January 9th, 2022
eCommerce Merchants: This is why your past Google Ads Agencies have failed you
Written by Nico Photos
Image: A Budweiser billboard in Harlington, TX — Circa 1914
Table of Contents
As a merchant working with Google Ads agencies in the past you may have been disappointed in one of these ways:
🍑 After a little while, performance stagnated (or never improved at all )
🍑 Once onboarding was done the agency suddenly seemed to care less
🍑 There was a lack of transparency in reporting or answering questions
🍑 You didn’t know who your account manager was (…?)
And if you managed to dodge all of those bullets you may have come to the disheartening realization that, even though your agency knew Google Ads well and delivered a decent service, they came up short in grasping the realities of business in an ecommerce environment, you might call this “The Generalist Dilemma”.
When I (Nico here ) managed the media buying team in a large agency setting, a strange pattern emerged. In an attempt to keep our ecommerce clients on board and happy with our service, I would end up bypassing account managers and consulting/strategizing with the clients myself—and:
Almost 1 for 1 they asked if I would ditch the agency take them on as a client of my own.
This was not an ethical problem I was eager to dip my toes into, but at that time the concept of building an agency catering only to ecommerce growth was born.
While fleshing out this agency idea, my partner and I undertook some thorough research. We talked with dozens of online merchants, past clients, friends in the ecom space and served as a Fractional CMO for an ecom store. We also drew heavily from our personal experiences as partners in an ecom business of our own.
We wanted to understand what it really would take, not only to build a Google Ads agency, but to build the most valuable agency service possible for our ecommerce partners.
Why are good Google Ads agencies so hard to find?
First let me say, a “Google Ads agency” is a wildly variable commodity.
🍑 There are agencies as small as a couple of people and as large as thousands of employees
🍑 There are “marketing” agencies that are, in reality, just web design companies who want to build some recurring revenue streams, they usually outsource their ads management. They also usually “do it all” e.g. Paid Search, SEO, Paid Social, Organic Social, Email, Local SEO, Content, etc., etc., etc.
🍑 Then there are channel specialists, that only deliver Google Ads (and perhaps a few complimentary services), but they service any and every client or vertical from SaaS to Local Businesses to merchants like you
And from working in agencies, speaking with merchants who’d worked with agencies, speaking to agencies ourselves, we found that even the best “channel-specific” Google Ads agencies were lacking a full grasp of how to best leverage Google Ads for Ecommerce Growth.
Specifically, we discovered three key shortcomings:
Shortcoming 1: Google Ads Agencies “do it all” (and badly)
Google ads is a massive platform with at least 4 distinct channels grouped under it (Search, Display, Gmail and Youtube). You may have been dazzled by all the knobs and buttons last time you poked around it.
It can be effective for nearly every business size, vertical or use case. “Can be” being the operative words.
What it takes to use Google Ads effectively are two very distinct skillsets:
1. A thorough knowledge of the platform and its capabilities
2. A deep understanding of the goals of the business and how best to leverage that platform to achieve them
Ecommerce has its own peculiarities, its own mathematics, its own hurdles that must be overcome. Even within “ecom” as a broad spectrum, there are such a huge variety of business models, growth strategies and overarching goals within the category.
So it’s unreasonable to expect an agency to be able to have an equally deep understanding of lead-based businesses, local services, physical retailers, SaaS companies, etc. Not to mention the subcategories within each (for example, lawyers vs. dentists—both need leads but the methods you would use to successfully generate them are quite different).
This problem is compounded when the agency offers a smorgasbord of unrelated services like SEO, Web Design, Creative Production, Content Marketing, etc., etc.
But, as covered above, even channel-specific agencies, (e.g. Google Ads specialists) can fall into this trap of “doing it all, badly”.
Shortcoming 2: Agencies do not optimize your account for profit (?!)
Google Ads provides a handy report that tells you the ROAS (return on ad spend, or how many dollars spent on advertising compared to how many generated in sales) and it’s very common practice within ad agencies to set a single ROAS target for an entire ad account.
But the truth is, this is lazy management.
Why? ROAS ≠ profit!
There are many examples of how this is but let me give you one: your products don’t have the same COGS, the same shipping costs. They don’t have the same rate of returned orders. They don’t generate repeat purchases at the same rate. So how can you set a single ROAS target across your entire catalogue?
Let’s take an example:
Product X has a gross margin of $72/unit, its customer return rate is 8%, buyers who come in through this product typically buy upsells and complimentary items over the next 60 days that accumulate to an average of $22 more profit.
Product Y has a margin of $61, return rate of 1% and upsell over 60 days is $42 on average.
Product X has a total profit value to your business of $88.22 ([$72 – 8%] + $22) over a 60 day period from when it’s first sold (not accounting for marketing costs).
Product Y has a total profit of $102.39 within 60 days.
Now, if you’re optimizing for customer LTV we’re looking at a ~$14 (almost 16%) difference in profit between these two products in favor of Product Y.
But let’s say you need to turn a profit on the first sale, well then you’ve got a ~$6 difference in favor of Product X.
This kind of simple mathematical oversight can be the key to unlocking huge amounts of lost profit in your account.
Simply put: Demand that your agency thinks beyond single account ROAS and understands what drives your profit.
Shortcoming 3: Agencies leave out half of what makes Google Ads work best
Google Ads agencies generally know about Google Ads. They like the varied grays of the interface, the comfort of the data table. They love analyzing which ad got how many clicks and what audiences showed the best click-through rate…
Look, your ad account is important. Its structure and the expertise with which it is run can have an enormous impact on your sales and growth.
But this is not always the case. Some Google Ad accounts, even when perfectly structured, won’t deliver the results you’re looking for.
But we’re a Google ads agency, right? We’re supposed to sell you on our service, not out of it.
Well, the truth is that we’re an Ecommerce Growth agency before we’re a Google Ads agency. And the hard fact is that your ads are only part of the process of convincing a stranger somewhere on the internet to buy your awesome thing.
Think about it, you’ve seen Google Ads before, you’ve clicked on them, you know how they work. Did that last ad you clicked on really seal the deal for you? Were you totally pumped and ready to buy because of the beauty of that copy? If we’re all being honest, the answer is no.
But take a moment here, think about the last Google Ad you clicked where you actually bought something. How did that process happen?
I’ll tell you:
1. It all started with your search intent. You were looking for something
You needed a solution to that problem you were experiencing, maybe your running shoes looked a little too dingy, your laptop was overdue for an upgrade or your skin needed some serious organic moisturizing.
2. The ad you clicked seemed to be a good match for whatever you were looking for
The image looked good, the price was along the lines of what you were thinking, it said it was organic… so you gave it a little click.
3. You wound up on a web page that followed through with the promise of the ad
It loaded fast, it showed a few more nice images of the product. Maybe it provided a size guide that helped you figure out whether to get the medium or the large, and it had a bunch of social-feed pictures of real people using or wearing the product. Maybe you saw some press mentions or reviews that gave you a little faith.
The first two parts of that process are controlled by your ad account. The last isn’t.
And there are factors that go beyond this. In fact there are 6 exact factors that individually influence your potential for growth as an online store (we’ve written extensively about them here).
The unfortunate fact is that your other agency had no idea about these harsh realities, and even if they build a perfectly structured ad account, there was still the chance of failure (or at least not reaching your full potential).
And there you are, left thinking Google Ads doesn’t work for you and scratching your head about which tactic to try next when in reality your ad account could have generated an additional 5, 6 or even 7 figures in revenue every month.
Our Strategy For Building A Top-Tier Google Ads Agency, Specifically Designed For Online Merchants
After uncovering the major factors that prevented a successful Merchant/Agency relationship, we had the framework we needed to build a top Google Ads eCommerce agency with the capability to help our clients achieve actual growth.
We felt that if we could solve the shortcomings laid out above and be held accountable for profit and growth across the channels we managed we’d have an agency service that we could truly be proud of, and certainly one of the best ecommerce marketing agencies around.
So I’ll cover each solution of our offering in full below:
a) how and why we chose which clients we’d service
b) how we build and optimize your account for profit, and
c) how we provide the missing half of what makes Google Ads so effective.
At the end, I’ll cover how we hold our team accountable for your growth across the channels we manage.
Solution 1: Exclusive focus on ecommerce merchants
We provide Google Ads management services for ecommerce merchants at launch, and at 6 and 7 figures in annual revenue. Within this range we have a deep knowledge of the levers available to obtain maximum growth, both within and outside your ad account.
For example, here is a graph from Google Ads and screenshot from Shopify of a client we took from launch to 6 figures in monthly revenue over a 5 month period and hit an average, per product ROAS 89.25% above their target without sacrificing scale:
This kind of growth wouldn’t have been possible without expertise in Google Ads, for sure. And some agencies can claim that level of expertise.
But what truly made this rate of growth possible was an understanding of the underlying structure of an ecommerce business, what drives a customer to buy online and how best to leverage Google Ads within the confines of those realities. Namely:
🍑 We worked with the brand’s team to set variable ROAS targets by product category, not a simple “1 size fits all” approach across the entire account. This allowed us to unlock a level of scale that wouldn’t have been possible without this understanding.
🍑 We also studied the entire product catalog and gathered data on which initial product purchases lead to the best customer retention, therefore growing non-advertising profit over a 60-day window. We could afford to spend more to acquire a first-time customer on a product that’s rate of retention was shown to be higher.
🍑 We launched complementary landing page and email automation campaigns to maximize conversion rate and retention.
🍑 We leveraged influencers whose core audience strongly overlapped the brand’s and used those relationships to generate super effective ad copy and landing page variations, spiking conversion rate and greatly increasing the brand’s authority instantly.
🍑 We effectively forecasted sales and were able to work with the brand’s 3PL to scale up operations quickly enough to manage the increased demand without causing delays in shipping.
🍑 We consulted with the owners to help shorten the brand’s CCC (Cash Conversion Cycle) and to understand which products had the most optimal CCC to unlock immediate capital for reinvestment.
These are ecommerce-specific solutions. They are not the kind of things that a non-specialist agency thinks about, or even knows about.
Look, there are many ways you could structure an ad account, some more effective than others. But with this kind of specialized knowledge, we can build ad accounts that actually solve the problems a business like yours will encounter and unlock hidden scale that would otherwise be obscured.
Solution 2: We optimize your account for profit instead of ROAS
We have built internal resources that we use to help our partners calculate and understand their numbers better across all categories and their entire product line. Then we study this information and use it as an integral part of our media buying strategy to maximize profit.
We consider a variety of aspects like:
🍑 CM2 or Contribution Margin 2—Calculated as (revenue per unit – COGS – 3PL/warehousing fees -shipping costs – payment processing fees = CM2)
🍑 Customer retention per product, or the average increase in revenue over a 30-90 day window on a per-product basis
🍑 The average rate of customer returns for the item
🍑 Available inventory and production lead-time
🍑 Sales projections for planning special sales events and for regular growth
Then we can set product- or category-specific ROAS targets (and even look beyond those in certain cases) that make sense from a business perspective and help achieve your growth and profit goals.
Solution 3: We leverage the full power of Google Ads by thinking beyond the ad account
While leveraging ecommerce-specific knowledge to build and grow your ad account is one of the key differentiating factors that set us apart from other agencies, the package wouldn’t be complete without its complement: landing page design
Google ads interests the customer and sells the click, but your website will have to take it from there. Where your visitor arrives on your website, after clicking an ad, is as important (if not more) than the ad they clicked.
See, landing pages are not just for use in lead generation campaigns. They’re an indispensable tool in your growth arsenal as a digital merchant.
Your product pages might work, to a degree. Maybe even enough to be profitable at the beginning. But let’s consider the major drawbacks in using a static product page as your landing page:
Product pages often lack the branding, storytelling and educational elements that help encourage a visitor to become a prospect. If they come through your home page or have a familiarity with you through social platforms there’s at least some understanding of what you’re all about as a brand. But when cold traffic hits a product page without ever having heard of you before you’re missing that chance to create a relationship.
On a product page you can’t tailor the copy, imagery and design to match the intent of every buyer. Here are a couple of examples:
🍑 Let’s say you sell clothing and one of your top-selling items is an elegant pair of slacks that are perfect for the office or a nice night out. How do you sell to both of those customer categories with a single page?
🍑 Or perhaps you sell an item in small quantities to consumers and in bulk for events and businesses. One page will not be enough to handle the two distinct types of buyer.
🍑 From another perspective, maybe your visitor came from a remarketing ad instead of a prospecting ad, maybe they came from a display ad rather than a search ad. Maybe they searched the term “healthy meal kits” vs the term “organic vegan meal kit”. A single product page cannot possibly hope to successfully convert all of these potential buyers.
🍑 You also often can’t test which elements and arrangement of elements is best for conversion rate. For example, it may be difficult to move that fantastic review or press feature to a better location on the page.
We create beautiful landing pages, with all of our underlying knowledge and expertise in ecommerce guiding the strategy, copywriting and layout. As a parallel service to your Google Ads management this allows us to unlock potential scale, efficiency and profit we could never achieve when managing your ad account alone.
If you’re interested in working with us, here’s how to get started
We offer a free ~1 hour screenshare where an ecommerce growth expert will walk you through your Google Ads account and point out key areas for massive growth.
Even if you decide not to work with us you’ll get a screen recording of the entire call and a report with all of our recommendations condensed into actionable form.
We provide this because we like to get to know you, your business, products, goals and ad account and to understand if we’re a good fit to help you achieve your growth and profit goals.
To schedule your call, take a minute to fill out this form: