Stop throwing more money at Google Ads: double your returns with smarter traffic optimisation

It’s increasingly challenging to achieve viable CPAs via paid search. More competition, higher bids, and inflated CPCs lead to squeezed margins and diminishing returns. Recent data from Optimyzr found that Google Ads CPCs have increased for search campaigns by 22% YOY. Data from Kinase PPC agency also shows that for their mix of clients, CPCs have increased by 35% since 2020: 

Traffic quality is also decreasing. New campaign formats such as Google’s Performance Max force advertisers to show ads on sites other than Google, where traffic is often less qualified and intent to purchase is lower. It’s easy to get into the habit of throwing more money at the problem—increasing ad spend to achieve targets and growth—but this is rarely the most effective action to take. 

Most brands historically spend considerable time and effort optimising keyword targeting, ad copy, bid adjustments, budgets, etc. These tactics are still very effective at improving performance and increasing return on investment. Indeed, search engines have put a lot of time and money into building AI tools to do much of this work and extract more value.  

However, it’s important to remember this is only one step in the user journey, and very rarely is adequate effort spent on optimising the subsequent steps - once a prospect starts browsing your website. This is a huge missed opportunity since there is so much scope to convert prospects at a higher rate, and as the data below will show, it’s much more valuable than just continuing to spend more money on ads.

To demonstrate this, let's look at some actual data for an ecommerce client Fresh Egg works with. This business has the following performance metrics:

• 130K session a month 
• 0.93% average sale conversion rate 
• £540 average order value 
• £250 paid search CPA 

Let's now look at the forecasted performance they're likely to see by increasing their paid search ad spend and compare this to instead investing exactly the same amount of money in conversion rate optimisation (CRO). 

It's worth saying at this point that Fresh Egg offers a Performance Guarantee approach to optimisation. Following a data review, we co-invest in a CRO programme and can guarantee minimum conversion uplift figures. We can, therefore, relatively accurately forecast the minimum revenue gains that can be achieved based on the client's benchmark performance. 

Since 2017 (when we started detailed historic recording), our average compound increase in conversion rate over 12 months for clients is +58%. However, for the client in question, we forecast based on a conservative 'worst case' of 11.2% increase in conversion rate, which in this case gives a monthly uplift of 0.93%. 

In this example, because of Fresh Egg's co-investment in the programme, our Performance Guarantee model costs £150K over 12 months - averaging out at £12.5K per month. So let's use this as the figure to compare with increased PPC ad spend: 

Based on actual client data, the graph below shows that investing an extra £12.5K per month in ad spend would increase return immediately by £26,736 per month, based on current CPA figures. This outcome equates to an increased paid search return of £320,832 over 12 months (114% ROI).  

However, as you can also see, if this £12.5K per month is spent on conversion rate optimisation instead, the return starts slower, but quickly ramps up as uplift starts to compound—overtaking the forecasted return from only increasing ad spend by month 6 and more than doubling the return by month 10. Over 12 months, the total increased return from investing in CRO will be £582,677 (288% ROI). That's almost twice the uplift!

And the returns don't stop there. As the graph shows, the returns from increasing ad spend stop once the money runs out. Meanwhile, the returns from increasing conversion rates typically last much longer.

Optimizely's Evolution of Experimentation Report demonstrates that revenue-based experiments retain their value to an average of 91% after a year, whereas experiments to softer metrics like engagement or clicks decay to 80%. These metrics highlight the importance of testing to meet your overall business goal and having a performance-focused CRO programme.