigns. in CAC instead of CPL. An agency that would be more “in the weeds” than us as business leaders, optimizing everything within the campaign, including keywords, creatives, landing pages, product segmentation, audience targeting, etc. We felt the biggest opportunity was managing the campaign at the CAC level, as opposed to the CPL level, as we thought knowing if a customer bought from us was more important than if they contacted us. It seemed reasonable enough, didn't it? But keep reading.
Our advertising agency plan
Our ad agency was very positive about linking our CRM data directly to Google Ads to let Google know which of their ads lead to actual customers buying. The agency had a lot of success with their other clients with this strategy, and they were confident it would work for us. We put a lot of work into setting it up and released it, fingers crossed it would lead to a material decrease in our CAC and a material increase in our ROAS.
But what followed had us all scratching our heads. Instead of our improvement campaign, this action actually hurt him. All of our marketing metrics started moving in the opposite direction – our CAC doubled and our ROAS was cut in half. None of us really had an explanation for what had gone wrong until we started digging a little more.
What happened?
The one change we made that we thought would help us actually hurt us. We changed our primary data point that we wanted Google to optimize for from a number of customers (eg phone calls and email form fills) to a number of customers (eg closed transactions in CRM ours). And, more specifically, we didn't cater to online customers who shopped on our website, we catered only to offline customers who shopped with our team of expert project managers, because our average order size of offline orders was 3 times larger than our average order size of online orders, adding that personal human connection and having the opportunity to upsell the order. But from a data perspective, that meant we went from Google sending 1,000 data points per month from phone calls and emails to Google only sending 100 data points per month from offline transactions originating directly from Google.
Remember, Google is an algorithm and it needs data to digest to do its job. The more data, the better. By making this move, we are actually “starving” Google by cutting data points. And what does Google's algorithm do when it doesn't have enough data to work with? He is paralyzed and doesn't know what to do. So it begins to “spray and pray” throughout its network, where it will hopefully generate more useful data and results to work with. And, what happens to your ad effectiveness during this time? It basically flushes down the toilet.
regulation
Once we found out what the problem was, it was a simple fix: we basically went back to our old ways, telling Google to optimize for customer data instead of transaction data. This began to feed Google's algorithm again, and good things happened. Our ROAS and CAC returned to historic levels as the campaign was no longer stifled and stifled.
Lessons learned
Many lessons were learned here. First, we mentioned above that Google needs data to work, and there is a minimum amount of data that Google needs for its algorithms to do their job successfully. We had drowned him. Second, there were many very smart veteran traders around the table who all together accepted the strategy that failed.
So even experts can make mistakes. In this case, the agency's success with other clients was because those other clients were materially larger than us, sending Google far more data than we could send them. And finally, there's a point in your marketing campaigns that you've simply “over-sharpened” your pencils, to the point that the tips break off when you press on them.
Yes, campaign optimization is good and necessary, but over-optimization can end up being a noose around your neck. So while you're tuning your campaigns, don't push the numbers too high or you might break a few springs along the way.