G ADS

Merino Wool Clothing

A well-known clothing brand that sells mostly on Amazon asked to analyze the G ads account.

A well-known clothing brand that sells mostly on Amazon asked to analyze the G ads account. In accordance with the task, we requested all needed information and accesses. Needed info:
  • Which products are the best-selling?
  • Which have the highest margins?
  • What cost we set for promoting existing product items, what campaigns were launched before our cooperation?
Accesses: G ads, G Analytics, G merchant, G search console, Shopify admin

What did we do first?

  1. Collected all existing information about website traffic and expectations (Target ROAS; LTV based ROAS)
  2. Checked general account settings (Conversions, audiences, negative keywords, placements, scripts).
  3. Checked existing campaigns (Product groups, main distributing channels, % ROAS)

Results

We proposed to pause almost all advertising campaigns except those aimed at advertising the Brand. These actions saved $12000 per month. In addition, we asked to reconsider expectations regarding the target ROAS since it could not be achieved in the current competitive environment with existing website settings. PS: All acquisition campaigns were paused. Looking at the screenshot, you can see almost constant profit indicator (blue) with a decrease in advertising costs (red). 

How did this happen?

A story about why proving that there is no solution can be more effective than solving a problem.

We received such numbers to make forecast about ROAS:
AOV (Average Order Value): $100 COG (COST OF GOODS): $70 Discount: $16 Profit per Sale: $14 Break even ad spend: $14 Min ROAS: 7.14
As I mentioned at the very beginning, the company gained success by selling on Amazon. The website was used to upsell repeat customers from Amazon. The company could not cancel discount offers. The price of the products, according to company policy, could not be higher than on Amazon. So, that we faced reality where we've got calculated minimal ROAS. mROAS: = (1/0,14) *100=714% However, according to existing data, competitive ROAS for G shopping (via pMax): 350%. To summarize, we couldn't squeeze into market with Break even ad spend:16$ when other companies pay 27$ (CAC).

What's about existing campaign?

We found several crucial mistakes:
  • Lack of product segmentation in terms of ABC analysis, average order value and margin.
Company sold socks for $19 paying for customer acquisition $27.
  • No negative keywords were used
Product titles included bundle items, and this additional items were added to ads by default. Many requests were inappropriate.
  • Poorly optimized titles
The company used the same structure of titles for G ads as the used on Amazon. [Brand name] — [Product] —[Specification] — [Additional items as the gift]
As a result, the company overpaid for loyal clients. Clients were looking for brand name and could be found it for free. However, the company paid on average 27$ for each branding request.