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Sep 2020 Paid Advertising Roundup from Mabo: Google Limits Search Terms & More

As we come to the end of Q3, preparations are underway to take advantage of the seasonal peaks to maximize on this upcoming potential. The ability to access a monumental amount of data is our biggest ally in the battle for profitability. New updates can come as a rallying cry of innovation or a new hurdle to surpass; the way we react to these changes can be a defining attribute for any advertiser.

1. Google Ads

1.1 – Google Reducing Visibility For Search Terms

In a heavily disputed move, Google announced on the Ads platform that they will start hiding low-traffic search terms, only showing high-traffic results. To confirm, even if that term received a click, it might not show up.

Data is king in this industry, whatever the amount, so this move has received some rather negative feedback. According to Google, this is a move to support privacy and protect user data, which seems slightly hypocritical considering how many user signals are tracked and used for smart bidding.

1.2 – In-Market Audiences Available for Shopping Campaigns

Google’s latest CSS newsletter has announced that in-market audiences have officially been launched for Shopping campaigns, a hugely welcome feature for many of us. With smart bidding taking away a lot of optimization opportunities, audiences are now more critical than ever given that you can still enhance your smart bidding through adjustments. Additional audiences bring more options for you to optimize your bidding, allowing you to utilize that data tweak your bidding on a more granular level.

1.3 – Create Rules More Efficiently In Merchant Center

Feed rules have become even easier to do in the Merchant Center. You can add multiple words and phrases within a single rule with new options giving access to ‘any of’ variants, such as ‘contains any of’. Gone are the days of arduously creating a rule for each query to action on; quality-of-life improvements like these are a real step forward for user efficiency.

2. Microsoft Ads

2.1 – Dynamic Remarketing & More

One of the best additions this month comes from Microsoft, giving us a huge boost just in time for the holiday season with some powerful audience features.

Dynamic Remarketing is now accessible for advertisers, allowing you to target your audience with the very products they’ve been viewing; a perfect fit for Black Friday, Christmas and more. Go one step further with LinkedIn Profile Targeting, giving you a unique approach to create custom audiences based on a user’s company, job function and industry.

Finally, in-market audiences are now available for both France and Germany.

3. The Digital Services Tax (gov.uk publication)

3.1 – Google Parrying the New Tax

Google’s answer to tackling the new DST fees is one that’s come with shock, with them imposing the tax onto the advertiser’s bill as a percentage of spend. Initially affecting the UK, Austria and Turkey, the fees will start as of November 1 with a straight 2% of a UK account’s monthly spend being added onto the bill, rising to 5% for Austria & Turkey accounts.

Although this fee impacts all businesses, it does seem exceptionally harsh to SMEs, having just dealt with the economic repercussions of lockdown.

3.2 – Amazon Following Suit

Amazon has followed the same approach as Google by forwarding the new tax onto its sellers, their justification being that they absorbed the DST whilst the legislation was in the process of being passed. The fees for Fulfillment by Amazon (FBA) and Multi-Channel Fulfillment (MCF) will increase by 2% as of September 1 and 15, respectively.

3.3 – Facebook’s Heroic Response

Facebook has a history of sour representation given David Fincher’s powerful 2010 drama and congressional hearing that sprouted several unflattering memes. Yet in an inspiring move, they have announced their intention to absorb the new tax so that it’s not passed onto sellers.

We’re seeing a rare glimpse of ethical responsibility coming from Facebook in a bold act that will surely improve their image.

A Controversial September

This September is one that advertisers may hope to forget. Despite Google bringing some practical updates, they’ve also included some revisions which are arguably more detrimental to the ads platform. Amazon continues to be frugal and Facebook is taking an unexpected moral high ground, though we’re yet to hear any official word from Microsoft.

Unlike the last two months showering us with utility updates, this month hasn’t been half as fruitful.

For more information on Mabo and their paid advertising management services, please visit Mabo.co.uk.

How to Pick a Profitable ACOS or ROAS Target

Online advertising can get expensive but thankfully the ad engines like Google, Bing and Amazon all have controls that help advertisers keep costs at the right level for their business goals.

In this post I’ll share how to use your profit margin in conjunction with either target ROAS (tROAS) or target ACOS (tACOS) to achieve break-even on your ad spend. Once you know how to pick the right target so you don’t lose money on PPC, you can dial it up or down to find the right balance between profits and revenue.

The Difference Between Google ROAS and Amazon ACOS

First let’s take a look at what ROAS and ACOS mean and how they are calculated.

Google uses ROAS

When it comes to reporting columns, Google uses terms like ‘Conv. value / cost’ or ‘All conv. Value / cost’. ROAS (return on ad spend) isn’t a metric you can pick: 

But the good news is that ROAS is simply one of the ratios expressed as a percentage so it’s just multiplied by 100 and a ‘%’ sign is slapped on the back:

Google does use the term ROAS in one of its automated bid strategies: Target ROAS (tROAS).

Amazon uses ACOS

Amazon shows the ACOS (advertising cost of sales) metric in its interface more prominently so advertisers are immediately exposed to it when they start advertising on Amazon.

ACOS is based on two of the other metrics Amazon shows by default in its interface:

ACOS and ROAS both serve the same purpose of giving guidance on how to make online ads profitable but at first glance the two metrics seem very different:

While the formulas look quite different, that’s mostly due to the difference in nomenclature between the two ad platforms. Where Google calls it ‘cost’, Amazon calls it ‘Ad Spend’. 

Google cost = Amazon ad spend

Where Google calls it ‘Conversion Value’, ‘Conv. Value’, or ‘Value’, Amazon calls it ‘Sales’.

Google Conversion Value = Amazon Sales

So once we standardize the terminology and swap out all the synonyms, we see that ROAS is the inverse of ACOS:

We need to know product profit margin before ACOS and ROAS become useful.

So how are ACOS and ROAS helpful in bid management? How might we decide what a good target ROAS or target ACOS might be? To do that, we need to understand margins.

Product profit margin or gross profit margin is the ratio of profit over revenue for a single product. The simplest way to think of profit is as the value of the sale minus the cost of producing the thing that was sold:

Let’s look at an example where we sell 3 products for the same price but they all cost different amounts to make. Or for an Amazon reseller, they all cost a different amount to buy from the manufacturer:

Combine margin with ROAS or ACOS to find your break-even point

Now we have all the pieces needed to find how much we can spend on advertising to break even on each sale or conversion*. 

To make sure we don’t lose money by buying ads, our ad spend to get a sale should be no more than the profit we get from that sale.

We make a profit when:

profit on the item sold >advertising cost to get the sale

That’s simple logic to understand, but to communicate this goal to the ad engines, we need to translate it into the jargon they use. That means we need to bring it back to ROAS and ACOS.

What is a Break-Even ACOS

ACOS it’s very simple to equate to break-even if you know your margin. The numbers have to be the same.

What is a break-even ROAS?

Because ROAS and ACOS are the inverse of each other, our break-even point on Google is when is (product profit margin)-1 . That’s the product margin divided by 1.

Let’s see that in a different more visual way:

The bottom line

So there you have it, the perfect ACOS or ROAS to break-even on your ad spend on Google or Amazon. On Amazon, it’s the profit margin of the product you sell. On Google it’s the inverse of that same number.

*You don’t really break even by spending no more on ads to get a sale than what you gain from that sale as that doesn’t consider other costs to run the business of selling things. This is why knowing the break-even point is just the start and you should add a target profitability so you make money.

Regular Pages

Sep 2020 Paid Advertising Roundup from Mabo: Google Limits Search Terms & More

As we come to the end of Q3, preparations are underway to take advantage of the seasonal peaks to maximize on this upcoming potential. The ability to access a monumental amount of data is our biggest ally in the battle for profitability. New updates can come as a rallying cry of innovation or a new hurdle to surpass; the way we react to these changes can be a defining attribute for any advertiser.

1. Google Ads

1.1 – Google Reducing Visibility For Search Terms

In a heavily disputed move, Google announced on the Ads platform that they will start hiding low-traffic search terms, only showing high-traffic results. To confirm, even if that term received a click, it might not show up.

Data is king in this industry, whatever the amount, so this move has received some rather negative feedback. According to Google, this is a move to support privacy and protect user data, which seems slightly hypocritical considering how many user signals are tracked and used for smart bidding.

1.2 – In-Market Audiences Available for Shopping Campaigns

Google’s latest CSS newsletter has announced that in-market audiences have officially been launched for Shopping campaigns, a hugely welcome feature for many of us. With smart bidding taking away a lot of optimization opportunities, audiences are now more critical than ever given that you can still enhance your smart bidding through adjustments. Additional audiences bring more options for you to optimize your bidding, allowing you to utilize that data tweak your bidding on a more granular level.

1.3 – Create Rules More Efficiently In Merchant Center

Feed rules have become even easier to do in the Merchant Center. You can add multiple words and phrases within a single rule with new options giving access to ‘any of’ variants, such as ‘contains any of’. Gone are the days of arduously creating a rule for each query to action on; quality-of-life improvements like these are a real step forward for user efficiency.

2. Microsoft Ads

2.1 – Dynamic Remarketing & More

One of the best additions this month comes from Microsoft, giving us a huge boost just in time for the holiday season with some powerful audience features.

Dynamic Remarketing is now accessible for advertisers, allowing you to target your audience with the very products they’ve been viewing; a perfect fit for Black Friday, Christmas and more. Go one step further with LinkedIn Profile Targeting, giving you a unique approach to create custom audiences based on a user’s company, job function and industry.

Finally, in-market audiences are now available for both France and Germany.

3. The Digital Services Tax (gov.uk publication)

3.1 – Google Parrying the New Tax

Google’s answer to tackling the new DST fees is one that’s come with shock, with them imposing the tax onto the advertiser’s bill as a percentage of spend. Initially affecting the UK, Austria and Turkey, the fees will start as of November 1 with a straight 2% of a UK account’s monthly spend being added onto the bill, rising to 5% for Austria & Turkey accounts.

Although this fee impacts all businesses, it does seem exceptionally harsh to SMEs, having just dealt with the economic repercussions of lockdown.

3.2 – Amazon Following Suit

Amazon has followed the same approach as Google by forwarding the new tax onto its sellers, their justification being that they absorbed the DST whilst the legislation was in the process of being passed. The fees for Fulfillment by Amazon (FBA) and Multi-Channel Fulfillment (MCF) will increase by 2% as of September 1 and 15, respectively.

3.3 – Facebook’s Heroic Response

Facebook has a history of sour representation given David Fincher’s powerful 2010 drama and congressional hearing that sprouted several unflattering memes. Yet in an inspiring move, they have announced their intention to absorb the new tax so that it’s not passed onto sellers.

We’re seeing a rare glimpse of ethical responsibility coming from Facebook in a bold act that will surely improve their image.

A Controversial September

This September is one that advertisers may hope to forget. Despite Google bringing some practical updates, they’ve also included some revisions which are arguably more detrimental to the ads platform. Amazon continues to be frugal and Facebook is taking an unexpected moral high ground, though we’re yet to hear any official word from Microsoft.

Unlike the last two months showering us with utility updates, this month hasn’t been half as fruitful.

For more information on Mabo and their paid advertising management services, please visit Mabo.co.uk.

How to Pick a Profitable ACOS or ROAS Target

Online advertising can get expensive but thankfully the ad engines like Google, Bing and Amazon all have controls that help advertisers keep costs at the right level for their business goals.

In this post I’ll share how to use your profit margin in conjunction with either target ROAS (tROAS) or target ACOS (tACOS) to achieve break-even on your ad spend. Once you know how to pick the right target so you don’t lose money on PPC, you can dial it up or down to find the right balance between profits and revenue.

The Difference Between Google ROAS and Amazon ACOS

First let’s take a look at what ROAS and ACOS mean and how they are calculated.

Google uses ROAS

When it comes to reporting columns, Google uses terms like ‘Conv. value / cost’ or ‘All conv. Value / cost’. ROAS (return on ad spend) isn’t a metric you can pick: 

But the good news is that ROAS is simply one of the ratios expressed as a percentage so it’s just multiplied by 100 and a ‘%’ sign is slapped on the back:

Google does use the term ROAS in one of its automated bid strategies: Target ROAS (tROAS).

Amazon uses ACOS

Amazon shows the ACOS (advertising cost of sales) metric in its interface more prominently so advertisers are immediately exposed to it when they start advertising on Amazon.

ACOS is based on two of the other metrics Amazon shows by default in its interface:

ACOS and ROAS both serve the same purpose of giving guidance on how to make online ads profitable but at first glance the two metrics seem very different:

While the formulas look quite different, that’s mostly due to the difference in nomenclature between the two ad platforms. Where Google calls it ‘cost’, Amazon calls it ‘Ad Spend’. 

Google cost = Amazon ad spend

Where Google calls it ‘Conversion Value’, ‘Conv. Value’, or ‘Value’, Amazon calls it ‘Sales’.

Google Conversion Value = Amazon Sales

So once we standardize the terminology and swap out all the synonyms, we see that ROAS is the inverse of ACOS:

We need to know product profit margin before ACOS and ROAS become useful.

So how are ACOS and ROAS helpful in bid management? How might we decide what a good target ROAS or target ACOS might be? To do that, we need to understand margins.

Product profit margin or gross profit margin is the ratio of profit over revenue for a single product. The simplest way to think of profit is as the value of the sale minus the cost of producing the thing that was sold:

Let’s look at an example where we sell 3 products for the same price but they all cost different amounts to make. Or for an Amazon reseller, they all cost a different amount to buy from the manufacturer:

Combine margin with ROAS or ACOS to find your break-even point

Now we have all the pieces needed to find how much we can spend on advertising to break even on each sale or conversion*. 

To make sure we don’t lose money by buying ads, our ad spend to get a sale should be no more than the profit we get from that sale.

We make a profit when:

profit on the item sold >advertising cost to get the sale

That’s simple logic to understand, but to communicate this goal to the ad engines, we need to translate it into the jargon they use. That means we need to bring it back to ROAS and ACOS.

What is a Break-Even ACOS

ACOS it’s very simple to equate to break-even if you know your margin. The numbers have to be the same.

What is a break-even ROAS?

Because ROAS and ACOS are the inverse of each other, our break-even point on Google is when is (product profit margin)-1 . That’s the product margin divided by 1.

Let’s see that in a different more visual way:

The bottom line

So there you have it, the perfect ACOS or ROAS to break-even on your ad spend on Google or Amazon. On Amazon, it’s the profit margin of the product you sell. On Google it’s the inverse of that same number.

*You don’t really break even by spending no more on ads to get a sale than what you gain from that sale as that doesn’t consider other costs to run the business of selling things. This is why knowing the break-even point is just the start and you should add a target profitability so you make money.