How Ecommerce Merchants Should Approach PPC

Things are changing a lot in the search ad arena. There is a steady ongoing shift of traffic from organic to paid search. You can’t fight it. Any profitable searches are going to be bought by competitors if you don’t pay for them. And increasingly that also means customers searching for brand terms and coupon codes for your site are getting directed to other sites where you’re losing some sales. There's no longer any question of whether you should be using PPC, or even whether you should bid on brand terms. You must. Paid search is going to become a bigger factor in your success going forward than it has been in the past. It’s critical to get it right.

If you’re capable of squeezing out some inefficiencies, bidding more aggressively in areas with better returns, putting in the hard work to continually cut out waste and identify new opportunities, and constantly re-evaluating the strategy, you’ll rise to the top. Tiny companies that can’t get the right people on that job are losing traffic. But also, the big Fortune 500 companies struggle because they can’t focus enough on the nuances that matter. Mid-sized companies that specialize in particular product types and customer segments and who are big enough to get the right people on the job… these companies are the ones that can pull ahead. Most mid-sized Magento merchants match that pattern: big enough to need to bring solid expertise to bear on the challenges they face… and focused enough to really benefit from it.

The typical mid-sized merchant has many areas where there’s a current defect or concern, and addressing them would have a positive impact on profitability. How much impact? Over what period of time? That’s often hard to say. Predicting the future is a waste of time, so I’m not going to say pursing a particular strategy would improve your ROAS by X% or increase revenue by Y% in the next three months. Anyone who tells you things like that is challenged in the integrity department. These are complex systems with hidden variables. One of the most obvious variables is that when we make changes, competitors do as well. No matter what a projection appears to suggest, that’s based on what happened in the past, or what’s going on right now. But competitors are also getting better. And if they suddenly lose 25% of their sales to you because you’re pulling ahead, they will respond.

The game here is making steady ongoing continual improvements. Some level of that is required just to stand still and not lose ground. Growing the business requires making those improvements at a faster rate than competitors. And if I were you, that’s the primary decision I’d be thinking about right now. Most of your results are going to come from very basic strategies like shopping ads, product remarketing ads, and basic search ads. The latest features are delivering almost no value to you, and you shouldn't pay very much attention to them. Being really solid in the basics matters far more. Making constant ongoing improvements in your basic strategies is what delivers solid profitable growth.

As you evaluate your choices for how to move forward with your digital advertising, how are you going to be able to grapple with the unique data about your business, your business model, your financials, the broader market, and then get down into the weeds to make steady ongoing improvements? This is, in my judgment, a key failing of most merchants. Vast parts of their ad accounts were set up a certain way in the past and haven’t morphed and changed much since then. Poor A/B testing of ad copy. Insufficient financial analysis to determine how to bid in a way designed to drive more profits. No work being done to negate things that don’t work, to keep pushing up quality scores and getting a cost advantage in the ad auctions. Too little pruning out of things that haven’t worked to keep the attention on expanding what does. Too much experimentation with recent features that don’t live up to the hype. But just not enough focus on continual improvement of what has been actually been proven to work well over the years. The work that will make your business grow is often boring and repetitive and a long slow slog through the muck. Because of that, the most valuable work is often neglected.

Ecommerce ad management needs to be more nuanced than general digital advertising. Most of the features of these advertising platforms are simply not useful to ecommerce sites. Don’t apply a one-size-fits-all approach to your advertising by blindly using “best practices” preached at you from Google or Facebook. In the context of your business, business model, industry, and customers, you need to adapt the best approaches available given the situation. Throw industry “best practices” out the window if they don’t make sense for you, and figure out what is likely to work better.

What matters from digital advertising for an ecommerce merchant is delivering profitable growth. And the key to that is profitable. The digital advertising industry obscures profit with a lot of bogus metrics and KPIs that don’t actually drive profit. None of the much-hyped automated bidding strategies available from any advertising platform is capable of optimizing for profitable growth yet. Here are some blog posts and presentations that call attention to how we think about these issues. They might be useful to you:

Paid is the New Organic: How Google is Monetizing Search
Paid is the New Organic – Live in NYC
PPC Strategies to Boost Your Bottom Line
Why ROAS Bidding Kills Ecommerce Profit
Should You Set a Target CPA in Google Ads

What Magento merchants should be grappling with right now in their digital advertising strategy is profitability and the major issues with industry “best practices”. Most people don’t understand those well at all. However you move forward, find the right team members (internal or outsourced) to be able to work together really well on grappling with those issues and improving business growth. And ensure you have the right people and processes in place to keep plugging away at steadily improving the strategies that time has proven for your business. Slow, steady improvement in what actually works is much more valuable than chasing the latest industry fad.

Get solid in the basics. Stay solid in the basics. Keep improving the basics.

Psyberware specializes in managing online advertising for ecommerce businesses, and nothing else. If you want to build a great relationship with a group of dedicated people who really understand ecommerce, get in touch with us.

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