If you want to see your campaigns generate 5x+ ROAS, you first have to identify the reasons why your Google Ads fail to get any positive ROAS at all.
Is it because of your keywords?
On the surface, that might be that case. But it’s much more than that.
We dug deep and uncovered 11 reasons for why your Google Ads fail to generate a positive ROAS and by fixing these we’re confident you’ll be on the path to getting that coveted 5x+ return.
- Lack of oversight
- Lack of structure
- Lack of active promotions
- Lack of engagement in other marketing activities
- Lack of competitor research
- Lack of wasted spend optimization
- Lack of sufficient testing
- Lack of matching landing pages
- Lack of conversion rate optimization (CRO)
- Lack of remarketing
- Not considering CLV
Many treat Google Ads as a set-it-and-forget-it advertising platform, but it requires constant monitoring.
Even if your campaigns are performing well in the beginning, there’s no guarantee they will keep performing the same way in a week or a month, not to mention 3-4 months, when many business owners finally find the time to review it.
Google Ads generates a constant stream of data, which needs to be analyzed, interpreted as insights and acted upon. Bids need to be adjusted, keywords need to be paused or added, new ad groups need to be created, ad copy needs to be updated, etc.
If done correctly, consistent oversight and optimizations can lead to similar results.
Lack of account structure is one of the most common occurrences we see when analyzing underperforming accounts.
A clear structure doesn’t just introduce clarity but improves tracking, bidding and budget distribution.
It’s not a rare sight to see one underperforming keyword being responsible for most of the budget spent, simply because it wasn’t split out and was sharing the budget with all of the other keywords.
With the growth of comparison engines and same-placement advertising (i.e. paid positions on Google Search), online customer behaviour has shifted more towards offer comparison and deal-hunting than click-and-buy (or click-and-sign-up) behaviour.
And these exclusive offers, discounts and seasonal promotions are what allows you to engage more users and, if done properly, recoup your margins throughout their customer lifetime.
Promotions can be a great way to re-activate dormant customers as well.
Here’s an example of such campaign’s performance:
Relying on Google Ads alone will NOT make your business.
Growing a business is hard, it’s true, and no one wants to see their Google Analytics’ traffic flatlining, so many pick the channel they’ve heard of the most, be it Google Ads or Facebook, and hope it will help them generate traffic and scale their business.
However, for a truly successful Google Ads campaign, they need to be leveraging other marketing channels, to build awareness, test their product or service hypotheses, create demand, generate additional audiences for remarketing, find the perfect place for Google Ads in their marketing mix and, ultimately, scale.
And if in the process Google Ads turns out to not be the right channel for them, so be it. Not running it could also mean getting a better return from other marketing investments.
On a similar topic to active promotions, another reason for negative ROAS from Google Ads is often the lack of competitor research.
Good competitor research can help you discover new targeting opportunities, new ad copy angles and new landing page inspirations.
But most importantly, it allows you to gauge your offer against your competitors’, see where you stand, and improve.
This is especially important in the case of Google Shopping, where, as mentioned in our article on 15 Google Shopping Feed Optimization Tips, Google’s algorithm attributes a lot of weight to your product price, and having a price of just a couple of cents higher than your competitors could mean appearing at the end of the Shopping ribbon and thus losing a high-click spot, and possibly a customer (and all their lifetime value).
Just $0.99 in price difference could have got this Amazon ad the no. 1 position
Wasted spend optimization doesn’t end with adding negative keywords once in a while.
It means staying on top of your keyword performance, reviewing, fixing and if nothing’s helping, suspending the underperforming ones, optimizing your budget distribution in favour of the better-performing or higher-potential campaigns, segmenting keywords into new ad groups and campaigns to improve their tracking and budget availability, and finally, monitoring your device, location, audience and ad schedule performance and applying appropriate bid adjustments.
As you might’ve seen in our 18-point Checklist for Improving Google Ads ROI (download it now if you haven’t!), wasted spend can add up very quickly if not optimized on time and correctly.
Here’s the same screenshot we provided there with just 7 clicks generating $200 in wasted spend.
Example from a student house’s account.
We often see a complete lack of testing when auditing new Google Ads accounts, which is severely restricting the potential for improvement.
It’s more or less common sense to run tests on Facebook ads, changing the banner creatives, creating new audiences, finding new angles for the ad copy, but it’s often different for Google Ads.
The banner creatives often get updated after months, the ad copy usually stays the same since account launch and the targeting, while the most tested, often doesn’t have structure or consistency to ensure improvement.
How often does it happen that you click on a Google Ads ad (Search, Display, Video) and get directed to the homepage or a general category page that you have to then navigate to find what you were looking for?
And how often do you stick it out, find what you were looking for on such a page and order or sign up?
I bet not that often.
Our experience shows that this behaviour is shared by most users.
What ends up happening, is, by not directing users to the landing pages that match their search intent, many advertisers are doing a good job of generating clicks, but a bad job of converting them, which builds up wasted ad spend and furthers the goal of reaching positive ROAS.
A well-designed ad is just 50% (if not less) of the success on Google Ads. A matching landing page and a well-optimized website is the other 50%.
Where are the boots?
As close as a matching landing page gets you to positive ROAS from Google Ads, it’s still not enough to ensure a 4-5x return.
What bridges that gap is CRO, or conversion rate optimization and it’s the not-so-secret sauce that allows many of our clients to maximize their conversions and increase the return on every dollar spent.
These optimizations range from basic website speed optimizations to more advanced urgency-building widgets and user-generated content on product pages.
This is something we constantly say to new clients who don’t yet see the need for remarketing:
A high percentage of your potential customers require more than 1 interaction with your page to make a decision, and, by not engaging in remarketing you’re losing a large portion of your potential revenue (estimated by looking at the average Time Lag, explained in more detail in our 18-Point Checklist For Increasing Google Ads ROI).
A well-thought-out remarketing campaign includes different messages and creatives for different audiences and, ideally, different stages of the funnel.
You’ve seen me refer to customer lifetime value a couple of times now.
I’m sure everyone knows what it is, but just for the sake of clarity Customer Lifetime Value or CLV, is the total amount of money your customers will spend on your products throughout the entire duration of their relationship with you.
And you have to account for it when measuring your advertising results.
If you’re able to generate repeat purchases through remarketing, email or just plain good customer experience, getting even a 100% ROAS can scale up to 1000% if the customer stays with you for months or years.
Here’s a handy calculator from Hubspot that you can use to calculate your CLV.