October 8, 2021
The Ideal QA Process in Digital Advertising
Imagine trying to solve a puzzle with only half of the pieces. Through intuition and lucky guesses, you could probably assemble a corner or two, but you will never complete the full tableau without every piece. If you’re an ecommerce retailer not tracking revenue, then you’re trying to solve the paid search puzzle without the most important piece. You are also wasting a great deal of spend, and missing growth opportunities within your accounts. Here’s why direct revenue tracking is an absolute must-have for ecommerce advertisers.
Don’t let missing pieces ruin your PPC strategy. Image via Pixabay.
The CPA Myth
If you are an ecommerce retailer focused entirely on improving CPA, you will ultimately end up cutting off traffic to your highest value products. The example below shows a retailer selling high-AOV products directly through AdWords. Looking at just conversion data, the first campaign clearly presents an opportunity for additional investment, with a much higher conversion rate and lower CPA.
Adding revenue data, however, changes the analysis. In this case, we see that the second campaign drove 200 times more revenue than the first campaign. Even though conversions are cheaper in the first campaign, the poor revenue performance there means that campaign operates with a ROAS of 0.43. The second campaign, however, has a ROAS of 2.67. In this case, campaign #2 offers the real opportunity to drive business and revenue growth, and should be a key focus of account strategy.
Looking at this data, you may think that you can predict revenue performance based on the relative value of the search terms in each campaign. This strategy rarely works, however, especially for higher-AOV advertisers who see a wide difference in order size and average revenue per sale. In the example below, product 1 is the cheapest product available on the site, but also generates more sales, and more total products sold, than products 2 and 3. In this case, you can increase revenue and improve account-wide ROAS by reallocating spend from campaigns focused on products 2 and 3 to campaigns focused on product 1.
In paid search, what you don’t know can hurt you. Without accurate tracking of direct revenue, you will never be able to identify areas of opportunity and wasted spend within your paid search efforts. If increasing revenue is important to your business, then you need to begin tracking revenue immediately.
