The Next Leap

Our experiment in eliminating AdWords

Back in the day, I managed a $500,000 annual pay-per-click advertising budget for CompactAppliance.com, a retailer of small-space appliances. That business was built on the pillars of PPC ads and sourcing from China. So I am very familiar with PPC and I also know a thing or two about product development and sourcing.

When I founded FringeSport, we launched AdWords campaigns when we launched our ecommerce site, on Shopify. At that time, we were trying to prove our business model. We were looking for revenue and not necessarily return on investment from PPC ads.

As we grew, we continued our AdWords campaigns, but we outsourced the management of them to a third party. We paid that company a percentage of ad spend in exchange for its management of our campaigns.

We were focused on growth. A year or so in, we realized that our return on ad spend — ROAS — had declined to a low level. While there was a customer acquisition argument to justify the low ROAS, we reset the ROAS higher and continued on.

This higher ROAS goal resulted in a lower level of ad spend (and less revenue) but at a more profitable rate. We continued on this path for a few years.

Recently, we became interested in multichannel funnels. We dug through our Google Analytics to see where our customers were finding us, and what channels were generating the sales. For example, a customer uses multiple channels before purchasing when she finds our site via a Google organic listing, comes back from an email campaign, and then finally purchases after clicking an AdWords ad.

We noticed that many customers coming through the AdWords channel seemed to have earlier touches from other, lower cost channels.

So we had a radical thought. Maybe most of the customers from AdWords would find us anyway, without us paying for the traffic.

This thought is heresy among my Internet marketing friends. But at FringeSport, we talked about it for months. We experimented with notching back our AdWords budget, and then spending more. Finally, we did the unthinkable: We eliminated AdWords and all PPC ads entirely.

This was a gut-check moment for me. I was terrified that all or most of our revenue would go away overnight — an overblown fear for sure, but it did cross my mind.

So what happened?

The month after we cut our PPC advertising, revenue at FringeSport.com dropped by as much as 20 percent. But our marketing expense dropped by 75 percent.

We then refocused on the blocking and tackling of ecommerce:

  • Search engine optimization;
  • Email marketing;
  • Content marketing.

And we also honed the selling skills of our employees that work directly with shoppers, such as:

  • Outside sales;
  • Retail sales;
  • Customer service.

We recently engaged a trainer in the Sandler Selling System. He has helped a lot.

And now, revenue is higher than it was with PPC ads, and our marketing spend is far lower. That said, we have worked hard on those basics of ecommerce, and there were some dark days when we were tempted to turn the faucet back on.

We will experiment with resuming PPC ads, but only with a very high ROAS — 10 to 20 percent probably — and we will manage it in house.

Has anyone else experimented with cutting PPC ads to the bone?

email-news-env

Sign up for our email newsletter