Measuring SKU Performance in Google Ads

John: 00:00:11

Hey everyone, John, around here with solutions eight and today we're gonna be

John: 00:00:13

discussing what is the skew performance?

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Sometimes we get asked this question by, leads existing clients,

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even just, during our speaking engagements or we're teaching courses.

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And it is a, long answer.

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So I thought it was gonna be a good idea to make a video about this because.

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This is going to be something that you're going to have to dig, to

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find out the information for now.

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We normally use a tool called NPE, but if you're not on nor beam, I'm gonna

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share with you a way that you can actually combine your Google ads and

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your analytics to account, to find out if you're driving traffic to a specific.

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Product.

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What is actually the full effort of what comes back from driving

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that trip to the product?

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Now, today is not the day that it was 10 years ago, which means

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that you, you run an ad, you got a good keyword, you got a good ad.

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You get a landing page or, a dedicate page on your website dedicate to

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that one product and you turn it on.

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And what is your clicks and your conversion cruise rate, your

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row ads, et cetera, from one.

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That's all gone.

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Now we have to understand that on average, it takes 10, 15, 20 days

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sometimes for people to convert, they're engaging on your social, your organic,

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your email, your paid traffic on SCM.

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Those channels, they are taking a long time to buy.

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And it's unfair to take a look at one channel with one campaign and

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say, what is actually happening from the efforts in that campaign.

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And I'm kind of dip my toe into ways that you can measure both the skew performance,

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but also what is the actual revenue and how do you measure against that?

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And I'm gonna share with you why Roaz is not something that you may

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want to focus on holistically, or even solely it is a good K KPI,

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good key performance indicator, but it's not the be all end all.

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You can have a horrible ROAS, but a great C and a great LTV, and you can be

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very profitable and you can be stopping three feet from gold as Casa always says.

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So I wanna share this with you today.

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And a good example of that from a higher spend client that I can share with

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you, what you may see on one channel, but looking at it a different way.

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And then also thinking about it even a different way after that.

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Could be the key benefits for your company to either a scale or B even just be in

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the short term, much more successful by thinking about it differently

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and reacting to this differently.

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So let's get started on the screen.

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You are gonna see a campaign that's blurred out.

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So what this campaign is, a performance max campaign with one skew, with one page.

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And what.

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This campaign and this performance Maxus one skew is doing is

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driving a very specific product.

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We're driving as to a very specific product page.

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Everything's very singular.

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So we can treat this as an individual skew.

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Now I do have 56 other campaigns in this account running.

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One of them is a brand campaign and the other ones are some

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dynamic remarketing campaigns.

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And what you're gonna see here.

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Is on May 1st through May 31st.

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So this last month in 2022, I spent 67,000.

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I have 1200 conversions and I have $248,000 in conversion value by

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click and $292,000 in conversion.

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Value by time.

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And the difference between these two is in the last 30 days, the people that

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clicked, I made 248,000 on the people that have clicked before May 31st, but

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converted within May 31st is 209, 2000.

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That's the difference between them and the reason why I'll see this is, is,

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Hey, you have 95% of your conversions.

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We're most likely gonna receive 84 more conversions and

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$13,000 more conversion value.

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And this is an estimate you're gonna see why there's that Delta there is because if

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we waited one more month, this number here will look more like this number there.

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So again, 67,200 $92,000.

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cash in the bank, I guess I would say with 1,207 conversions.

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Now, if we look at the Roaz of this let me do this.

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I try not to share any let me do Roaz by time.

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Try not to share any specific, client privilege information, but I do

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wanna share what this looks like.

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The Roaz here is 436% good.

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It looks really.

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now in this same time period though, in analytics, remember

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this number 292,000 in analytics.

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What I've done here is I have gone into and move that up

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here over to, to the right.

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What I've done is looked at the same time.

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Period, May 1st, May 31st.

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Then I've also segmented by a filter of the channel, which is just the Google CPC.

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So I'm not taking into consideration anything from.

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Or from which is called Microsoft advertising.

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Now I will never get over saying Bing.

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Bing is just gonna be stuck in my vocabulary for like the next 10 years.

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but Bing Facebook, Instagram Snapchat TikTok, Hulu, any

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sort of CTB S data, nothing.

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So it's only.

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From the Google channel.

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However, there's gonna be a caveat to this, which is what

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I'll share with you soon.

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But from the inbound sales that have come from the Google ads channel,

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there's $680,000 in product revenue.

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Now what's interesting about this is two things are happening here.

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Google said, Hey, they clicked on my ad in this campaign and spent 209,

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$2,000 with us, but they clicked on any other campaign in my in.

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Account and spent 680,000.

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Well, how could that be?

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Well, in this specific account, my brand name made about a

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million dollars this last month.

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Yeah, about a million dollars this last month.

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Just I think 1.1 inside of that million dollars, what do you

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think is in there where they buy?

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Well, Was it, this product here that I know you're is blurred out, but the same

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product that I'm I'm sharing on the screen is the same product in that campaign.

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Do they come back through the brand campaign and end up buying

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the product that I was pushing traffic to from one campaign?

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Yes.

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We have seen that times and times, again, that even utilizing nor

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beam is where I can prove it.

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But I wanted to kind of give you food for thought into how do you measure the

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overall effectiveness of your marketing?

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It's not always campaign specific, not everyone is gonna click on that

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ad and then go into the website and then just click and buy.

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Sometimes they click, they leave and they might change devices, change IP

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addresses, change locations, and they simply just Google the brand name because

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they wanna come back and buy from you.

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But what are they gonna come back and buy from you?

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What are they actually going to buy?

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Well, was it the campaign that drove the first one, two or three clicks to the

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site looking at that specific product?

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Most of the time.

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Yes.

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So when you look at a different way, have to think about, well, did they

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come back through my marketing campaign?

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Yes.

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Did they come back through the brand campaign?

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Yes.

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Did they come back through the campaign that was trying to drive

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the click in the first place?

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Yes.

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How much APEN are you dedicating to that product?

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And what is your net sales from that specific channel?

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Well, we see that we spent . 66,000, we got 292 channel direct clicks

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and conversions, but in the channel of Google sorry, not a campaign,

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direct clicks and conversion, but the channel that is Google is 680,000.

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So that's a double, I'd a doubling of your revenue.

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Now, if you're looking at your Google ads campaign and measuring it just

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by row, as you're like, uhoh, I need to be at 700, let's say, well,

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not to say that the 436 is bad.

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That's amazing.

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But it's actually in my account, total has a 400 rows of a 1.5 million spend.

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So I do think that it is slightly above average, but it even is twice as good

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as what we're seeing here, because we're simply taking the, unknowns about, well,

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what exactly happened after they clicked?

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What happened now?

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Here's from the part that gets a little bit crazy and I pulled up on the screen,

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a few things to think about one Roaz.

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Is it good?

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Well, on my Google ads channel, it's a four on my analytics

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from that same channel.

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It's.

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Awesome.

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So we're looking between a, four X and an eight X return.

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Now I think, well, what is the cost of acquired new?

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that's different.

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That's different than what you see here.

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That's different than what you see in analytics.

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Why well is this the first, second, 12th time that they purchase from you?

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And you can say, yes, I'm only tracking a 90 day click, but what happens if they

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come back and buy from you every year, they look like they had to have clicked

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on an ad and purchase from you again.

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So when you're taking into consideration, what is new versus repeat?

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This is a whole different scenario.

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This is a big, big, big change.

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And what I mean by cost of acquired new customer is you can have a row as

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a four to eight, but the first time the cost of new customer is $100, let's

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say, but the second, third and fourth, fifth purchase, second, third, fourth,

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whatever purchase is a CPA of three bucks.

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Now what happened?

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Well, you paid dearly for the first time that that customer came in.

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and they kept purchasing from you through your brand campaign, let's say,

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and your brand campaign has a good CPA.

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So maybe it's, $3.

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Now, what is the average of that?

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Well, if you're looking at Roaz and you're looking at revenue,

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your C might be somewhere around

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a hundred dollars cost required to customer, but your CPA could be 25 bucks.

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She like, wow, I'm getting a $25 CPA.

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Well, that's not true is four purchases on average.

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And if you look at your actual customer list, you're really

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paying a hundred dollars.

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Then you're paying $5 every single time to come back.

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That's a different way to think about this now.

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So now Roaz becomes a little bit less important and the cost of acquiring

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the new customer becomes important.

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This is a model that we use very often the CAC versus LTV.

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And what does this mean?

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What LTV means that what is the lifetime value of that from a

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three, six and even 12 month out?

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So if you have a three month lifetime value, which means they,

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may purchase again, most likely not let's use round numbers here.

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So the lifetime value of the first purchase is first three

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months is a hundred dollars.

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Okay.

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Well, what do they spend in six months?

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Well, a lot of times they do come back.

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Well, a 1.5 repeat rate annually means that about half of those, a

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quarter of those people are gonna come by and, and buy a second time.

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So now actually the LTV is one.

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now we're at 150.

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Well, what is the LTV of 12 months?

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We usually get two purchases a year.

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Now that is $200.

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So a row as a Ford, eight, doesn't matter, a CPA of 25.

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Doesn't matter.

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The cost of acquiring that new customer costs you a hundred dollars, but

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the lifetime value of it is $200.

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So now you're actually spending a hundred dollars to make $200.

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And if you look at what is the cost of acquiring a new customer,

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as long as this does not go up.

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And a lot of times it does go down to scale.

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As long as this does not go up, you have a very scalable campaign, regardless

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of what your role as, or your CPA says.

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If you get more new customers, your CPA.

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Could potentially go up because you have a lot less repeat customers, which means

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you're not getting the $3 conversions.

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You're getting more $100 conversions.

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So your cost pro acquisition doubles and you're like uhoh,

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but your C stayed the same.

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Why you had twice as many new customers, CAC stayed the same, regardless of

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CPA, your Roaz went from four to eight.

John: 00:10:12

Oh no.

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Now it went down to 200%.

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Roaz this is looks bad.

John: 00:10:17

Yes.

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But what is the cost of acquiring that?

John: 00:10:19

Well, it's the same.

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It's just, I'm getting less repeat.

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I'm getting more news.

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So my Roaz looks terrible because I didn't get the fast $3.

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Easy Roaz conversion my $3 CPA.

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Then if spending a hundred that boosted my CPA really, or that

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boosted my Roaz really high.

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So who buys is actually going to affect your Roaz, who buys is actually

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gonna affect your CPA, but your cost of acquiring that new customers

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more important than anything else.

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Cuz you can scale that as long as that metric stays the same.

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And as long as your LTB stays, the same other things you have to

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think about across pollination.

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What other efforts on other channels are driving in my brain convers.

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Now we have to look at how many new branded conversions, sorry, how

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many branded conversions are new customers, because if you could find

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a cost of acquired new customer brand, you could spend that to the moon.

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And if you find the cost of acquired new customer on non-brand,

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you can spend that to the moon.

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And if you look at what you're manipulating, your other social channels

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on, for example are actually driving up or down that cost acquired new customer.

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You'll see those two Correlly.

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So your Facebook campaign might have a better CPA or a better row as, and

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you're seeing your brand actually have more sales and less CPA, more row.

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Good.

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Keep spending on that because if you add those two together, what is the cost

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of acquiring new customer, regardless of channel it's X good keep scaling.

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So the other one is the cross explanation between Google ads, campaigns.

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Like did they click on product a, did they buy product B?

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That happens about 10% of the time.

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So just take that in consideration.

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That's . You might get a sale of an item that he actually never spent a dollar

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on marketing because they were marketing a different item and they just bought

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another item after they came to the site.

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So a few things that think about ancillary things that are not really

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affecting the, the big, picture, but things you must think about is.

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Why am I receiving sales on that?

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You can look through the top convergent path and even Google analytics and

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identify that that product was actually sold from a first click, from a different

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product that you're marketing for.

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And is your other channels driving that inbound brand conversion.

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So two things you wanna be very, very considerative, but at the end

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of the day, what you wanna look at is it's not necessarily row as by SKU.

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Doesn't matter, RO as by.

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Is good.

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But if I said, if I'm only gonna go after all of your customers that step by from

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you every month, I can do a 2000% ROAS on all of your existing new customers,

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you're gonna lose money, cuz I'm just spending more to make you the same amount

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of money, but ROAS looks fantastic.

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But the cost of acquiring at new customers, what you have to think about,

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I don't really care what the RO is.

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Honestly, the RO is, is, is a good key performance indicator that I'm

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heading in the right direction.

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When the RO as goes down.

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If I know my new customer is coming up and my cost acquiring new customer is

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going down, I'm just using my budget more.

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If you're on Shopify, hop into your Shopify account and look

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at your analytics tab and look at the return of customer rate.

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And if it's 30%, you can imagine that's possibly 30% of your sales, maybe even

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40% of your sales that are coming in from even your pay channel are coming in from

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customers that already know about you.

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And you just keep paying for more and over again, can take that money and actually

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go more towards new customer acquisition.

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Your Roaz goes down, your CPA goes up, but your CAC may go down.

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And if your LTV stays the same, you now have made more money.

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So that's kind of my, little rant here for the day, but a thing to think

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about where it's not skew specific, it's not campaign specifically.

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You have to think about this holistically.

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Was it cost to acquire a customer?

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What do they spend over long enough time period, but obviously after all

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of your cost and your net profit, do you equate to being profitable?

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And if your LTB stays the same and your cost of acquiring your customer

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stays the same, keep adding an admin.

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One last thing to think.

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When you're looking at the C versus LTV is how far do you wanna spend

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into your future profitability?

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Remember that time period?

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I said it is three months, six months a year.

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If I make an LTV over a year period of $200, but my first month cost is

John: 00:13:36

a hundred dollars and it costs me a hundred dollars to make that, that first

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time revenue of that a hundred dollars.

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I don't see profitability until year.

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, that's fine.

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If I'm probably DC funded and I have a 10 year ramp up, but if you're like, I can't

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just eat off nothing for the next year.

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You'll need a row.

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As of, let's say 200% on your first time, sale.

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So your cost acquired a customer would be one fourth of the one year LTV.

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And that scenario you'll say I cost me $50 to make 100 in the first purchase.

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Then by year two, I made 200.

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Now my year is $50 in $200 out or average over 12.

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So don't get too aggressive by saying like, oh my gosh, I'm gonna make

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six grand by year seven, I'm gonna spend $7,000 cost for required.

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New customer.

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You just broke even for the next seven years.

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That's how that scenario works.

John: 00:14:19

So please lemme know if you like this video, think about

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this in a different way.

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It's a lot of fun to fun to kind of measure.

John: 00:14:24

Performance in a, in not necessarily pigeonhole yourself into one campaign's

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performance for what's you there's much more stuff going on here.

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So just things to think about when you're measuring success,

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your Google ADSD campaign.

John: 00:14:35

I'm John Ram solutions eight.

John: 00:14:36

Thank you so much.