What are qualities of the most productive client + Google Ads Agency relationships?
A perspective reality for most e-commerce brands is that Google Ads is not the magic bullet you’re looking for to grow your brand. That might come as a surprise to you given we're a Google Ads Agency but here me out.
As Brian Chesky, CEO of Airbnb, so eloquently put "if you want to light up a room, performance marketing is a laser. It can light up a corner of a room." And Taylor Holiday, CEO of Common Thread Agency, added to that idea by saying "obsessing over the ad account is like rearranging deck chairs on the Titanic”.
I’m here to tell you that Google Ads has its role in your paid media funnel but it is almost certainly not your big unlock to growth.
That's because in the lifecycle of a brand, constantly spending 30% of your gross revenue on marketing is simply not sustainable. You stop spending and the revenue goes away.
And this is coming from 10 years of watching brands spend as much as $1,000,000 a month on Google. Some e-commerce brands spend 80% of their marketing budget on Google. Even in those situations, hiring a Google Ads agency is not your big unlock as a business.
So if your big UNLOCK to growth doesn’t exist within Google Ads (or any ad account), what good is a Google Ads agency?
I think the answer to that question comes down to 3 key things a great agency can solve for you:
- Reduce wasted spend
- Properly assess budget distribution (i.e. new vs returning customers)
- Always-on incrementality testing
That is our service in a nutshell. Let’s discuss real examples of each that moved the needle for our clients this year.
How can a Google Ads agency help you with reducing wasted spend?
We had a prospect (now client) come to us in April on the back of a Q1 where they were down 35% in revenue year over year. Upon digging into their Shopify, we found that the leaky bucket was New Customer efficiency. Specifically, Customer Acquisition Costs had ballooned 2.5x year over year.
When we peaked under the hood in the Google Ads account, it was a story all too familiar.
- 75% of spend was going to branded terms.
- Performance Max was a mixture of brand and non-branded terms
- Branded CPCs were 2x year over year
With a few simple optimizations, we paid for ourselves for the whole year saving on average 15k per month in wasted brand spend.
Step 1: Switch brand campaigns to manual CPC, we were able to cut CPCs back down to 2024 levels without sacrificing any click volume.
Step 2: Get branded terms out of Performance Max so we can have a clean and proper look at ROAS
Step 3: Redistributed wasted brand spend to non-branded campaigns.
This may seem obvious enough but most brands don’t have the time or resources to check their agency on all of these facets. The agency deliver what seems to be a healthy ROAS every week and the brand takes that at face value. It’s only when growth slows or reverses that they realize something is wrong.
And by the way, Google wants you to waste spend at every twist and turn. The ad platform has become designed to have novice marketers make key mistakes.
So yes, reducing wasted spend is one core reason to hire an agency and it can be a big deal.
What is the best budget distribution across media channels?
Most e-commerce brands need to use Google Ads to bring in new customers. Full stop. Returning customers can make their way through traditional channels like email, organic social, sms.
Your Google Ads strategy should be focused on first click attribution on a new customer.
With that in mind, your budget distribution should be managed on the campaign level, figuring out the profitability of each campaign and updating budgets to reflect the best contribution margin.
This usually means heavily leaning into Shopping & Non-Branded Search.
Here how it typically looks for a 100k per month budget on Google Ads:
In this example, you’re aggressively targeting 75% of your spend towards Google Shopping and Search. Focused on new customers. Then you’re dedicating 10% of your spend toward upper funnel tactics, testing into YouTube as a discovery platform.
This example can vary quite a bit. But the distribution stays relatively true. Our team tries to never spend more than 25% of our budget on people already searching for us.
How does this change during sales or promotional periods?
This is the key question that your marketing team should be executing on. For example, What is the estimated conversion rate uplift of the upcoming sale? How much budget should we reserve for the sale vs non-sale days?
This is where a great Google Ads manager shines. Looking at historical data, macro trends, pacing towards quarterly goals, they determine the proper
How does always on incrementality testing play a role in your Google Ads Strategy?
Last up is a core feature of your Google Ads agency. Would this sale happen if the user did not see an ad? That is the fundamental definition of if the sale was incremental.
When we’re looking at channels like YouTube & Demand Gen, where in-platform and even MTA attribution usually under-serves the channel's viability, we have to turn to incrementality testing.
As it relates to YouTube, we run a GEO holdout test like the one you see below. Or with branded search, we might run a 50% on / 50% off test where we stop advertising branded search terms in 50% of the country.
The point is this, you never stop incrementality testing. You always need to be testing your hypothesis. Maybe in Q1, branded search spend was not incremental. But in Q2, branded search became more incremental because of new competiton or third party retailers selling your items. That is where you can lean on an agency to really see how you should be spending and where. This is a never ending loop of testing new channels and old to support the growth of the business.
What makes a great Google Ads Agency?
At the end of the day, we're in a client services business. What I like to do is make sure our clients are getting the most expert tactical implementation of Google Ads combined with the holistic strategy of budget distribution, forecasting & creative optimization.
If you can get an agency that is doing all of that and not killing you on price, you've found a winner. If you're not getting that then reach out to Banfana.
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