The day arrives, that day you achieve stabilize the CPA of your Adwords campaigns and you are able to predict how you are going to close the month at conversions level, because you know that you may have 10% variance with your objective CPA.
You present the monthly report, with pride, everything controlled, stable CPA, constant pending growth, little by little you are selling more.
But the fateful question comes:
If we duplicate the Adwords investment, will we duplicate sales?
[bctt tweet=”Are you worried about this question: If we duplicate the Adwords investment, will we duplicate sales?” username=”adinton”]
I experienced this situation years ago, in 2005, the answer was, we should sell more, but I imagine that the CPA will get worse. Beginner error was to increase bids without control, because you had to invest double for yesterday. The problem, and you know it, is that after this, your Adwords account will never be the same again. No matter how hard you work, you usually do not get the ratios you used to manage before.
NOTE: Startups be aware, you will grow faster if during a month you invest 3.33% each day (without counting cumulative) than 100% from one day to the next.
We have recently experienced a similar situation. How a company has duplicated their Adwords investment x2 and this is what we found:
|April vs March||+100%||+40%||+50%||+20%||+60%||+30%|
Or what is the same, a disaster.
What happens when we look at it with attributed data?
Analyzing 100% of the customer journeys:
|Adwords||Add to Cart||New Customers||Recurrent Customers||One click conversions|
|April vs March||+25%||+25%||-5%||+45%|
Does it make sense for your business to pay 4 times your current CPA for a new customer? Have you asked yourself how much would you pay for each new customer?
The key lies in the ability we have to continue monetizing these new clients, but increase our client base by 25% from one month to the next, increasing our capacity to generate new business by 25%, at a strategic level it is remarkable. It is increasingly important in ecommerce to measure the Lifetime Value.
On the other hand, observe
But it has not only impacted on how Adwords has worked better, It has impacted in other channels as well:
|April vs March||Clicks||Conv||New Customers||Assisted Conv from Adwords|
If we only look at the Adwords data, as a single channel, we miss a very important part of the cake. If you detect that this investment increase:
- It’s generating more new business directly in Adwords. (+25%)
- It is generating more new business in other channels. (24% & +33%)
- That 22% of the conversions traffic of other channels have passed directly through Adwords.
Therefore, the previous calculation of x4CPA to get a new customer is lower if we measure the influence of Adwords on at least two channels, SEO and Direct.
Is not it easier when you have all the information to make correct strategic decisions?
How can you tell if an action is correct if you only see part of your traffic?
We must start thinking that clicks are people, and as such, we jump from one channel to another, from one keyword to another, if we do not analyze the customer journey, any optimization will always be lame.