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How To Achieve Profit Increase Despite The Off Season
10th February 2024 • The Google Ads Podcast • Solutions 8
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Want to know how to grow your business year-round, even when things are slow? Learn from Regina's success story! These tips and advice could be the missing puzzle to your success.

Regina Bellows, Executive Director of StarterPPC, outlines how they increased one client's profits by 13% during their off-season. She shares her story of success and gives actionable tips on how to use analytics and metrics to get smarter with your marketing decisions. With this valuable advice, you can also make your business thrive even when things seem slow.

This episode 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 How To Achieve Profit Increase Despite The Off-Season

1:59 Analyzing ROAS and MER

4:27 The challenge of a small business

7:23 Need help scaling Google Ads with a limited budget? Let StarterPPC help you!

9:03 Increasing the ad budget little by little

13:32 Future predictions for MER


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Transcripts

Rachel:

Hey everyone, Regina here with Starter PPC.

2

:

I'm going to talk today

about a success story.

3

:

We have a client who's been with

us for almost 11 months now.

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:

and most recently we were able

to make some breakthroughs.

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:

We were able to increase

the business's profit.

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:

Okay.

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Not just revenue, but

like bottom line pocket.

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cash in pocket profit, by 13%.

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It was actually closer to 13 and a half

percent, on average over the past three

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:

months in the middle of the off season.

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:

I think this is a big deal because usually

in the off season profit goes down.

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:

I want to show you guys the numbers.

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:

So we're going to look at some

spreadsheets that I have, and I'm

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going to show you how we did it.

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:

But before I dive into that, I

want to talk through some of the

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:

history just to give you context.

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:

So this client has been with us

for about 10 and a half months.

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:

I believe she started in November

of last year, but I'm just showing

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:

January, we were spending only

about $500 in budget every month.

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:

Now normally we work with

clients who have budgets between

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:

1000 and to 5,000, dollars.

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:

but if a client comes in with $500

in budget, we will work with that.

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It's just that it's very difficult

to make a profit with $500 in

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:

budget I'm going to show you why.

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the return on ad spend was really high.

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This is a seasonal business that

does really well in the winter and

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the business dies off in the summer.

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she actually sells

felting supplies, right?

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crafting, making scarves, things

like that, which people do

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:

in the fall and in the winter.

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:

the blue line is ROAS and

it was really high 17, X.

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:

And this is just return

on ad spend, you guys.

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:

So as you can imagine, if the return

on ad spend was only 1, 700%, then

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:

the overall business's return on media

spend, right, media efficiency ratio,

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:

which is an even more accurate number

to look at is almost always higher.

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And sure enough, it was higher.

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:

For those of you who are lost,

the difference between ROAS, which

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:

is return on ad spend and media

efficiency ratio is just that ROAS

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:

relies on the Google tracking, which

is inaccurate to come up with a return

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:

on how much ad spend happened, right?

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:

So it only counts people

that can be tracked after

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they've interacted with an ad.

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Whereas media efficiency ratio is like

calculating ROAS, but on a business level.

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So you would basically take

your total revenue, and divide

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it by your total, media spend.

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it's always higher than ROAS.

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Almost always, unless

something is very wrong.

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:

Alright, so we were spending about 500.

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We were making super high returns.

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:

even in February when the blue

line starts to trend down, we are

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only, again, making a ROAS of 8.

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:

65.

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The MER was higher.

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and we're still spending about 500.

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Then it goes a little

bit back up in March.

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It goes, starts to go

down in April, right?

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:

The ROAS is taking a dive in May.

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People are not felting anymore.

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:

and then in June, which was the lowest

month, the return was only 300%.

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:

Now Throughout this entire time period,

every month we're going to the client.

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We're saying, Hey, let's add budget.

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Let's grow this business.

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It's making really high returns.

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Let's jump on this and get you more sales.

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:

And she's saying to us, I can

barely pay my overhead costs.

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I can't pay my bills.

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And we're saying, wow, on your business,

you're making like a 20 X return.

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:

So for every 1, she was making 20

and you still can't pay your bills.

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That's because you don't have enough

profit left over after paying your

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:

cost of goods and your shipping

costs, to cover the overhead and

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still have some leftover, right?

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:

So this is the problem with

being a small business.

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We'll get back to this graph in a minute.

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:

I want to show you guys the real

numbers in this spreadsheet.

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This is the problem with

being a small business.

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look at scenario one on the left side.

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Here, everything in gray,

these are real numbers because

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these have already happened.

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All right?

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So we were spending 500 in,

Google ads, but she was spending

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more money in like Etsy ads.

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she was hovering around 1, 000 spend

for the total business throughout

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:

those months that we looked at.

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:

And here is the media

efficiency ratio, right?

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:

So not just ROAS and Google, but

this is the total businesses return.

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:

So for every dollar.

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:

She spent she was making 28 and Her

sales were only 25, 000 in revenue.

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:

So when you take away the profit margin,

which is 25 percent right for cost of

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:

goods and fulfillment Then she only

has five thousand four hundred dollars

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:

with which to pay her overhead costs

And pocket some profit because she only

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:

has a few months where the Mer is high.

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It starts dropping in June, right?

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So in June, she only made 2, 300

in profit, which might not even

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:

be enough to cover her overhead.

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So in the winter, she might still be

paying the bills from last summer.

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:

problem.

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And we were going to her

saying, hey, let's grow.

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She finally agreed to start growing

her budget and growing her sales.

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:

And you can start seeing that in July.

100

:

So July, August, and September are the

win months that I want to talk to you

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guys about because in these months we

began to grow the Google Ads spend.

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:

right here on the right.

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:

I added some notes and you

can see budget change percent.

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This is overall budget

for the business, right?

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:

So in July, there was only

a 13 percent increase.

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I don't think she was increasing

her budget other platforms.

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So it was just our increase in Google

ads, which I think was slightly

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:

less than 20 percent increase.

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so we added 13 percent budget and,

we, it wasn't a huge increase.

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:

Then you can see a 23 percent increase,

to the budget in August and a 10 percent

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:

increase to the budget in September.

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Now, what happened to the profit?

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It's going up.

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And this is in the dead of summer.

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This is when nobody is felting.

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It is hot.

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Everyone is at the beach.

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and I have tracked here the profit.

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So as you can see, profit was just

going down for no reason other

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:

than the fact that it was spring.

121

:

Hi there.

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:

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?

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:

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

134

:

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.

137

:

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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:

Because all of our clients are just

starting out, we've come up with

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:

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

143

:

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

145

:

ads experts to help you without breaking

the bank, check us out at starterpbc.

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:

com.

147

:

Okay.

148

:

Back to the video.

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:

and then when we started adding

budget profit goes up, right?

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13 percent increase.

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In July from June, 20 percent

increase in August compared

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with July, 7 percent increase in

September compared with August.

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I think this is huge.

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This averages out to a 13.

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4 percent increase over the

last three months in profit.

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and all we did was add budget.

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I'm telling you, if you find

that you're not making enough

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:

profit to pay your bills.

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But your Mer is really high or

your row eyes is really high.

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Just add a little bit of profit.

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Don't add a ton all at once, right?

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don't double your budget overnight.

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Don't do more than 20 percent at a time.

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:

if you're feeling very budget

strapped and you can't come up

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with the 10, 20%, come up with 10%.

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But try to come up with that budget

that you can add when the Mer is high.

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Because It's the only way to crawl

out of that pit of, Oh, I don't

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:

have enough profit to pay my bills.

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I only have 2, 000.

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To pay my overhead costs, So

now we're crawling out of it.

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And this is in the off season.

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:

So the reason why I have this spreadsheet

is because I'm trying to run some

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:

scenarios, to try to figure out what's

going to happen as she sticks with us.

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:

And we continue to do these

20 percent budget bumps here.

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I'm adding a full 20 percent to

the business's budget overall.

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:

month over month.

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Now, I don't have any control over

the budget on the other platforms.

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We only manage her Google ads account.

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So I don't know if she'll actually do

20%, but this is my pie in the sky.

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I want her to do 20%.

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So on this scenario too, you

see the budget increasing by 20

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:

percent and the scenario one,

it's staying the same, right?

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We stopped doing increases

and we keep it at:

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:

And over here, I'm using

some sort of average Mer.

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I can't remember how I came up with this.

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:

you don't really know what

the MER is going to be.

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but you do know that if you don't increase

your budget, the MER will be higher

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than if you do increase your budget.

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Why?

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Because every time you give the algorithm

more money to work with, It has to go out.

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It has to find new people, new placements,

new combinations of ad copy, new images,

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to use, new products to show, whatever

it is, and it has to try things, and

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it has to figure out what's working.

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You're also competing with

bigger competition, As you grow.

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So your bigger competitors who are

able to bid more aggressively, you are

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now playing in that pool with them.

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So that's why the MER tends to

shrink as you grow your budget.

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until it levels out at

an industry average MER.

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The thing is a lower MER is

not necessarily a bad thing.

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Why?

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Because bottom line is profit, right?

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So here, we were growing.

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The budget, the mirror was shrinking

:

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in August compared with July again,

for:

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yet profit was higher in September.

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So don't be afraid of a shrinking mirror.

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Be afraid of a shrinking mirror

that shrinks really fast,

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profit is the bottom line.

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if you're not making more profit,

then you're growing too quickly.

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and since this is seasonal, we have

to look at every month individually,

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what I would like to start doing

is comparing year over year, how is

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July this year compared to last, but

I don't have that data right now.

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so anyways, I'm running some

scenarios into the future.

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I have no idea what the Mer

is actually going to be.

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I suspect it's going to continue

shrinking as we grow because I don't

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:

believe that her competitors are.

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Able to make this high of a mer, right?

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And whatever your competitors

are making is what your mer is

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going to level out at as you grow.

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So I'm going to assume it keeps shrinking.

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I put some in January is

,:

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And this is a full whopping 1000

percent less than last January.

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And yet sales revenue is 54, 000 compared

with last January, which is 25, 000.

224

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Why?

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Just because we have more budget.

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We're spending three times as much.

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even though the Mur is a thousand

percent less, revenue is super high and.

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She has double the profit now, right?

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10, 000 instead of 5, 000, so don't

be afraid of growth, you guys.

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sometimes is the way out of your

financial woes, is to add budget.

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yeah.

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And this is just the total,

comparing two scenarios here.

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71, 000 compared to 89, 000.

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I have no idea how accurate this is.

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I feel like this is a

really high MRSA, actually.

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This should be probably lower.

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Who knows if it's going to go back up

to:

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Definitely not in October.

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I should probably set

this to 16, who knows?

240

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yeah, let me go back to the graph and we

can just look at how things are panning

241

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out, from inside the Google dashboard.

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the red line, which is cost begins

to grow, in July, $600 spent.

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the blue line is still low because

it's the middle of the summer.

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$723 spent.

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Blue line is still low 'cause it's the

middle of the summer, . And again, 864%

246

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Blue line is still even lower because

it's still the middle of the summer.

247

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September is the beginning of fall,

so hopefully it starts to grow.

248

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The return starts to grow soon, but.

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In September, return did not

grow and yet we still made more

250

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profit than we did in August.

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I can't stress this enough, you guys.

252

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Don't be afraid of a shrinking MER.

253

:

Be afraid of a shrinking profit.

254

:

Okay, thanks for watching.

255

:

This is a success story.

256

:

If you are interested in growing your

account with Google Ads, check us out.

257

:

We are Starter PPC.

258

:

We manage budgets between

1, 000 and 5, 000.

259

:

500 and 5, 000.

260

:

and we would love to work with you.

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:

Thanks for watching.

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