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Are you a CPG brand looking for an alternative to Facebook and Instagram Ads to drive traffic and sales on your website? Google Ads may be a great option if you’re looking to avoid paid social ads or just want some added volume on top of what you’re already getting on those platforms.

Intent-based vs. Interruption-based marketing

Google can be such a powerful ad platform because it relies on what we call “intent-based” marketing. Potential customers seeing your ad have already expressed an interest in products like yours, so they’re pretty likely to convert if you can get in front of them! This differs from social media “interruption-based” marketing, where you are building awareness with potential customers scrolling through their feeds without a direct intent to purchase.

Unfortunately, however, many CPG brands (especially smaller ones) decide to run Google Ads and, after spending a bunch of money, find that it’s just not working for them. We’ve spent the last few years trying to determine the differences between brands that find steady profit on Google Ads and those for whom these ads “just don’t work.” Here’s how to determine if Google Ads will work for your specific business before you start:

  5 Questions to determine your readiness for Google Ads Success

We’ve found that brands that can answer “Yes!’ to these 5 questions are much more likely to find success with Google Ads 

Do you have your products listed on a site designed to convert?

If you’re getting traffic to your site but folks just aren’t buying, you should update your site for a higher conversion rate before spending money on paid traffic. Here are some “low-hanging fruit” or best practices that we look for:

• Optimized product images, titles, and descriptions

• Copy that does a good job of showcasing the key features of your products to potential customers

• Quick and frictionless checkout processes

• Discounts for new customers making a first purchase

• Attractive, modern site design

We often suggest Shopify as a platform as it helps with many of these basics right out of the box.

Do you have the capacity to ramp up sales?

I often tell the story of a local ice cream brand that came to us looking for help driving more purchases on their site through Google Ads. The problem was that they were looking to do only local deliveries with a single driver who had a capacity of just 45 orders per week. Even if we completely maxed out their capacity, those 45 orders were unlikely to bring in enough revenue to make the investment in Google Ads worthwhile!

Before you look to drive more sales with Google Ads, make sure you have the inventory, warehouse and shipping processes, customer service capabilities, and staff to handle the extra traffic and orders!

Are you measuring where your traffic and purchases are coming from?

If you aren’t measuring which channels are driving the traffic and sales on your site, you’ll have no way to know what’s working in Google Ads or any marketing channel. Measurement is an absolute must for digital marketing success.

A great first (and free) step is installing Google Analytics on your site.

Do you have sales coming through on your website already?

Google Ads (or any paid ads, for that matter) can easily be a waste of money if you expect them to drive your first sales on the website. You’ll want at least a few regular orders coming through your site before you turn to paid ads for more traffic. These initial sales will allow you to test your website, your processes, and your measurement. The resulting customer list will also give you a great starting point when it comes to targeting your paid ads.

If you’ve stood up an ecommerce store and haven’t received any orders yet, try some of these before spending money on ads.

• Try sharing the website with customers you’ve sold to in person before

• Email any existing customer list you have

• Reach out to friends and family

• Sell at farmers markets or other local outlets and share a card with the website with each order

Do you know your goal for Google Ads?

Before spending money on Google Ads, you should have a clear vision of what success on this channel would look like. The first step is understanding your target ROAS (more on that in a second). For most businesses, however, the goal will likely go a bit deeper than this. Perhaps you are looking to expand in a particular state or region. Maybe you only want new customers and don’t want to spend money targeting existing customers.

Whatever your goal, make sure you (and the rest of the business) are clear on it, so you’ll know whether Google Ads are working!

Measuring Results

Measured results are a key component of Google Ads success, but what numbers should you use to define and measure success? While your business likely has its own unique goals with specific KPIs for each, here are some basic ones that you should start with when diving into Google Ads.

Cost Per Action (CPA) and Return on Ad Spend (ROAS)

Return on Ad Spend (ROAS) and Cost Per Action (CPA) are the key metrics that Google’s Smart Bidding models run on. To tell Google the target results you require, you’ll need to translate your goals to one of these two metrics. Let’s start with CPA.

• CPA = Total Spent on Google Ads / Total purchases from Google Ads

If your business spent $10,000 on Google Ads and got 1000 purchases, your CPA was $10.

ROAS is a similar figure, but it considers each order's value. This is good because it lets you attribute more value to larger orders.

• ROAS = Total Google Ads Revenue / Total Spent on Google Ads

If your 1000 purchases above represented $40,000 in revenue (avg. order value of $40), your ROAS would be 400% or 4X.

But what is a good ROAS or CPA to shoot for?

The next question you’ll likely ask is, “What’s a good ROAS for Google Ads?” The answer is: it depends…

We find most success scaling ads for brands that can accept a ROAS in the 2X-3X range, but at the end of the day, you need to set a target that is still profitable for your business. Calculating the right target for your unique business depends on your costs and margin on each order.

Customer Lifetime Value and Profitability

One factor many brands overlook when starting out is the concept of Customer Lifetime Value or CLTV. This is the average total revenue over the lifetime of each customer. Many brands will find that the majority of the revenue generated from the average customer comes not from the initial purchase, but from subsequent purchases. This is especially true for brands with a loyal customer base who do a good job developing and nurturing a long-term relationship with the customer.

As in the example above, imagine that your average order value is $40. Once you figure in your cost of goods sold, warehousing, shipping, and other overhead expenses, perhaps you register a profit margin of about $20 for each order. In this case, the 4X ROAS and $10 CPA from the example above are profitable as you will still make $10 ($20 margin - $10 CPA) on each order. Since you make money on each order, you could call this scenario “first purchase profitable”.

As I mentioned earlier, however, for many brands, scaleable results are found in the 2X-3X ROAS range. A bit lower than the 4X we saw in our example. Imagine your brand is looking to grow its Google Ads results at a 2X ROAS. You may have already realized that if you spend $20 to get the $40 order (2X ROAS) and your margin before ad spend is only $20, this ROAS leaves you just barely breaking even.

The beauty of loyal customers who drive a high CLTV, however, is that while they may find you on Google or through some other channel the first time, they are likely to return and buy again. This may be a spontaneous visit back to your website, or even a visit that you nudged via email campaigns, for example. In our previous example, you may see that while the first purchase at a 2X ROAS was not profitable, if the second purchase came from a direct website visit, the total margin from this customer’s two purchases would now exceed the original ad spend. We’d call this example “second purchase profitable”.

Especially for strong brands with loyal followings, measuring and focusing on CLTV and profitability beyond the first purchase can be a winning strategy on Google Ads. Knowing these numbers can allow you to accept a slightly lower ROAS than your competitors, which makes your results far more scalable.

Ready to take the next step?

Are you interested in running Google Ads for your CPG brand but unsure where to start? Download the Digital Marketing Maturity Assessment at ppcpitbulls.com/assessment. This simple checklist will allow you to assess what stage of Digital Marketing Maturity your company is at and what steps you need to prepare for success in Google Ads (or any online marketing channel, for that matter).

PPC Pitbulls is dedicated to helping passionate product people simplify the digital marketing landscape to build more authentic customer relationships and sales online. If you have questions about any of this information, email me for an introduction.Request an Introduction.

Jordan Buckner

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