Check out Andy’s latest appearance on the FoodBevy podcast, Startup to Scale. You can listen by clicking the link and check out the transcript below if you prefer to read!
How To Know If You’re Ready For Paid Ads
Jordan: I’d love for you to explain the name PPC Pitbulls and how you came up with it.
Andy: It’s all after our namesake, my dog, Percy. She’s been a member of the family for as long as my wife and I have been together. When we were deciding on the name, we looked at alliteration and decided it had to be Pitbulls!
Jordan: Why did you get into the paid space around Google and PPC, Pay-Per-Click, ads?
Andy: I kinda fell into it. I have a data background. I was in development, data management, project management, and working with an agency. When I went off on my own to support smaller businesses and help them grow, I wasn’t sure exactly how I wanted to do it, but I had a colleague who was doing Google Ads at the time. He brought me in, we did a couple projects together, and it really hit. I came at it from a technical, analytics-based side, and he took it from a more high-level marketing standpoint. Putting those two worlds together worked really well. Since then, he’s moved on to bigger and better things. Now it’s just me and a few employees, and PPC Pitbulls.
Jordan: A lot of our listeners have dabbled in advertising and some are using it actively, but there is some misconception around Google Ads specifically, and the role they can play in people’s businesses. If people are starting to consider IF they should start using Google Ads, and for what, I’d love for you to give an overview of what brands should start thinking about around the purpose of Google Ads and how you recommend they use them.
Andy: People are running Facebook, Instagram, and even TikTok Ads these days. The way we think of Google differently is that Facebook and these others are called Interruption-based marketing. You’re scrolling and an ad shows up in your feed. That’s great for awareness: you see something you didn’t even know you needed. It pops up and looks good with great imagery, so you go buy it.
What’s cool about Google, and what makes it different, is that it’s what’s called Intent-based marketing. This is when someone is searching and they know the type of product they want to buy. They’re pretty far down the marketing funnel and are ready to make a purchase. They are looking for products like yours, which makes it easier.
From a high-level standpoint, Facebook is great because it can scale a little further, but Google is typically great because, at a smaller ad spend, you’re able to get a little higher return. Google is an easy way, because they have that intent already, to get some first purchases and people coming in. It can be really profitable at that level, but then as you try to scale up from there, we find that you do need to go to Facebook or Instagram to build awareness and scale beyond that.
Jordan: I’m sure most people are familiar with the typical placements for Google Ads when they search in the search engine an ad might pop up in their results. What other placements are there within their ecosystem?
Andy: In what you described, there are actually two pieces. First, the search, the old-school, text-based listing you see on top of all the other search results. The next is shopping, which will pop up even over the top of the text ads. It’s great for e-commerce as it’s very visual with images of your product. Those are going to be the two main drivers of most of your results.
On top of that, there are more awareness-based pieces. They’re great for re-marketing. Those are display marketing, which is going to be on the sidebar of many websites, even in your inbox and YouTube now. If you have any video-based assets, you can pop up in those segments before the YouTube videos start. Facebook makes it really easy to provide all of those assets and it will optimize the targeting along the customer journey, both getting the new customer initially and retargeting existing customers.
Jordan: What does success look like in Google Ads for brands you work with? Are they seeing really high return on investment (ROI)? Is it mostly around awareness? Where are they seeing their success?
Andy: The number we really focus on is ROAS (Return on Ad Spend), which is essentially the number of dollars in revenue for every dollar in ad spend. If you were to put in $1 in ad spend and get back $4 in purchases, that would be a 4x or 400% ROAS.
One of the big things people need to think through is: What are your margins? What can you take as a reasonable ROAS as you get in? It does vary by business. Some businesses can return a 6-7-8x ROAS, but it’s not super common especially as you start to scale up. Typically we tell people you want to think about the 2x or 3x range. Google Ads can really be a great driver for you if you have margins that can accept a 2x or 3x ROAS.
Some people have come to us and said it’s below where their margins are so it doesn’t make much sense. One of the things you can think about is the first purchase ROAS versus the lifetime customer cycle.
As a company, are you using things like email marketing to nurture and build more purchases out of existing customers? If so, you can accept a break-even – $1 in ad spend for $1 in revenue for that first purchase as long as you have their email address and can nurture them for additional purchases. It’s a big strategy that can help on the scale side. In general, we try to look at that 2x to 3x range to get started with Google Ads.
Jordan: Most of my listeners will know when looking down the marketing funnel from awareness at the top and loyal customers at the bottom, I usually recommend that before scaling and investing too much at the top, that you invest in the optimization at the bottom so you know that everyone clicking on an ad has the most optimized flow coming down. That’s where a lot of brands make a mistake. They will throw a bunch of money at ads without optimizing their landing page, copy, checkout flow, and email retention. Then they’re surprised when they’re spending so much money and they’re not seeing the sales or repeat purchases. They will blame the ads because that’s where they’re spending the money, but it’s really all the other things that come below it. Do you find the same thing?
Andy: Exactly. Those are some of the big things. When we first started doing this, we found that there are certain brands where you turn on Google Ads and you get great results, profiting right off the bat. Then there are others when you turn on ads that it’s slow and they think it’s not really working.
We took a lot of time to look at that. What makes these two use cases different? All of those things you just mentioned are the major things that will really help. Businesses want to have them in place before they start Google Ads. Make sure your items are on a website that’s designed to convert: you have upsells in the right place, checkout is easy, and you don’t have to go through 25 steps to finish the purchase. If it’s the first time someone has been on your page, you should be offering a discount to collect their email address so you get them in a flow and you’re constantly trying to sell them again. If you’re paying the same amount as someone who comes through a click, make sure you’re getting the most bang for your buck. Whether you sell them or not, you’re still paying the same amount for that click.
The other big thing we see is a lack of understanding of what’s happening once people hit the site. The simplest thing you can do is have Google Analytics installed. As you go to turn on Google or Facebook Ads, if you don’t know how much you spent and how many purchases you got from it, that’s going to be a big problem. You have to make sure that you have all of your analytics, and behavior & conversion tracking set up. You will be able to understand what purchases you got and where they came from in the customer lifecycle journey.
Jordan: When brands make the decision to start running Google Ads, and they’re in the platform setting things up, what are some of the biggest mistakes you see them making?
Andy: I like to start simple. Don’t go in and set up 15 different campaigns. We see that a lot when we inherit brands from other agencies. It used to be very common that you’d have all these different campaigns, and these specific longtail keywords, with a different bid for each thing someone searches for to find your product. But these days, everything is automation-based. Make sure that you’re sending the data back from your site when someone makes a purchase and don’t get too complex with it. Have one campaign and be sending data back into that campaign to tell Google what’s successful and what’s not successful. A lot of the success you have in Google Ads is based on the data you’re feeding back into it. If you’re breaking everything up with 1,000 campaigns and 1,000 ad groups and 1,000 keywords, you’re just splitting your data that many more ways, so Google isn’t actually able to understand what is happening with the ad.
Jordan: I think that’s very smart. A lot of people make things way too complicated. When creating the ads themselves, are there things you’ve found in terms of the structure of the ad, that help with conversions? Are you putting the main tagline for your products? Are you talking about benefits? Are you sharing emotional vs. functional benefits? How do you approach that?
Andy: It’s really all of those things. When you see the listing, typically it’s 2-3 headlines and descriptions. When you’re creating that, you don’t have to tell Google: “These are the exact headlines I want to show and exact descriptions.”
You basically give Google 15 headlines and five descriptions and Google will mix and match them to optimize them to give you the best outcome. At least one of your headlines should be your brand name and official website. Beyond that, it’s about speaking to the customer, the problems the customer has, and the reasons they should select your product over your competitor’s. Then get to the product as well. Is it all organic? Is it gluten-free? Make sure that’s all in your headlines and then Google will optimize for what works best in general as well as what works best for a given consumer.
If you have enough data coming back in, Google may be able to say for this particular demographic, this is the cheapest way to get protein in your diet. But for this demographic, talking about the taste profile will be more beneficial. Basically, Google is putting in different headlines for different people in different demographics.
Jordan: It’s really cool that there’s that type of learning going on. So when creating the headlines, you should keep each to one selling point. Is that how that works?
Andy: Yes, that’s a good way to think about that. One technical point is to remember that they’re going to be switching these in and out so make sure they at least flow together. Sometimes people put in too many that are duplicative – you don’t want three headlines that basically say the same thing. Remember that all the headlines need to be able to flow as they are put together in different combinations.
Jordan: In terms of budget, what’s the minimum for someone just getting started to see any kind of consistent results?
Andy: Remember it’s all about getting that data back into the model. You want to think about how much you need to spend to get about 50 purchases back in the model. If you’re getting much less than that, there are some different strategies you can try if you know you’re not going to be able to get that many. But for the most part, you want to be able to get about 50 purchases coming back in.
When you go to translate that to a budget, you have to think about what your average order value is. If you’re thinking about that 2-3x ROAS we talked about earlier, take your average order value and multiply it by 50 to get your total monthly revenue. For a 2x ROAS, divide that number by 2 to figure out what your average ad spend should be. That gives you a good starting point.
I always caution people too. You don’t have to go in and spend a ton of money all upfront before you see any results. Start off slow and get profitable first. Then you can think about how you grow and scale up from there.
You want to be measuring results. Start off with a reasonable budget that you can afford to spend. Don’t ramp that up until you’re seeing results come in; good, profitable results.
Jordan: I just did a little back-of-the-envelope math. If your average order value is $30 and you’re expecting 50 orders per month, your revenue is $1500. Half of that would be $750 as a starting point.
Andy: Yes, I think that’s a good starting point. I wouldn’t go too much below that because you want to make sure you’re getting that data in. It may take a month or two before you start seeing profitability so make sure you’re putting up an initial budget spend you’re comfortable with and you can lose for a month or two while you’re testing this out and experimenting to see if this is going to work for you. But I do think that’s a good starting point depending on the size of your brand.
Jordan: Is that the usual investment time you see: a month to two months? Or does it sometimes take even longer?
Andy: It depends. If you’re thinking in terms of when you’re going to get repaid for everything you’ve put out, it may be a little longer. But if I’m running your ads, I’d love to see at least signs of profitability. We talked about a 2x ROAS, so after the first month, we’d like to at least break even. Obviously, if you hit break even at the end of the month, you’ve put up a good deal of ad spend before you got that. So it’s going to take a little while to get to the results that are going to recoup all that. That one to two-month range, if you’re not profitable by that point, it’s time to start asking some questions. Do you need to do something differently or is this channel just not going to be profitable?
Jordan: I have to say that you’re using a lot of the words I like hearing: profitability, break-even, reviewing that account to make sure it’s working for you, and that this channel is good. A lot of brands have been burned by agencies that sell the dream, but leave brands disappointed. So I love that you’re talking about how to reasonably approach this.
Andy: That’s so important. As you’re dealing with agencies, often it can get pretty technical and there’s a lot of data involved, but at the end of the day, someone needs to be able to translate it to where you can understand and give you an answer as to where your money is going. If you’re not seeing purchases coming in – it can take a month or two – but you should be able to see things starting to improve or head in the right direction. If you’re running a higher ad spend and you’re not seeing any purchases coming through, and no one can explain why you’re not seeing them or that it’s going to take six months before you see anything, those are the points where you have to ask some hard questions.
Jordan: I love that!