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Measuring Ad Success Key Business Metrics Beyond CPA and ROAS
21st June 2024 • The Google Ads Podcast • Solutions 8
00:00:00 00:06:28

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John discusses the critical business metrics beyond CPA (Cost Per Acquisition) and ROAS (Return on Ad Spend). In this quick discussion, he explains how these metrics correlate and affect campaign scalability. He also shares the glass ceiling of diminishing, profitable returns misinterpreted by ROAS in different ad platforms. Listen to this episode to learn more about why you should evaluate beyond CPA and ROAS and dig deep into the customer journey across your ad platforms to determine your ad budget and strategy's effectiveness.

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Transcripts

John:

How everyone measures clients wise.

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CPA ROAS like what am I getting cost

per conversion, blah, blah, blah.

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But there's the return on ad spend.

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these are the metrics that

we should be counting.

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Typically, this is how

everyone measures client wise.

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no CPA ROAS, like what am I getting

cost per conversion buble one,

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but there's a return on ad spend.

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these are the metrics that

we should be counting.

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This is something that all of these

will have a correlation to each other.

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They all work together.

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obviously CPC is going to be

different than ECPNV, which is

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the effective cost per new visit.

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that's how scalable a campaign is.

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there's more here.

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Obviously, there's frequency, which is

good, but that's an app platform metrics.

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Most of these that you'll see here on the

screen, CPCs in app CPN rows are an app.

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Everything else is not really in

app, like in metal or in Google,

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in email clients, whatever it is.

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so by scaling as example, if

you're a CPNB is too high, Okay.

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It's really difficult to scale your CPC

could be low, but depending upon campaign

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type by channel, if your is too high,

that's what actually is going to be.

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It's going to be scaling because

as you add in dollars, your is

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what you're adding dollars to.

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So that's when you said, the

CPC is maybe not what they were.

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They want it as well.

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It could be or it could not be.

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it all depends on what the difference

between the e ccp NV and the CPC is.

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CPC is indicative of just

a click from a network.

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E ccp, NV is how many are new.

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A lot of times, those are

way different metrics.

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so that's one of the thing that I'm

gonna be, giving that speech about.

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but that's also something that to

give you, I'll just do, this last

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seven days, for example, on Facebook,

I think, like the 3 range, like 2.

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90 3 range, but it actually is

costing him 5 for every new visit.

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So when you're looking at the

difference between Facebook and

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Amazon, we'll discuss this part later.

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But when they started to pull

back, they're like, oh, we'll

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have an economy of scale.

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we'll pull back the spend

here and we'll do better.

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And it didn't.

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And that's because they started

losing more new visits that returning.

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So scaling up or scaling down is

having the same effect because

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they're not actually controlling the

difference between CPC and ECP and me.

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So when they pull back, everything hurts.

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So that's, what's interesting.

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All these are correlated.

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and that's why I'm saying it's so unique.

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It's really, it's the customer journey

and that's the real unique part is

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you never want to pull back more

new visits than returning visits.

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Then your economy is

scale moving up or down.

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So this is a really complicated scenario.

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Cause just massive and has

millions of users like a month, but

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that's just like the thing where.

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We really have to go one by one to make

sure that if we're going to scale up,

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we don't use the current performance in

app because that is a snapshot in time.

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That's one, maybe fifth

of the user journey.

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so that's how we want to make sure we

think about this traffic is if it's

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scalable, why or why isn't it scalable?

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The other part, actually, what's

funny is in that same presentation,

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this part here, This is just

something that's good for everyone.

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The glass ceiling of diminishing

profitable returns misinterpreted by ROAS.

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The red line is where you hit

a point of diminishing returns.

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And so Google, people

usually overspend on Google.

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We overspend on Google,

because we're a Google agency.

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Typically we have been, and that's

where it's yeah, but you guys

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are the ones that should go where

maybe that's not necessarily true.

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The diminishing profitable return

at the point of diminishing returns.

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Cause Anything that over attributes, you

can scale that thing right up to the moon.

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And it just always get a, show

you a good profit return, but

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it's not affected by the backend.

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Meta is typically under utilized

because it always has like a 1.

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5 return because it's always

started the customer journey.

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And then Google's always overspent

because it's always like the last

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30 percent of the customer journey

that we get attribute, which means

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that it's always going to look good.

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So this one's understanding this

one's overspending and then.

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We are always person on

the other end of the call.

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That's Hey, solutions, eight.

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why don't you spend more?

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You're doing better than meta

and you gotta save my ship here.

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But that's because we haven't

identified the glass ceiling.

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So when we're scaling a client, my

always thing is, what are they doing?

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What channels are they running?

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Apple levels?

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What is the customer journey

that they're going through?

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Are we starting a lot of the journey on

meta that we're overspending on Google

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and overspending on Amazon because,

we don't control Amazon and people

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are just dumping in brand spend there

and it shows a 10 X return, but it's

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started by something else like YouTube.

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So these are always those kinds of

like points where we look at is when

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you're looking at omnichannel traffic,

we can scale, but should we scale?

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are we in that part

here in this, scenario?

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we're already here, we're

past point dimension returns.

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And Regina, you're asked, take it up here.

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It may not be a good idea.

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what other things are we doing?

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And are we under utilizing any

other channels at the time?

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or that's why I think that we're

thinking about a customer journey.

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We're really simple.

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We're in a war of attention with

everybody else for a product people want.

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Period.

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That's as simple as this really gets.

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That's why meta does so well.

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And it looks like it does poor

is when is the war of attention

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because they have a higher frequency

where Google gets like one click.

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so those are ways to think about it.

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