Realistic Budgets and CPCs?

Ask Me Anything Q&A Googleshoppingamarepo
1

We have a very new brand: https://furyon.co.uk selling Martial Arts Apparel and Equipment - focussed on Karate uniforms for now.

We are yet to find an advertising channel that can return a positive ROI from a unit economics perspective. The positive ROI per unit is important as we have limited capital and are trying to grow the business organically. Factoring in Lifetime value of a customer is great longer term but we need the cashflow now to invest in inventory.

Our average product price is ~£20, with a 30% profit margin, i.e. max spend per conversion would be £6 (for zero business growth). so assuming an approx 2% Conversion rate we need 50 clicks and therefore a max CPC of £0.12

We first experimented with Meta Ads, but CPC was around £1. Introducing controls to limit the bid cost or control CPA made all spending stop - the ads were not getting shown. I think we had 1 sale from this process in the space of 3-4weeks, and spent ~£100. Some upfront cost whilst we learn is understandable but after more research this doesn’t seem like it’s going to be a profitable option for us in the near term.

Now we are trying Google Ads. Have tried PMax(all products), shopping (just the one kids suit) and now a search campaign (just the one kids suit). It’s still early days for these ads.

  • First PMax campaign (£13 per day) was getting lots of impressions and clicks but average CPC was £1.12 and so after no sales and >£40 spent in the first few days then I switched this off.
  • New PMax ad (still running, £5 per day budget, target CPA-£8). Set up for just one product range. CPC is ok - (ave £0.2) - getting closer to what we need but one search term was costing £3.30 per click so I added a limit of £0.7 per click as a control, and now clicks dropped down from 40-50 per day to 5 per day
  • Shopping (running, £5 per day, target- Maximise clicks 0.7 CPC bid limit) - single product kids suit campaign. Peaked at 8 clicks per day, now down to 2. Is still in bid strategy learning phase
  • Search (running, £5 per day, Target Maximise conversions - £8 CPA target) - single product kids suit. No data yet - only just set it up yesterday

Total spend on Google ads £110 so far.

It would be great to have comments on the specific types of campaigns we’re trying, but more importantly on the feasibility of trying to grow the business through this channel with around a £5 per day budget please.

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Hello OrangeCuckoo, thank you for your question.

A realistic CPC is not really something you would want to focus on. As a business what is important for you is return on advertising spend, in other words ROAS.

ROAS is based on sales value divided by ad spend. For example $1000 in sales value divided by $200 in ad spend is 5 or 500% ROAS.

When you setup for example a Performance max campaign, you should choose your bidding based on conversion value or in other words ROAS.

The campaign will then automatically bid, to try and achieve your goals. But don’t just setup a high ROAS target, as Google will struggle, start low, then incrementally increase until you reach a satisfied target.

As to budgets, it depends if you have over 10k products, then starting with £30 to £50 per day, will not work really well. As you have too many products.

The budget depends on many factors, but start with something that you can afford.

If you have limited capital, then I recommend you start with standard shopping campaigns, with an advanced layering so that you can micromanage which search terms to bid for, I have explained how this works here: https://www.youtube.com/watch?v=CiRIDzRrHno

Testing just for a few days will not work. For clients I manage I spend at least 1 month to 1.5 months for testing. Yes, it does require you to spend money. But 2 days, you will not get anywhere. It takes at least 3 weeks for PMax to learn.

The downside with Pmax, is that it is more costly, due to it targeting text, shopping, display, youtube, etc.

While if you choose standard shopping, it is just shopping. So it is more cost effective.

You will not get much performance if your want to spend £5 per day. Your data collection is too slow. Ultimately a lower budget will cost you more in the end as you are just waiting and waiting, to see what search terms appear.

But regardless, I still recommend you choose standard shopping as per the video.