Rebuilding Your Google Ads Based on Revenue (Episode 529)

0:19Hello and welcome to the Paid Search Podcast. My name is Chris and today I'm going to talk to you about rebuilding your Google Ads based on revenue. Today I'm specifically speaking to those of you that are doing lead generation and it should be a very approachable course for those that are unfamiliar with what I mean by revenue-based bidding. If you don't know what the term revenue-based bidding or ROAS is or TROAS.

0:52Chris Schaeffer: I'm going to talk about how this can be done, why it works, why it's different, why some businesses absolutely have to have it, and maybe others aren't really quite ready for it. So I'm going to go through all of it. And before I do, I want to tell you about how this podcast is made possible by my friends at Optio. So Optio is my go-to software whenever I need help grinding through the data. If I need to work through a problem, Optio is a great solution that you can go to and get answers about why things are changing. If there's anything that's consistent about Google Ads is that it always changes.

1:40Nothing's consistent. One of the things I hear my clients say all the time is, why was it good last week and it's bad today?

1:47Chris Schaeffer: Why do things change so much? That's just constant. And so our job as managers is to provide some type of consistency, to optimize, to hopefully reduce the amount of variance that happens. And when you have questions about how to do that, how to get it done, where you should look, and you don't even know where to start looking, Optio is a great tool. You can try this tool for free. It is a phenomenal tool that many listeners have had for many years, and you can try it for free for 28 days at optio.com.psp. This is a brand-new revamped tool that's utilizing AI. It also works across Google Ads and other marketing platforms as well.

2:34It's not just Google Ads, but I know that's what you're here to talk about is Google Ads. So try it for free at optio.com slash PSP. All right, let's talk about it. So first, before I begin, I'm going to tell you about some terms that you're going to hear on this podcast that you need to be familiar with before I just jump into it. So I'm going to refer to some of these terms, and I'm going to define them very quickly first. offline conversion tracking. So that's a term referring to the fact after the click has happened. So offline conversion tracking refers to the phone call that you make to the person after they send you their phone number, after they schedule a call with you, or after you go to their house, or you go to the job site and look at and get information about the bid or quote that you're going to provide the customer.

3:38So it's those secondary steps that happen after the initial contact by your lead. Okay, that's an offline conversion tracking. Next, something referred to as value based bidding. So that's essentially what we're talking about today. Everything I'm talking about is referring to value based bidding. It's based on the value of the lead that you're getting. There's always leads coming in, and some of them are better than others. So some have more value than others. So that's what value-based bidding is, is you bid based on the value of the lead itself. Next is a very common term. You've heard me say it many times.

4:27Return on ad spend. ROAS is the kind of short term for that. It's just ROAS is the other way to say it. So ROAS, ROAS, Return on Ad Spend.

4:41Chris Schaeffer: And then TROAS, T-R-O-A-S, is Target Return on Ad Spend. So these are bidding strategies. That's all they are. It's just a setting in Google Ads. So they sound like fancy terms that you would never say in real life. but they're just bidding strategies. So return on ad spend is a terminology of a type of bidding strategy and it is a goal. You want to have a certain return on your investment and a target return on ad spend is just a measurement of hopefully you can achieve this much return on ad spend. So hopefully you get a 2x return on ad spend or a 3x or a 10x return on your ad spend. So there will be more vocabulary in a moment, but I wanted to go get those out of the ways to help you understand where we're headed.

5:40Chris Schaeffer: And now let's get into it. Why do I think, Why am I taking the time to discuss rebuilding yet again your Google Ads based on revenue? Lord knows you have certainly probably rebuilt and retried things many times. I mean, that's the eternal struggle with Google Ads is constantly trying to revamp, retry, rebuild. and why do I think for some of you value-based bidding is the way to go? Well, it's as simple as this. Value-based bidding or return on ad spend bidding is the connection between the click and the revenue in your company. If you've ever had a conversation with whoever is managing your Google ads and they say, Hey, things look really great.

6:40And they're referring to the raw number of leads that you reached this quarter, this year, this month, this week. And you are very unhappy with the results that you're getting. And you're a bit shocked that they say that things are great. That means there's a disconnection between the click and the revenue of your business. The click is the initial entry into your website.

7:08Chris Schaeffer: They're coming from Google Ads, and the revenue is, of course, the final product of what you're hoping to get out of the whole deal. That's the reason you're even spending money on Google. You're trying to make money by offering a service. So connecting the click to the revenue is the healthiest place to be because you'll never again hear your manager, your intern, whoever, or some report telling you things are amazing, and yet things are not amazing. Once you connect these two together, there is a synchronization that has happened. So now clicks don't just come through without some type of value-based bidding on those clicks.

7:59Chris Schaeffer: So it sounds very appetizing, right? To not be just spending money on things based on volume, things that may have no real financial value to you. I can tell you that I have worked with many companies that have to use this because there might be a massive number of opportunities of leads, of people interested in quotes and jobs that will come through, but in the end, maybe only 10 % of those lead to value for the company. So what they want is to drive as many of those valuable leads as possible, not just a raw number of leads. As I have seen many times, most recently I had a client that was renting vehicles to a specific corner of the market.

9:04Chris Schaeffer: And there was a massive demand for these specific type of vehicles. And we were just sending leads to them. I mean, they're just getting tons and tons of leads. And the conversation that we had was, well, yeah, but they're all not quite right. Some of them are, but how can we make it better? How can we get more people that are like this and not like this? Well, the answer is connecting what the good look like and the bad look like and then communicating that back into Google Ads and having a system that can measure that and bid on that factor. So how does it work? How can you do this? So I can tell you it's not super complicated, but it's not just a click of a button.

9:58It's not just the kind of thing that you can just click and it's just taken care of. It's going to take a few steps, and let's talk about how. And at the end of the episode, I'm going to give you a specific list of about six things that you will need in order to achieve this. I'll talk about that. I'll give you a very practical checklist at the end. But let's talk about how it happens.

10:23Chris Schaeffer: So first, offline conversion optimizes for value based on custom signals that it learns in your account. Okay, so I just said a very loaded phrase there that may have just bounced off your ears and not really gone in. So let me say that in a more English way. offline conversion right which which we've learned what that is offline conversion tracking optimizes so what does that mean offline conversion tracking optimizes so basically that means that the system that grabs traffic for you that decides to bid on this on google and not on this it is a ever-changing ever-optimizing system that learns from what's getting you the most value so that's how it works it's a continuous process that hopefully will yield more and more value for you as it learns as it gathers that this type of search drives a lot of conversions but no value However, these searches over here drive less conversions, but a significant volume of value for you.

11:49Chris Schaeffer: So that's how it works, very simply. It just says, you know, there's a thousand apples out there, and the Google algorithm's job is to get you the ones that you want, the ones that don't have worms in them. there's 800 that have worms in them that you don't want and over time it picks up all the different apples and it tests them and nope this isn't what i want this and eventually the system will learn what the best leads look like it'll pick out the best opportunities for you instead of just the low-hanging fruit right the low-hanging fruit sometimes the fruit that's on the ground. Why do all my leads come out as junk?

12:37Chris Schaeffer: Why does everybody just want a price? Nobody's ever serious. Well, that's because the system's just picking apples off the ground. It's sending you leads that are easy to accomplish. So if we show the system, no, not those apples. Stop picking those apples. They're literally laying on the ground. They're literally rotten. You can see that. Instead, you know, go for these. They're harder to reach. They might be more expensive, but they provide more value for you. So I think you understand the difference now between value-based bidding and traditional bidding. Bidding like Target CPA, which is a bidding strategy in Google that allows the system to just push for the cheapest conversions.

13:29Chris Schaeffer: That's all it does. It pushes for the cheapest possible conversions, and that's what it's supposed to do. The goal is to get more conversions at the cheapest cost possible. I was working, another example, I was working with a client that was repairing windshields, and they kept getting the wrong kind of windshield jobs. All of them wanted windshield work, but way too many of them were just small chips, things that just weren't going to drive the right kind of revenue. It was a$50 job for them rather than a$500 job or a$200,$300 job. They can't sustain their business at a low revenue of$50 a job.

14:20They need to be, you know, jobs that are worth more to them, jobs of window replacement. So they had a very, very high conversion rate and a very, very low job rate, you know, actual jobs of what they were looking for. So their success rate was extremely low. And you know what they were doing? They were running maximized conversions. They were running target CPA. they were running performance max campaigns spending tens of thousands of dollars a month just we're talking 50 60 70 80 thousand dollars a month and in the end they had to just stop the google ads they shut it all off entirely because the system just kept eating money and in the end returning worthless leads.

15:15So let's move to the next section. How can you teach the algorithm what it is that you want? Well, get ready. There's some more terminology coming, but we're going to go through that. Offline conversion tracking captures, and this is this,

15:34Chris Schaeffer: so this is a new term, what, how it works, how you can teach the algorithm is you must identify that conversion. And offline conversion tracking captures this thing called a Google click identifier. Okay, a Google click ID is sometimes what it's called. Or if you want to sound real fancy, you can use a word like G-clid. Now, that sounds like an inappropriate body part to me, but it's an abbreviation for Google Click ID or Google Click Identifier. G-C-L-I-D is what it is. G-CLID is what all the cool kids call it but I'm not a cool kid. I really don't like those abbreviations. They sound strange.

16:23So I'm going to call it a Google Click Identifier but a Google Click Identifier is the connection that translates that this click was this person, right? Or at least, you know, this lead. Okay, so this Google Click ID number connects, and this is the first half of the process of teaching the algorithm. Because in order to teach the algorithm, you have to give it the information. You don't teach an algorithm any other way other than providing information. So that's our goal. So the first connection, there's three connections total. The first connection is connecting the click to your CRM. Okay, now, if you don't have a CRM, this is something I'll discuss at the very end of the episode, you know, one of the things you will need.

17:22You will need a CRM.

17:26Chris Schaeffer: and so when a lead does come in google now knows what click what search what device time of day location all of the information that comes with a click is now associated with the conversion so it knows that information it instead of just saying this click brought in a conversion no now it knows the device type the time of day, the day of the week, what, you know, what identifiers that we can't even see brought in that conversion. And this is the magical part. This is the part that makes it incredibly powerful because there's information that we cannot see. when someone clicks on an ad they also clicked on other ads at some point they also did other searches that day the week before the month before google has that information and it puts people into categories into audiences into different things and we don't get to see that you cannot see that.

18:42Chris Schaeffer: We'll never be able to see it. But Google knows it and it can use that information to spin up a value based bidding system to say, hey, this person kind of matches these types of people and with a value based bidding system, it will grab more people that look like that. Okay. So the first connection, click connecting your click to your CRM. Okay. And when those leads come in, when those leads come in, they're going to take the form of maybe four different things. Some are just going to be leads. It's going to be a form. It's going to be a call, going to be appointment. And maybe it's worthless.

19:25So what you do is each of those types of leads are going to be assigned a value.

19:31Chris Schaeffer: Some are big, some are small, some are worthless, some are worth nothing, some are worth hundreds of thousands potentially. So each of those can be assigned a value. And this all happens in your CRM. So you control this data. So there's more technical terms coming. So here we go. The first is just the raw lead itself. That may be worth nothing. Somebody calling you doesn't mean anything. What really matters is the conversation you have afterwards, after you discuss what it is that they want, right? So the form, the call, the appointment they book, that's worth zero. Then the next step is a marketing qualified lead.

20:15So at least it hits a certain value level of some kind. You know, they have stayed on the phone for 60 seconds, or they filled out a form that is more than just a name and an email. You know, these are just minimal. Very often it's qualified by how much time the person takes to even submit the information or commit to speaking to your company. So this is referred to as a marketing qualified lead. This is an MQL. This might be worth 50. I'm not even going to say dollars. It's just worth, because I don't want you necessarily to always associate it. Sometimes it's not worth associating associating it to an actual dollar amount.

21:03I can't tell you the number of businesses that absolutely get hung up on

21:09Chris Schaeffer: deciding what that dollar amount is. They're like, well, sometimes it's big. Sometimes I'm just like, I don't care. Okay, forget it. I'm just going to make up these numbers because in reality, it doesn't matter. So let's just say MQL, a marketing qualified lead is 50. Then your salespeople have a conversation There's a follow-up email or they visit the job site. They go to the person's home, whatever it is. And now they input that information into their CRM. And now it's an SQL. Good conversation. Turns out they do want concrete work. Or they do need a new HVAC system in their facility. or they are looking for some other kind of service exactly as you're looking for, and that's now a SQL.

22:07Yeah, this is a qualified lead. We can move on this.

22:13Chris Schaeffer: This is worth 500, right? And this is usually a good rule of thumb. If you don't know what numbers to pick for your values, just multiply them by 10. The first one's 50, next one's 500. so the last one it's the one everyone wants is closed one so closed as in close the deal or one w-o-n i won the deal um that's worth five thousand okay these are made up numbers i don't even care if they're real or not but you must give google some kind of tangible value for these so let's say now you fast forward a few months and this starts to accumulate start getting some of this you know maybe it takes about three weeks for your um lead to go through and to sell them the item or maybe it takes four weeks or two months or maybe a week but over time the algorithm them will get better at finding more valuable leads it now starts recognizing that oh there's zero value in these apples laying on the ground if i take the time to pick the apples off the tree that's actually going to be worth more and that is value-based bidding now we make the final connection from originally we made the connection from the click to the crm now we're making making the full connection from the CRM to the revenue and connecting all three together.

23:46Chris Schaeffer: It's now connecting the click to the revenue. That is value-based bidding. Extremely powerful. It demystifies the process of finding the right lead. Not just leads, but finding the right lead. So I'm going to tell you what may stop you entirely. Be sure and stick around because there's some of you that it's not right for you. I'll give you one definite reason why it may not be right for you here in a moment. I'll remind you before I discuss that about my sponsor Optio, it works with value-based bidding. It can help you with your bidding strategies. It is a powerful tool that cannot be stressed enough how helpful it can be to find the questions that you have not yet asked.

24:44That could be very important to the critical performance of your campaign.

24:49Chris Schaeffer: So try it out for free at optio.com slash PSP. All right, so what would disqualify you from using this value-based bidding system? What do you need? What is a requirement? Well, first, you have to have a CRM. If you don't have that, it's not really going to work for you. You're going to have to have some type of system that can review the leads and assign value to them. So that's going to have to be put into your process. There are many CRMs out there. I will not get into that. You decide what you want to use. There's big names and small names. There's plenty of variety. but you'll have to have a CRM.

25:36Chris Schaeffer: You also have to have, and this may be a total killer, you have to have some conversions, and they need to be moderately predictable. You can't just have one a year. You need to have some moderate consistency. Now, do not think that you have to have 30 conversions a month or 30 conversions a week. I would not go so far as to say that it has to be this many. I've seen systems that have worked very well and have a very moderate number of conversions. And that may be the case. Sometimes, you know, for B2B lead generation, you may only get a few a month. So don't think that, you know, well, I don't have 30, so it won't work for me.

26:21That's not the case. You at least have to have some kind of consistency. I'm going to go so far to say, as long as you have consistent conversions, then that's probably okay. Okay, so now we're going to get into a few more technical things. Other things, if you want to use this as kind of a quick checklist, if you want to bring this up to your tech team, or however you want to solve this, you will need auto-tagging in Google Ads. This is the easiest of all. You just have to hit a checkbox in the settings of your account just to turn on auto tagging. Spoiler, it's turned on already by default, so you probably don't even have to do much, but that has to be turned on.

27:04This is used to identify the click to the lead. It basically tells Google who this is or what lead this actually was, what click it came from. Then you also need some hidden forms or some way to transfer that click, Google ID, Google that GCLID, as I don't like refer to it, that GCLID number needs to be transferred to your CRM. So this hidden form fill, you know, the person doesn't fill out, that's transferred to your CRM through your form. You know, so in some way that needs to be transferred. So that needs to happen through hidden forms, excuse me, through hidden fields in your forms or some way you have to figure that out.

27:56Chris Schaeffer: And you probably need some kind of Google Tag Manager because this will help track the users as they navigate the website. So, you know, you might have a landing page or you might have a website. But even if you have a landing page, the person may come back more than once. they may actually come back across a different device or on a different day. So you need some type of system that continues to sort and categorize this person. This is this person. They went to a new page. They clicked off of your landing page or they went to a different page of your website. This is still the same person. This is the same click ID number.

28:39Okay, so that's the Google Tag Manager. You also need CRM fields that are corresponding to that Google Click ID number. So you can't just have a CRM that just says the person's name and the email and the phone number. It also has to have a designated, and this is their Google Click ID, because that's what translates it eventually back into Google Ads. Google Ads has to know, okay, their name is John Smith. This is their phone number and email. But wait, what's their Google Click ID? It needs to know what that is.

29:22And last, your CRM has to have an integration back into Google Ads. So it needs to push that data back into Google Ads so that it can provide that value-based bidding metric back into Google Ads. So it can say, okay, of these 15 conversions, this one and this one are worth$5 ,000, and this one's worth$500, and the rest are all zero. It needs to be able to push that information back into Google Ads. So the good news is most of the CRMs that work with Google Ads have an integration already built into it. Certainly many of the big names already have that. But it is a must. Those are some of the basics that you need.

30:11So I hope that this is helpful

30:13Chris Schaeffer: and I hope it has helped you discover perhaps a way to rid yourself of eating leads with worms in them every time. Just junk lead, junk lead, junk lead. hopefully this will help you to pick the right leads more often train the algorithm to achieve what it is that you want it to achieve rather than just taking whatever leave a lead it hands you. So as I said, my name is Chris Schaefer. I am a Google ads expert. I've been doing this for over two decades now. And if you would like help with this, I'd be happy to guide you through the process. I offer management, or you can just reach out to me for a one hour session.

31:00We can walk through it together. I can give advice and help you with your campaigns. If not, you can find me here every single week. I'll catch you next Monday.