Cosmetics online store promotion: increase of ROAS by 1.5 times without reducing income and without increasing budget for clicks

*with a 15.17% decrease in the click budget

Client

Online cosmetics and manicure products shop with a network of offline shops in Kyiv. Macro-level customer base is divided into two parts: B2C (small average check, mostly one-time purchases for personal use) and B2B (wholesale orders from salons and masters, with a high average check and LTV).

Period of work

Work on the project is ongoing from 01/07/2019 to the present.

Our task

Since any business is a living organism, constantly changing under the influence of external factors, in 2 years the original objective from the client "To increase sales" was transformed into a more complex but financially effective objective — to maximize advertising revenue.

Description of work

Over such a long period of work on the project, we have accumulated many interesting statements, and it is virtually impossible (we tried) to describe them all in one story. Therefore, we decided to share the most significant and interesting aspects. Conventionally, all work on the project can be divided into 3 periods, each of which had a different impact on the final result of promotion.

Period I — the start of the project

At the time of launch, the client was already running contextual advertising campaigns on Google. After the audit, the Aweb team prepared an account development strategy to increase conversions. The ad campaigns in the account were set up at a high enough level, but the client was interested in growth and scaling, and for that, the global strategy needed to be reviewed, and the approach changed. Global objectives:

• Conversion trackingThe client demonstrated a systematic approach to the business, so internal business processes were clearly regulated, all orders were recorded in CRM with the indication of the source and further tracking of traffic sources efficiency by key business indicators (LTV, CPS, CPL, AOV). On our side, we had to set up proper tracking of all types of conversions on the website (e-commerce, calls, form submissions).

• Setting up advertising campaignsTogether with the client, we prepared a list of priority product groups. The main challenge at the stage of selecting groups for launching a PPC campaign was to combine the client's wishes with the ability to quickly achieve the goals set in the number of conversions from the PPC position.
  For example: there is a product group A with which the client makes the maximum profit, and it’s natural that the client wants to increase sales in this particular group. But the volume of search queries for this group of products is minimal, so there is no traffic, so there is no way to quickly get a sufficient number of conversions through contextual advertising. At the same time, group B products, which is able to provide a significant number of conversions and is recommended by PPC experts, bring minimal profit, so it makes no sense for the client to promote this group. In the end, together we found group C, which combines both the client's wishes and the possibilities of implementation on the side of PPC.

Advertising campaigns set up at the start of the project work:

• Optimization

Before starting cooperation with Aweb, the client ran Google Ads contextual advertising campaigns for a long time. Since the assortment of the online store is quite broad, the account contained a large number of active advertising campaigns. Based on the audit results, we have suspended campaigns with low efficiency. Advertising campaigns that showed the potential to improve performance were kept active, developing a plan to optimize them.

Optimization and set up actions in period I

We have set up 74 advertising campaigns: search, CMN, sales, and video campaigns. The main principle behind optimizing campaigns across all networks is a non-linear approach to measuring effectiveness, which consists of the following principles:

• • accounting for conversions according to the model "Position-aware";
  • when evaluating the results of an advertising campaign, to the basic criteria (number of conversions, conversion price) we added associated conversions in the form of a coefficient for evaluating the effectiveness of a particular advertising campaign. Using this tool is a kind of "fuse" that protects against the shutdown of campaigns (mainly contextual media and video campaigns) that were bringing in direct conversions at a high cost, but at the same time, they are an intermediary for the completion of conversions in other campaigns;
  • updating ad texts, and a change in the approach to creating texts: away from universal descriptions for a niche and towards targeted descriptions for a specific product category;
  • transition to auto bidding strategies. It's strange to read about this in 2021 (it's strange to write about it too), but in 2019, auto strategies were not as popular and, in addition, did not always produce predictable results. The process of switching to auto strategies was quite lengthy because of the large number of active advertising campaigns;
  • launching a Smart Shopping Campaign. A regular ad campaign on manual settings brought in almost 40% of conversions, at a fairly low cost per conversion. For the first few weeks, both the regular and smart campaigns ran in parallel. As a result, the Smart Campaign was almost 40 times more effective in terms of cost per conversion. Naturally, as the traffic volume increased, the cost per conversion also began to rise, but the Smart Campaign was still more effective;

• launch of Dynamic Search Ads (DSA). For e-com projects, this is an ideal tool since it allows you to collect traffic for queries that fall into the “Few queries” status in a regular search advertising campaign. In addition, launching such a format saves time on configuration, which is especially important when there are a large number of SKUs.

In addition to extra traffic, this format also allows you to reduce the cost per click.

II Period — COVID-19 Pandemic, Lockdown and Saving Antiseptics

The global task for this period was to squeeze the maximum out of a fixed budget for clicks. Testing new hypotheses, launching advertising campaigns in new directions, or increasing the budget for more effective advertising campaigns — everything was done within a fixed budget. Accordingly, the team’s main task was to promptly respond to changes in the performance indicators of already launched ACs, suspend the least effective ones, and use the freed funds to either test new hypotheses or scale-up already successful ACs in the account.

Optimization

• 2020 was a pretty volatile year for just about any business. For some, quarantine restrictions and lockdowns became points of growth that have opened up new opportunities, while for others, they caused a complete stoppage of business. In our case, we managed to achieve a balance: on the one hand, part of the offline business suffered, and there was also a significant decline online, since the client’s target audience (beauty salons and beauty masters) under quarantine restrictions either worked at 50% load or did not work at all; on the other hand, the life jacket, which almost doubled the number of transactions and income, is an increased demand for antiseptics, of which the client had more than 75 SKUs in different volumes and for various purposes.

After three months of active trading, demand began to fall slightly, competitors pulled themselves up, after which efficiency began to decline. Therefore, further, the task of meeting the demand for antiseptics was transformed into the distribution of the budget between priority areas to obtain the optimal number of conversions.

• Testing automatic strategies. In the second period, we switched all active ad campaigns to automatic strategies, depending on the client’s goals concerning each category, from the “Maximum Conversions” strategy to the “Target ROI”. Factors influencing the choice of a particular strategy for specific AC were customer goals which included testing demand for a specific brand or category, maximizing profit from a product, increasing turnover by category, and others.

• Suspension of AC with low efficiency and reallocation of the budget to more efficient ones. During the period of unstable demand due to quarantine restrictions, the client, for obvious reasons, was not ready to increase advertising costs. Still, at the same time, realizing the importance of the continuous work of the Republic of Kazakhstan to maintain efficiency, the budget was not significantly reduced, which allowed us to preserve indicators at the desired level.

• In addition to those already mentioned, our specialists have carried out the following: testing video campaigns for “cold” audiences, testing remarketing audience segments for Display Networks, launching adaptive search and display ads, testing the effectiveness of the advertising campaign for competitors and for our own brand.

The first month of full-fledged cooperation with the client was August 2019. The CPC channel performance statistics after a year of cooperation (August 2020) is shown below:

Budget per click was not changed

III Period Was Transition to Maximizing Profit From Advertising Investments, Searching for the Optimal ROAS Indicator, Promoting Offline Outlets.

The primary markers of this period were the maximization of advertising revenue and the use of contextual advertising to increase traffic to offline outlets.

As we said above, any business is a “living organism” that changes under the influence of external factors, and the goals change accordingly. By ensuring a stable flow of transactions and accurately predicting costs and revenues from digital, the client was able to devote some of the resources to experiments to find ways to increase the profitability of advertising campaigns.

Optimization

• We divided the smart shopping ad into two advertising campaigns. The main reason for this was to preserve the ability to experiment with bidding strategies and product groups (conducting such experiments in one advertising campaign could lead to a sharp decrease in the number of conversions and revenue if unsuccessful).

• We first switched shopping ads to the Target ROI strategy and then to the Maximum Conversion Value strategy. The main reason for switching to the latter strategy was a sharp cost increase, while revenue growth lagged by 23%.

• Together with the change of strategy in the Google Ads account, we have taken the following optimization actions:
  • suspended product groups with ROAS below the break-even point;
  • made adjustments to the product feed, adding optional attributes to increase the clickability of ads in shopping campaigns;
  • adjusted the budget on a regular basis based on data from the Google Ads Results Planner;
  • client-side adjustments were made to improve the site's UX.
• Launch of a local ad campaign for offline shop visits. Despite quite good conversion results for the local ad campaign, the actual data on the offline shop turnover did not show sufficient growth, so we suspended the local ad campaign.

• • • Due to the low effectiveness of the Local ad campaign, we decided to test the Smart ad campaign format on two of the client's priority offline shops. This format allows us to combine two goals: to encourage visits to the offline outlet and to push for online purchases. By integrating with Google My Business service, 2 buttons can be added to the ad: route to the offline point, call (to the number of the specific offline point, not the number of the online shop), and standard: go to the website of the online shop.

The statistics for this type of advertising campaign are as follows:

As a result of the successful test run of two ad campaigns, our specialists decided to scale up: today Smart ad campaigns are launched on all offline shops of the client's network. Results of the project in numbers (comparison of the first month of the project and data for the same period 2 years later):

Conclusions

• • 1. Transformation of business goals in the process of working on a project is a natural process. The main thing is to react quickly to changes and adjust the strategy in time, which is only possible with a constant exchange of information between the client and the agency.
    2. It is impossible to take a linear approach to problem-solving. If one tool does not work, you need to keep testing alternatives.
    3. Increasing revenue without increasing the budget for clicks is feasible (and without reducing turnover).

Google Ads toolkit involved in working on the project

Types of advertising campaigns:

• • • Search network campaigns
    • Context media campaigns
    • Shopping campaigns
    • Smart campaigns
    • Video campaigns
    • Discovery campaigns

Ad formats:

• • • Expanded text ads
    • Adaptive search ads
    • Dynamic search ads
    • Adaptive media ads
    • Graphic ads
    • In-stream; out-stream ads

Bid assignment strategies:

• • • Target price per conversion
    • Maximum conversions
    • Maximum ROI
    • Target ROI
    • Maximum shows
    • Price per conversion optimizer

Project participants:

• Project manager: Ekateryna Tymoshenko

• PPC specialists: Halyna Lyman, Olexander Shylin

• Head of the contextual advertising department: Halyna Lyman