John shares how you can measure your SKU performance in Google Ads without the help of data-tracking software. This way, you can scale your campaigns with data-driven decisions just by using your Google Analytics and Google Ads accounts.

He also shares why you shouldn't make your ROAS the ultimate key performance indicator. As well as the important factors you should consider when you're measuring success in your Google Ads campaigns.

00:00 How to measure SKU Performance in Google Ads

00:40 Understanding how your target audience converts

07:52 Important factors to consider when measuring your success in Google Ads

13:04 Why you shouldn't base your profitability on your ROAS

Northbeam:

https://www.northbeam.io/

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

discussing what is the skew performance?

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

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

And it is a, long answer.

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

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

find out the information for now.

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

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

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

Product.

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

that trip to the product?

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

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

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

that one product and you turn it on.

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

row ads, et cetera, from one.

That's all gone.

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

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

your email, your paid traffic on SCM.

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

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

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

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

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

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

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

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

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

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

So I wanna share this with you today.

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

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

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

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

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

and reacting to this differently.

So let's get started on the screen.

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

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

And what.

This campaign and this performance Maxus one skew is doing is

driving a very specific product.

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

Everything's very singular.

So we can treat this as an individual skew.

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

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

dynamic remarketing campaigns.

And what you're gonna see here.

Is on May 1st through May 31st.

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

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

click and $292,000 in conversion.

Value by time.

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

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

converted within May 31st is 209, 2000.

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

Hey, you have 95% of your conversions.

We're most likely gonna receive 84 more conversions and

$13,000 more conversion value.

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

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

So again, 67,200 $92,000.

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

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

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

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

wanna share what this looks like.

The Roaz here is 436% good.

It looks really.

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

this number 292,000 in analytics.

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

here over to, to the right.

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

Period, May 1st, May 31st.

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

So I'm not taking into consideration anything from.

Or from which is called Microsoft advertising.

Now I will never get over saying Bing.

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

but Bing Facebook, Instagram Snapchat TikTok, Hulu, any

sort of CTB S data, nothing.

So it's only.

From the Google channel.

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

I'll share with you soon.

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

there's $680,000 in product revenue.

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

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

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

Account and spent 680,000.

Well, how could that be?

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

million dollars this last month.

Yeah, about a million dollars this last month.

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

think is in there where they buy?

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

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

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

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

Yes.

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

beam is where I can prove it.

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

overall effectiveness of your marketing?

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

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

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

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

they wanna come back and buy from you.

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

What are they actually going to buy?

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

site looking at that specific product?

Most of the time.

Yes.

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

come back through my marketing campaign?

Yes.

Did they come back through the brand campaign?

Yes.

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

the click in the first place?

Yes.

How much APEN are you dedicating to that product?

And what is your net sales from that specific channel?

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

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

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

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

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

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

not to say that the 436 is bad.

That's amazing.

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

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

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

what exactly happened after they clicked?

What happened now?

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

a few things to think about one Roaz.

Is it good?

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

from that same channel.

It's.

Awesome.

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

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

that's different.

That's different than what you see here.

That's different than what you see in analytics.

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

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

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

on an ad and purchase from you again.

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

This is a whole different scenario.

This is a big, big, big change.

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

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

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

whatever purchase is a CPA of three bucks.

Now what happened?

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

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

and your brand campaign has a good CPA.

So maybe it's, $3.

Now, what is the average of that?

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

your C might be somewhere around

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

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

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

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

paying a hundred dollars.

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

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

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

the new customer becomes important.

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

And what does this mean?

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

three, six and even 12 month out?

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

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

So the lifetime value of the first purchase is first three

months is a hundred dollars.

Okay.

Well, what do they spend in six months?

Well, a lot of times they do come back.

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

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

So now actually the LTV is one.

now we're at 150.

Well, what is the LTV of 12 months?

We usually get two purchases a year.

Now that is $200.

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

Doesn't matter.

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

the lifetime value of it is $200.

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

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

as long as this does not go up.

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

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

of what your role as, or your CPA says.

If you get more new customers, your CPA.

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

you're not getting the $3 conversions.

You're getting more $100 conversions.

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

but your C stayed the same.

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

CPA, your Roaz went from four to eight.

Oh no.

Now it went down to 200%.

Roaz this is looks bad.

Yes.

But what is the cost of acquiring that?

Well, it's the same.

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

I'm getting more news.

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

Easy Roaz conversion my $3 CPA.

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

boosted my Roaz really high.

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

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

more important than anything else.

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

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

think about across pollination.

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

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

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

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

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

you can spend that to the moon.

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

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

You'll see those two Correlly.

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

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

Good.

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

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

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

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

That happens about 10% of the time.

So just take that in consideration.

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

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

another item after they came to the site.

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

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

Why am I receiving sales on that?

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

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

product that you're marketing for.

And is your other channels driving that inbound brand conversion.

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

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

Doesn't matter, RO as by.

Is good.

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

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

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

of money, but ROAS looks fantastic.

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

I don't really care what the RO is.

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

heading in the right direction.

When the RO as goes down.

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

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

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

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

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

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

customers that already know about you.

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

go more towards new customer acquisition.

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

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

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

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

You have to think about this holistically.

Was it cost to acquire a customer?

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

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

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

stays the same, keep adding an admin.

One last thing to think.

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

into your future profitability?

Remember that time period?

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

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

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

time revenue of that a hundred dollars.

I don't see profitability until year.

, that's fine.

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

just eat off nothing for the next year.

You'll need a row.

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

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

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

Then by year two, I made 200.

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

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

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

New customer.

You just broke even for the next seven years.

That's how that scenario works.

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

this in a different way.

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

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

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

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

your Google ADSD campaign.

I'm John Ram solutions eight.

Thank you so much.