Google Ads ROAS is Shrinking

Regina: 00:00:11

Hi everyone, Regina here with Starter PPC.

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Oh my gosh, the ROAS shrink is real,

. I have found all the data for you.

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If you have been following us for the

past year, maybe two years, Or if you've

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worked with us, you know that we talk

and talk about how Google Ads is losing

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its ability to track users very well.

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And that's why we've started

using a different metric from

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ROAS, return on ad spend.

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Instead, we now track

media efficiency ratio.

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Both of these metrics usually just

applies to e commerce companies.

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If you are a lead gen company,

this concept still applies to

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you because Google is losing its

ability to track your users as well.

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But for you, we would be using total

business cost per new customer.

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Whereas in the world of e

commerce, I'm looking right now

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at ROAS and ROAS versus Merck.

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A lot of our clients, they

come to us still wanting, a 300

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percent ROAS or 400 percent ROAS.

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And they say to us a year or two ago

I was getting three or 400 just fine.

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How come you guys can only get me 200?

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This is what's happening.

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Google is being.

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sued for privacy law restrictions.

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Sued for data gathering.

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They're getting put on a leash.

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This is happening progressively over time.

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In addition, they now have things are

coming at them from all angles, right?

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They also have Apple, which

is now stripping URLs whenever

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someone clicks on an ad.

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For privacy reasons, because Apple's

launching their own ad platform and they

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want Google's ads to look less profitable.

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What's happening is a 300 percent

ROAS back in the day is the equivalent

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of a 200 percent ROAS today.

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And I'm just using round

numbers here, these are not.

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Real numbers, right?

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It's an unknown.

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We don't know how much

shrinkage there really is.

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Specific to an industry.

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Some industries get restricted by privacy

laws more than under other industries.

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An example of this is if you are

in the financial planning industry.

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Supplement industry, medical

industry, there's no such

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thing as remarketing for you.

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Whereas back in the day, it

would have been okay, right?

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So that's one major example of a huge

restriction on the ability to track users.

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I have pulled up dozens of accounts data

across a wide variety of industries,

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this is data from our clients.

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I have tabs open.

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Each tab is a separate manager account.

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So we have 5 different manager

accounts with, 100 clients in each.

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Maybe not a full 100, but we had

to split them up because , you

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can only put, a certain amount of

accounts within each manager account.

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So we have 5.

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And, what you're seeing

here is data across.

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21 accounts in our first manager account,

and I'm only showing 21 accounts because

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what I've done is I've put some filters

here that says that the ROAS has to

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be at least 80 and I did that 80%.

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And I did that just to

take all of the lead gen.

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accounts or the accounts that

aren't tracking conversion value

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out of the equation for our graph.

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Here is from January 1st, 2020

hrough now, the end of August: 2023

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Almost four years later, you

see a downward trend and this

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is across 21 accounts, right?

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So this is the average ROAS per month.

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Almost four years, across

21 accounts on average.

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Each of our manager accounts,

this one, I believe has 19 again,

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downward trend manager account.

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Number three, manager account.

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Number four, manager account.

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Number five, downward trend I wish it

wasn't the case, you guys, but it's true.

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Unfortunately, ROAS has just

become an unreliable metric.

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And here is the proof, It's not just you.

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It's everyone.

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It's not just us saying this, it's fact.

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Hi there, quick interruption.

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Do you know the main thing that

prevents small business owners from

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getting their Google ads account into

a position to grow and scale budget?

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A lot of businesses, especially

those that are just starting

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out, have limited budgets.

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And so because of this, they're turned

away by most ad agencies because most ad

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agencies have minimum budget thresholds

that they're willing to work with.

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So what happens is the business owners

end up learning Google ads themselves.

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And the problem with that is

that most of the advice online is

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geared towards larger accounts.

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And the advice doesn't have any of those

strategies or tricks that can kickstart

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the algorithm into giving a small

account a leg up over larger competitors.

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So it often just doesn't work.

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And the business just ends up

losing money month over month.

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If this sounds familiar,

starter PPC can help.

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We offer Google ads management services

that are designed for accounts that

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have between 1000 and 5, 000 budgets.

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And Because all of our clients are

just starting out, we've come up

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with ways to keep our management fees

significantly lower than most agencies,

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because we know that every dollar saved

on management fees just goes towards

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the ad budget, which is going to help

the algorithm gather speed and power.

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So if you're serious about growing your

business and you'd like a team of Google

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ads experts to help you without breaking

the bank, check us out at starterpbc.

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com.

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Okay.

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Back to the video..

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I wish I had a way to tell you guys.

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Here is the exact return on your ad

spend that you got from Google ads.

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I don't have a way to do that anymore.

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All I can do is tell you,

this is the return on ad spend

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we can see in the dashboard.

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And let's look at the return on

your total marketing spend, right?

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Which is MER, Media Efficiency

Ratio, for your business.

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And these two numbers are

going to be different.

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For example, if it's 200 percent

ROAS inside the ad account.

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For example, your media efficiency

ratio, the return on your marketing

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spend for your business will

usually will always be higher.

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For example, 300%.

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And we have to assume that the 200

percent is then good enough, right?

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Good enough to push for growth because

the business is showing profit.

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And the only way that you can

really try to gauge whether Google

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ads is impacting that total 300

percent NER media efficiency ratio.

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Would be to.

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Lower your Google ad spend or raise

your Google ad spend and see how is

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that media efficiency ratio impacted

for your business as a whole.

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Unfortunately, this isn't a clean test.

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Because so many other

factors can affect it, right?

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If the weather shifts or if the economy

shifts during that experiment, it can have

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a huge impact on business the everything.

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And so you don't know for sure whether it

was the budget that affected it or not.

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This is why when you work with starter

PPC or with solutions eight, we usually

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recommend adding 20 percent budget month

over month in the beginning, at least,

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to try to gauge whether that media

efficiency ratio is going down, staying

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the same, can it withstand this growth?

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Is the business going to be profitable?

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Is there room for scale?

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I hope that these giant graphs

that I've pulled up on my screen

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here have managed to convince you

guys that the ROAS shrink is real.

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Thank you for watching.

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If you have any questions, let us know.

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You can check us out at starter ppc.

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com.

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You can also check out our sister

agency solutions soul eight, com

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and we will talk to you soon.

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Thanks.