All advertisers are ultimately working towards the same goal with their campaigns: increasing sales. And even with plenty of resources available to help educate advertisers and marketers on best practices, there is still a major underlying problem. When a business’ profits start to decline, advertising budget is often scaled back or cut off for a period of time. We’ve witnessed this firsthand working both with advertisers that are new to the field and veterans with decades of experience.
Why Is This a Mistake?
Cutting your advertising budget can have major implications now and down the road.
- It decreases your brand exposure.
- You’re opening the door for competitors to swoop in and gain market share and ultimately create a barrier to entry.
- If sales are down, it could mean that customers can’t currently afford to pay full price. If you used to offer discounts or promo codes in your ads, stripping them out puts you at risk of damaging your reputation with loyal customers.
Why Do We Make These Mistakes?
It’s in our economic nature. As marketers, it’s embedded in our DNA to cut costs when profits decline. But as our founder Peter Dulay says: “The number one reason advertisers fail to grow their business through online advertising is that there is a major disconnect between how they spend their dollars, and how they get their sales.”
It comes down to a lack of understanding. When advertisers don’t fully comprehend how their dollars are directly turning into sales, it quickly becomes the first place to scale back spending. Most marketers focus on the aggregate spend they’re putting into advertising versus what they’re receiving out out of the entire program.
Google Isn’t Helping
Google has made it more increasingly difficult to extract concludable data. Here are ways this happens.
Lack of tracking capabilities – If you rely on Google for the majority of your advertising, you’ve probably recognized the gap in tracking capabilities. Before you challenge us by saying “But what about the Target ROAS bidding strategy in AdWords,” remember that it only works properly if you’re tracking conversions 100% accurately. Here are a few common scenarios where tracking sales and conversions can get messy:
- When a large portion of sales occurs from phone calls
- Conversion tracking is not setup correctly
- Not linked with Google Analytics
- Revenue tracking is not utilized
- You’re tracking page views or newsletter signups instead of sales or leads.
- Tracking is set up twice
Meddled or inaccurate conversion data often results in a decrease in confidence in your advertising methods and thus, a decrease in spending.
Shopping campaigns are difficult to manage at a granular level because they are granular in nature. When the budgets are spread across so many products, it becomes harder to get product level data fast. Attempting to determine how your advertising efforts are performing for that particular product is difficult to see at-a-glance.
Enhanced Campaigns in Google Adwords stacks too many segments on top of one another. It is designed to manage campaigns across multiple devices, geo-locations, and ad schedules. Originally, best practice was to segment by geography and device. While the lack of segmentation does help keep the data in fewer ad groups, managing multiple dimensions in a single campaign can definitely meddle the data, making it difficult to see accurate results.
What’s a Better Strategy?
If the biggest mistake advertisers are making is scaling back ad budget when profits decrease, is doing the opposite is the right solution? Most of the time, no. A better strategy is acquiring clear insight into your different campaign areas (with their ROAS) and making adjustments to your budget and bids accordingly. An experienced advertiser learns exactly where to allocate dollars, how much or how little to allocate, and the expected return.
They are experts in surfacing advertising data to form actionable decisions. It’s about knowing how to track conversions effectively. Using this insight, you can optimize your strategy and typically see drastically better performance.
Final Thoughts: Don’t be too quick to cut back your advertising expense when you don’t see directly correlated sales. By doing this, you could actually be contributing to a decline in sales and profits.
Ready to stop guessing what to do with your advertising budget and making on-the-fly decisions? Let us take a look at your account! We’ll help you optimize your campaigns and take a more strategic approach to your advertising.