Why Scaling Campaigns Can Become Costly

Speaker [00:00:11] Hey everybody

Speaker [00:00:11] It's Regina at solutions eights

Speaker [00:00:13] I'm here to talk about the age old question of why does my CPA go up?

Speaker [00:00:18] Or my ROAS goes down when I'm increasing budget

Speaker [00:00:21] Should I freak out?

Speaker [00:00:22] And what should I do about it?

Speaker [00:00:24] So first of all, don't freak out

Speaker [00:00:26] It is inevitable

Speaker [00:00:27] Uh, You can see here, this is a client where the

Speaker [00:00:31] Line is showing costs and we have more than doubled the cost over

Speaker [00:00:36] the past two and a half months

Speaker [00:00:37] And CPA is in blue, which is going up right alongside it

Speaker [00:00:42] So unfortunately this is an inevitable side effect of increasing

Speaker [00:00:47] Spent I know I've made a video on a similar topic before, but this

Speaker [00:00:52] comes up so often with clients

Speaker [00:00:54] I thought I would make another one and go into a couple of details around,

Speaker [00:00:58] you know, wha how do we battle this?

Speaker [00:01:00] When should we battle this?

Speaker [00:01:02] And you know, what what's causing it?

Speaker [00:01:05] I think that small businesses feel like maybe they're the only ones

Speaker [00:01:08] that are experiencing this, right?

Speaker [00:01:09] When you try to scale all of a sudden you're

Speaker [00:01:13] Your profitability diminishes what larger companies understand is that when

Speaker [00:01:19] they are pushing more money into their marketing, there's going to be two major

Speaker [00:01:23] phenomenons that, that take effect one

Speaker [00:01:27] The profitability diminishing is some of it is temporary

Speaker [00:01:32] And I'll explain why in a second

Speaker [00:01:33] So you kind of just have to wait it out and understand that that's going

Speaker [00:01:37] to be part of the growing pains

Speaker [00:01:41] The larger companies also understand that when you

Speaker [00:01:47] As you grow your metrics kind of change, right?

Speaker [00:01:51] You're you're getting conversions at scale

Speaker [00:01:55] And so your overhead costs don't scale

Speaker [00:01:59] Along with your other costs

Speaker [00:02:02] And so your your overhead costs become a smaller percentage

Speaker [00:02:05] of the whole, of your costs

Speaker [00:02:07] So you, you can afford to pay slightly more for a lead

Speaker [00:02:12] You can afford to operate at a slightly lower ROAS

Speaker [00:02:16] That's why some of your larger competitors are able to outbid you on

Speaker [00:02:19] those keywords that you so want to play

Speaker [00:02:23] First in the search results for but they are, unfortunately they're able

Speaker [00:02:27] to outbid small businesses sometimes because at scale they know they can

Speaker [00:02:31] afford to bid more aggressively

Speaker [00:02:34] They can afford to get that first spot because they don't really need the same

Speaker [00:02:37] margins that small businesses need

Speaker [00:02:39] So some of it is kind of just a, a shift in the way that you

Speaker [00:02:43] think about your CPA goals

Speaker [00:02:47] Cost per acquisition goals, right

Speaker [00:02:49] Or ROAS goals, depending on if you're an e-commerce company, I'm talking ROAS

Speaker [00:02:54] If you're a lead gen company I'm talking CPA

Speaker [00:02:57] okay

Speaker [00:02:57] So to back up, part of the reason why this happens is because the

Speaker [00:03:02] algorithm, you know, we're telling it, Hey, here's more money

Speaker [00:03:06] To spend

Speaker [00:03:06] And so it has to go out, find new people, new, new pockets of the market

Speaker [00:03:10] Oftentimes it's going up the funnel rate

Speaker [00:03:12] So it was just doing a lot of remarketing

Speaker [00:03:15] It was doing a lot of the people that are searching for the keywords

Speaker [00:03:18] that have less competition

Speaker [00:03:20] Now it has to go up the funnel to people that, you know, maybe maybe

Speaker [00:03:23] need to click on ads multiple times before they're ready to convert

Speaker [00:03:27] Maybe it has to go after keywords that are highly competitive, things like that

Speaker [00:03:32] So

Speaker [00:03:32] That's why it's getting more expensive as you grow

Speaker [00:03:37] Now

Speaker [00:03:37] Part of it is just that the algorithm doesn't know what to

Speaker [00:03:40] do with all that money, right?

Speaker [00:03:41] It has to go through a learning phase again, because you're saying here

Speaker [00:03:44] double the spend, or, or even if you add 20% more spend it, doesn't

Speaker [00:03:50] have the patterns at that bigger

Speaker [00:03:53] Portion of the market to know who to target and when and

Speaker [00:03:56] where and how and why yet

Speaker [00:03:57] so here's what I would recommend

Speaker [00:03:59] First roll out the budget increases that you've planned without battling,

Speaker [00:04:05] without battling the CPA or the ROAS

Speaker [00:04:07] Right

Speaker [00:04:07] Don't

Speaker [00:04:08] Don't try to keep a target CPA goal or keep a target ROAS goal on the

Speaker [00:04:14] campaigns and, and control that and push it down while you're rolling out

Speaker [00:04:20] budget increases because the algorithm needs this opportunity to learn and the

Speaker [00:04:25] target CPA goal and target ROAS goals

Speaker [00:04:28] To be honest, might restrict the spend anyways

Speaker [00:04:30] So

Speaker [00:04:32] Probably can't even have it on because this is technically a learning

Speaker [00:04:35] phase that you're going through

Speaker [00:04:36] Similarly don't make big changes, right?

Speaker [00:04:38] Don't shut off half your keywords

Speaker [00:04:41] To try to push money into the half the keywords, roll out the budget

Speaker [00:04:45] increases first, roll them out

Speaker [00:04:47] 20% of the at a time

Speaker [00:04:49] If you're at a higher spend, you can, you can do 20% increases

Speaker [00:04:52] Every few days, if you're at a lower spend, I would recommend

Speaker [00:04:55] one 20% increase a week

Speaker [00:04:57] If you're at a really low spend, maybe one every other week, and

Speaker [00:05:01] then give it a little bit of time

Speaker [00:05:03] After you're done with the budget increases at that heightened

Speaker [00:05:06] spend, just to get familiar, right?

Speaker [00:05:07] You want to gather some conversion data before you start trying to drive

Speaker [00:05:11] that CPA down or the ROAS up again?

Speaker [00:05:17] Once you're there

Speaker [00:05:19] And try to breathe through it

Speaker [00:05:20] Don't forget once you're there, then you can start making some adjustments, right?

Speaker [00:05:25] Target CPA, goal, target ROAS goal

Speaker [00:05:27] Yes

Speaker [00:05:28] You know, try adding, adding that back in

Speaker [00:05:31] I would suggest adding a target CPA goal

Speaker [00:05:33] That's just slightly lower than what the average is that you've

Speaker [00:05:36] been seeing now that you added by

Speaker [00:05:39] So slightly lower and see if the algorithm can learn how to make that happen for

Speaker [00:05:45] you without restricting the spend

Speaker [00:05:46] If it does do it again, same thing goes with target ROAS, put a target ROAS goal

Speaker [00:05:52] That's slightly higher than the rows you've been seeing with them

Speaker [00:05:54] higher budget and see if it's able to make that happen to you with it,

Speaker [00:05:58] with the, without restricting this

Speaker [00:06:00] Rinse and repeat then you can do some other things, right?

Speaker [00:06:03] Like minor, minor bid adjustments on things like audience signals

Speaker [00:06:08] or audiences, ad schedules devices minor bid adjustments on Mac CPCs

Speaker [00:06:14] These are all fine tuning type strategies that

Speaker [00:06:18] You know, might not help the performance in a large way, maybe

Speaker [00:06:22] a nominal performance increase, but it is a way to start to try

Speaker [00:06:26] to, you know, battle that CPA

Speaker [00:06:28] Now that you've increased your overall market share

Speaker [00:06:32] You can also try to finding new keywords, right?

Speaker [00:06:36] Maybe you can afford to take on some more top of funnel keywords

Speaker [00:06:41] You were just doing the low hanging fruit keywords before,

Speaker [00:06:43] but now you're at a higher market

Speaker [00:06:45] So it might be profitable for you to add some keywords

Speaker [00:06:48] Similarly, you can turn off some of your old keywords that, you

Speaker [00:06:51] know, you've tested, tried and tested, and you know that they're

Speaker [00:06:54] bringing in a high CPA for you

Speaker [00:06:56] That's unaffordable

Speaker [00:06:57] I would also rework your, your goals, right?

Speaker [00:07:01] So if you do significant budget increase and you find that your CPA

Speaker [00:07:04] has gone up, or your ROAS has gone down, it could be because that's,

Speaker [00:07:10] what's affordable for the market

Speaker [00:07:12] That's, what's affordable for your competitors, and that

Speaker [00:07:14] should be affordable for you too

Speaker [00:07:15] So at that scale you might need to rework your numbers and see if

Speaker [00:07:20] you know, now that your overhead is a smaller portion of the whole

Speaker [00:07:23] And you have a bigger remarketing list, right?

Speaker [00:07:27] More people who have converted and who are visiting the website

Speaker [00:07:31] so that you can remarket to maybe it's possible that you can operate

Speaker [00:07:35] at that higher CPA or lower ROAS

Speaker [00:07:38] So

Speaker [00:07:39] You can try also changing your keywords to exact match changing the match type of

Speaker [00:07:45] the keywords can sometimes help to focus the campaign and drive the cost down

Speaker [00:07:50] All right

Speaker [00:07:51] So let us know if you have any questions in the comments and don't forget to