Shownotes
Regina discusses a major issue: the shrinking of Google Ads ROAS (Return on Ad Spend). While ROAS was once a reliable measure of ad performance, it has become less dependable. If you still rely on ROAS to gauge your campaign's success, you should think again and listen to this episode now.
Regina Bellows, Executive Director of StarterPPC, explains why Google's user tracking capabilities have weakened. She then presents actual client data to show the ROAS decrease impacting various businesses.
Additionally, she provides tips on how to better evaluate ad performance using the Media Efficiency Ratio (MER). Listen to this episode now to gain insight into the ongoing challenges faced by advertisers and accurately determine if your Google Ads campaigns are effective for your business.
This video is from StarterPPC’s YouTube channel, check it out if you want to maximize ad spend & achieve better results with a smaller budget:
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0:00 Google Ads ROAS is Shrinking
1:20 Google's Privacy Lawsuits and its Effects on ROAS
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6:31 Analyzing ROAS vs. MER
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Transcripts
Hi everyone, Regina here with Starter PPC.
2
:Oh my gosh, the ROAS shrink is real,
. I have found all the data for you.
3
:If you have been following us for the
past year, maybe two years, Or if you've
4
:worked with us, you know that we talk
and talk about how Google Ads is losing
5
:its ability to track users very well.
6
:And that's why we've started
using a different metric from
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:ROAS, return on ad spend.
8
:Instead, we now track
media efficiency ratio.
9
:Both of these metrics usually just
applies to e commerce companies.
10
:If you are a lead gen company,
this concept still applies to
11
:you because Google is losing its
ability to track your users as well.
12
:But for you, we would be using total
business cost per new customer.
13
:Whereas in the world of e
commerce, I'm looking right now
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:at ROAS and ROAS versus Merck.
15
:A lot of our clients, they
come to us still wanting, a 300
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:percent ROAS or 400 percent ROAS.
17
: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.
25
:In addition, they now have things are
coming at them from all angles, right?
26
:They also have Apple, which
is now stripping URLs whenever
27
:someone clicks on an ad.
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:For privacy reasons, because Apple's
launching their own ad platform and they
29
:want Google's ads to look less profitable.
30
:What's happening is a 300 percent
ROAS back in the day is the equivalent
31
:of a 200 percent ROAS today.
32
:And I'm just using round
numbers here, these are not.
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:Real numbers, right?
34
:It's an unknown.
35
:We don't know how much
shrinkage there really is.
36
:Specific to an industry.
37
:Some industries get restricted by privacy
laws more than under other industries.
38
:An example of this is if you are
in the financial planning industry.
39
:Supplement industry, medical
industry, there's no such
40
:thing as remarketing for you.
41
:Whereas back in the day, it
would have been okay, right?
42
:So that's one major example of a huge
restriction on the ability to track users.
43
:I have pulled up dozens of accounts data
across a wide variety of industries,
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:this is data from our clients.
45
:I have tabs open.
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:Each tab is a separate manager account.
47
:So we have 5 different manager
accounts with, 100 clients in each.
48
:Maybe not a full 100, but we had
to split them up because , you
49
:can only put, a certain amount of
accounts within each manager account.
50
:So we have 5.
51
:And, what you're seeing
here is data across.
52
: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%.
55
: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.
58
:Here is from January 1st, 2020
hrough now, the end of August:
59
:Almost four years later, you
see a downward trend and this
60
:is across 21 accounts, right?
61
: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.
67
:Number five, downward trend I wish it
wasn't the case, you guys, but it's true.
68
:Unfortunately, ROAS has just
become an unreliable metric.
69
:And here is the proof, It's not just you.
70
:It's everyone.
71
:It's not just us saying this, it's fact.
72
:Hi there, quick interruption.
73
:Do you know the main thing that
prevents small business owners from
74
: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
76
:out, have limited budgets.
77
:And so because of this, they're turned
away by most ad agencies because most ad
78
:agencies have minimum budget thresholds
that they're willing to work with.
79
:So what happens is the business owners
end up learning Google ads themselves.
80
:And the problem with that is
that most of the advice online is
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:geared towards larger accounts.
82
:And the advice doesn't have any of those
strategies or tricks that can kickstart
83
:the algorithm into giving a small
account a leg up over larger competitors.
84
:So it often just doesn't work.
85
:And the business just ends up
losing money month over month.
86
:If this sounds familiar,
starter PPC can help.
87
:We offer Google ads management services
that are designed for accounts that
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:have between 1000 and 5, 000 budgets.
89
:And Because all of our clients are
just starting out, we've come up
90
:with ways to keep our management fees
significantly lower than most agencies,
91
:because we know that every dollar saved
on management fees just goes towards
92
:the ad budget, which is going to help
the algorithm gather speed and power.
93
:So if you're serious about growing your
business and you'd like a team of Google
94
:ads experts to help you without breaking
the bank, check us out at starterpbc.
95
:com.
96
:Okay.
97
:Back to the video..
98
:I wish I had a way to tell you guys.
99
:Here is the exact return on your ad
spend that you got from Google ads.
100
:I don't have a way to do that anymore.
101
:All I can do is tell you,
this is the return on ad spend
102
:we can see in the dashboard.
103
:And let's look at the return on
your total marketing spend, right?
104
:Which is MER, Media Efficiency
Ratio, for your business.
105
:And these two numbers are
going to be different.
106
:For example, if it's 200 percent
ROAS inside the ad account.
107
:For example, your media efficiency
ratio, the return on your marketing
108
:spend for your business will
usually will always be higher.
109
:For example, 300%.
110
:And we have to assume that the 200
percent is then good enough, right?
111
:Good enough to push for growth because
the business is showing profit.
112
:And the only way that you can
really try to gauge whether Google
113
:ads is impacting that total 300
percent NER media efficiency ratio.
114
:Would be to.
115
:Lower your Google ad spend or raise
your Google ad spend and see how is
116
:that media efficiency ratio impacted
for your business as a whole.
117
:Unfortunately, this isn't a clean test.
118
:Because so many other
factors can affect it, right?
119
:If the weather shifts or if the economy
shifts during that experiment, it can have
120
:a huge impact on business the everything.
121
:And so you don't know for sure whether it
was the budget that affected it or not.
122
:This is why when you work with starter
PPC or with solutions eight, we usually
123
:recommend adding 20 percent budget month
over month in the beginning, at least,
124
:to try to gauge whether that media
efficiency ratio is going down, staying
125
:the same, can it withstand this growth?
126
:Is the business going to be profitable?
127
:Is there room for scale?
128
:I hope that these giant graphs
that I've pulled up on my screen
129
:here have managed to convince you
guys that the ROAS shrink is real.
130
:Thank you for watching.
131
:If you have any questions, let us know.
132
:You can check us out at starter ppc.
133
:com.
134
:You can also check out our sister
agency solutions soul eight, com
135
:and we will talk to you soon.
136
:Thanks.
