If you rely massively on ROAS in Google Ads, rethink your strategy! Regina just unveiled the alarming truth—ROAS is shrinking! Check out her essential insights to work around it and find a key metric that'll keep your PPC campaign thriving.

Regina Bellows, executive director of StarterPPC, shows proof that ROAS in Google Ads is shrinking. Instead of letting this issue stop you from optimizing your campaigns for success, she gives helpful insight into another key metric that can help you take back control!

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0:00 Intro

0:26 Proof that ROAS is shrinking

4:14 What is MER?

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8:38 How to go around this issue in Google Ads

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Hi everyone.

Regina here at Solutions A and starter PPP C.

I have some data for you and it's exciting.

I basically have some proof that Roaz is shrinking over time,

and what do I mean by that?

Roaz return on ad spend is basically a simple calculation of conversion value,

All the money that came in inside of the Google Ads account divided by cost,

The money that you spent on your Google Ads, Conversion value divided by cost.

So for every dollar you spent on Google Ads, how many dollars

do Google Ads make in return?

The problem with this metric is that it relies heavily on Google's

ability to track users from the point of the first click on an ad

all the way through to the sale.

this could take.

Days, weeks, months, whatever.

Even if it's in the same day, Google can sometimes drop that.

User.

Google's ability to track is becoming more and more limited every month.

In 2022, we saw Roaz across the board for every account drop.

every single client who comes to us saying, I need a 300% return, we.

Did you need a 300% return last year?

Because a 300% return this year in Google Ads is a different number.

It's a higher return of your business ROI than it was in 2020 a year ago.

I'm going to explain what I mean by this with some data I'm

showing you a profit and loss statement from one of our clients.

this is the worst quarter of the year for them.

the off season, but it really doesn't matter.

This is just for the point of comparing roaz to a much better metric.

M er, what I really like about this business as a good example.

Is that it's really clean.

business doesn't do anything besides Google ads.

They don't have partnerships with other businesses that

are buying in bulk from them.

They don't have a store, they don't do Etsy ads, they don't

do Amazon ads, whatever.

it's really very clean to look at the media cost and clean to

look at the total online sales.

And it's really easy to compare Roaz to m e r.

this particular case, This is why it's good clean data to work with here.

And what I've done is I've gone ahead and I've hidden a bunch of the rows

that are kind of too granular and irrelevant, but I didn't hide anything

that contributed to the totals.

and by the way, this is an e-commerce business that's basically drop shipping.

Sell products on the internet.

There's nothing else going on with this business.

total income all comes from online sales.

And then the expenses I've kept broken down.

there's not a lot of different categories here.

Google search, this is the amount of money that's being spent directly in Google Ads.

This is the row here, the media costs.

Everything else is other supplementary.

what I did is I went, October 22 compared to October 21, November.

In December, And what I did is I went into Google ads and I grabbed what

Google is reporting is the return, right?

So return on ad spend according to Google is this row.

And then what I did is I calculated the m e r.

So what is m e r?

It's basically like roas.

But Zoomed out for the whole business, not just Google ads.

it stands for Media Efficiency Ratio, and it's the same calculation as roaz, right?

Conversion value divided by cost, except instead of conversion value, we're

taking the entire businesses conversion.

Value, All the income, they do get some sales through email, right?

So some repeat business or people that just know them

and come directly to the site.

that's the hard part, right?

It's hard to distinguish between who came from Google Ads, who came from an email,

who came directly to the site, Who came because their friends told them about it.

MER calculates all of this conversion value divided by cost, right?

Your media, media spend is basically anything that is an ad or something that

is gonna scale when the business scales.

It's just one other way of looking at Roaz return on ad spend.

I calculated that here with this math equation.

This row divided by this row, and I compared them.

what I found to be very interesting is in 2022, compared with 2021, the

difference between m e R and Roaz.

Way bigger, right?

So 1.54 is the difference here in 2022 compared to 0.4 is the difference in

2020 1.87 compared to 0.06 difference, these two were almost identical in 2021,

Roaz and Mer 0.67 compared to point 22.

Why is this irrelevant?

what's happening is Google.

Ability to track users in 2022 has gone down compared to 2021, M e r is not

affected by Google's ability to track.

Roaz relies heavily on Google's ability to track and report which of the sales

did it get, whereas this just takes the total business revenue and does a

general ROI on your ad spend, basically.

The difference is getting wider in 2022 than it was in 2021.

This is because now when you go to a website, the website has a popup, it

asks you, Hey, do you accept all cookies?

Most people hit decline, Things like that.

Privacy laws are popping up here and there.

And so it's restricting Google's ability to track users from the

point of the first click on an ad all the way through to the sale.

That's why when people come to us saying they want a 300%

return, It's not a higher roaz.

It's the same roaz.

When people want a 300% Roaz today, it's a higher return for their business.

Higher, m e r, higher profit, than a 300% roaz.

Back in 2021 and we expect this trend to continue into 2023.

Unfortunately, and this is why we are starting to calculate the m e

r at the end of every single month with all of our clients because we

really can't trust Roaz right now.

It seems to be shrinking.

Every month a little bit more than it was the previous month.

that's that.

If you guys have any questions for us check out the links below.

We've got Starter ppc, which is for small businesses under $5,000 budgets.

And I have the link to starter ppc.com.

You can message us on the chat bubble over there on the, website.

also the link to solutions eight for, so if your budget is over

five, Check out solutions eight and let us know what you think.