Startup To Scale

90. How To Know If You’re Ready For Paid Ads

January 30, 2023 Foodbevy Season 1 Episode 90
Startup To Scale
90. How To Know If You’re Ready For Paid Ads
Show Notes Transcript

Have you tried running Google Ads and seen them as a complete waste of money? Let’s face it, running paid ads is challenging, especially for CPG brands. How do you know if you’re even ready for paid ads and what should you expect? Join me for a conversation with Andy Janaitis, founder of PPC Pitbulls as we break down:

  • What it takes to be successful running Google Ads
  • You minimal budget spend
  • How to setup campaigns
  • What Return on Adspend you can expect

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Andy Janaitis

[00:00:00] Hey everyone. Welcome to today's episode where we are gonna be discussing how to know if you are ready for pay Google Ads. And for this conversation, I've invited my friend Andy Janaitis, who is the founder and chief account strategist for P P C Pit Bulls. Welcome Andy. Thanks for having me, Jordan. So first off, I'd love for you to explain the name PPC Pit Bulls cause I think it's really cool and why you came up.

Yeah, so it's all kind of after our namesake is , my dog Percy. Yeah, she's been a, a member of the family for about as long as my wife and I have been together. And yeah, we're just kind of looking at the, when we were first picking out names or looking at kind of the alliteration with PPC and I was like, you know, it's gotta be pit bulls, gotta gotta name it after the dog.

So that's where it all, all started. I love that. And. Why did you get into this pay space around Google and PPC as pay per click? You know, I kind of fell into it actually. I come from , a data background and I was in software development, [00:01:00] project management, product management. And then over the years, kind of working in an agency, I had a couple different colleagues doing different things.

And you know, when I went off on my own and, and knew I was gonna start my own agency and support smaller businesses and kind of smaller businesses grow. I wasn't sure exactly how I wanted to do it and kind of where across my skillsets I wanted to apply that. But I had a colleague that was doing Google Ads at the time and he kind of brought me in and we, we did a couple projects together.

And , it really hit, you know, we were on, I came at it kind of from a more technical, analytic based side. And he kind of took it from a more high level marketing strategy standpoint, and kind of through the, putting those two worlds together, it worked really, really well. So out of that, PPC Pit Bulls was born since then, he's gone on to do bigger and better things , and we're just me and a few employees in PPC Pit Bull.

Excellent. So I know a lot of our listeners have DA dabbled in advertising. Some are using it actively. But there's a lot of. I think, misconception around [00:02:00] Google Ads specifically and the role that they can play in their business. So I'd love to start with that. So as people are kind of considering if they should use Google Ads and what for, I'd love for you to give an overview of how brands should start thinking about what's the purpose of Google Ads and how you recommend they use them.

Definitely. Yeah. So starting off at a really high level and we hear this a lot from CPG brands, so oftentimes, you know, people are running Facebook, Instagram, even working on some of the TikTok stuff these days. And the way that we kind of differentiate or. Think of Google differently is that Facebook and some of these platforms, we call them interruption based marketing, right?

So you're scrolling, you're doing different things and then an ad shows up in your feed. And that's great, especially for awareness, right, because it's, you know, you see something that you didn't even know you needed. That's it, you know, pops up this beautiful product. You know, look super tasty. A lot of great imagery.

Perfect. I'll go buy it. But what's cool about Google and what makes it a little bit different is it's more what we call intent-based marketing. So this is somebody searching and they know they want, you [00:03:00] know, some sort of ice cream treat, or they know they want a food-based gift or something like that.

So you already know that they're pretty far down the marketing. The funnel and they're ready to make a purchase. They're looking for products that are like yours. So in some ways it makes it a little bit easier at a high level kind of strategic standpoint. I always say that Facebook is great because it can scale a little bit further.

But Google is typically great because at a smaller ad spend, we're typically able to get a little bit higher return. So that's, I, like Google as kind of an easy way because you have that intent already. To go in and get some first purchases and get, you know, people coming in, it can be really profitable at that level.

But then, you know, as you really start to scale up from there we do find that sometimes you need to go to something like a Facebook or an Instagram to build a little bit more awareness , and scale beyond that. And then I'm sure a lot of people are familiar with. The kind of main placements for Google Ads, which is when you search into Google and the search engine, a ad might pop up in the first couple results, [00:04:00] but what other placements exist within their ecosystem?

Definitely, yeah. So what you described, there's kind of two pieces of that. The first is search and that's the, you know, the old school, you know, the actual text-based listing that you'd see right on top of all the other search results. The next is shopping, and that actually now will pop up even over the top, especially for an e-commerce product.

So that's very visual. Has a picture of your product with the title below. And those are kind of , the two main, that's gonna be the main bread and butter drivers of kind of where you see most of your results. But then on top of that, now there's some kind of more awareness based pieces too, and they're great for remarketing.

And those are display marketing, which is gonna be, you know, in the banner or in the sidebar on different websites as you're scrolling around, even in your Gmail inbox. And also YouTube Now if you have any video based assets, those can pop up in those short segments before your YouTube videos start.

And what's great, Facebook makes it really easy to kind of provide all of those assets and then it will kind of optimize the targeting along the customer journey, both through, [00:05:00] you know, getting the new customer initially and then also retargeting with existing customers if you set it up properly.

Excellent. I think that's really clear on where it shows up. And then what does success look like for Google Ads, for brands that you work with? Are they seeing really high return on investment? Is it mostly around awareness? Kinda what are, where are they seeing their success? , definitely. Yeah. So the number that we really focus on is called roaz or return on ad spend.

And essentially what that is is dollars in revenue for every dollar in ad spend. So if you were to put a dollar in ad spend and get back a $4 purchase, that would be a four X ROAS or a 400% roas. So that's kind of what we have in mind. And one of the big things that people need to think through is where are your margins?

What can you take as a reasonable ROAS as you get in and kind of for a ballpark? Now, this is, it's so different by business. We have, you know, some businesses can return like a 6, 7, 8 x ROAS. That's a thing that happens, but it's not super, super common. [00:06:00] And especially as you start to scale up and see, okay, I've got some good results in there now I want to grow and, and put as much money against it and get those results at scale.

You know, typically we tell people to think about the two x to three X range. So you want to think about Google Ads can really be a great driver for you if you have margins such that you can accept about, you know, a two x or a three x. And one of the things we think about with that, you know, people come to us and say, well, you know, that's, that's just below where my margins are.

 That doesn't make sense for me. One of the things that you can do, or one of the things that people do to think about it at scale is starting to think about, you know, your first purchase ROAS versus kind of the customer life cycle and bringing people in. So, you know, as a company, are you using things like email marketing to nurture and to build more purchases out of existing customer?

Where to, you can accept a break even. You know, you can be $1 an ad spend for $1 in revenue for that first purchase. As long as now we have their email address and now we can nurture them and get [00:07:00] additional purchases from some of our other revenue channels. That's, you know, , a big strategy that I think really can help on the scale side.

But yeah, as we get started, definitely. We kind of look for that two to three X range in terms of, of what we can expect from Google Ads. Yeah. You know, a lot of our, my listeners will know that. In terms of looking at the marketing funnel, growing from awareness down to your most loyal customers at the bottom, I usually recommend before scaling anything too much at the top, you invest in the optimization at the bottom so that you know, everyone that you is clicking on an ad has the most optimized flow coming down.

Because I see that's where a lot of brands make the mistake. They will spend a bunch of money on ads without optimizing their landing page and their copy and their checkup flow, their email retention, and then they're like, Hey. I'm spending so much money, but I'm not getting sales or I'm not getting repeat purchases.

And it's, they'll blame the ads because that's where they're spending the money, but it's really all the other things that come below it. Do you kind of find the same thing? Exactly, yeah. Those are some of the big things. And that's, [00:08:00] you know, kind of when we first started doing this, we found that there's certain brands that you turn on Google ads and then all of a sudden we just, you know, we get great results.

We're just profiting right out the bat. And there's certain. You know, if we turn on ads and we'd say, ah, you know, it's, it's not really working. It's not coming in. Right. So we took a lot of time to really think about that and like, what makes these two different use cases different and all those things that you just discussed, those are some of the major things that can really help you and you want to have in place before you start Google Ads.

So making sure that you're. Items , are on a website that's designed to convert. That means you have upsells in the right place. It means, you know, your checkout flow is easy. People don't have to go through 25 steps to finish the purchase. You know, even as simple as like, hey, if it's the first time somebody's been on your page, you really should be offering a discount to collect their email address.

Say, Hey, we'll give you 10% off your first purchase, and then you've got them in a flow and you're constantly trying to sell them again. So all those different types of things make it. If you're paying the same amount for that click as somebody comes to your site, make sure that you're getting the most bang for your buck.

Because [00:09:00] whether or not you sell them really well or you don't sell them really well, you're still paying that same amount for the clip click to come in. So those are some, some different things. The other big thing I would kind of add on top of that and the, one of the biggest things we see, Is lack of understanding of what's actually happening once people do hit the site.

So the simplest thing you can do is have Google Analytics installed make sure you have Google Analytics installed. But you know, as you go to turn on something like a Google Ads or a Facebook ads, if you don't know that, hey, this is how much I spent and this is how many purchases I got from it.

That's gonna be a big problem. So you gotta make sure that you've got all of your analytics and behavior and conversion tracking set up that you can you know, kind of tell that, Hey, these are the purchases I got and these are which channels they came from. And really understand that that customer lifecycle journey.

When brands make a decision to start running Google, as they're kind of in the platform setting things up, what are some of the biggest mistakes that you see brands? So there's a few. I like to start very simple. So a big [00:10:00] thing that I always say is don't go in and set up 15 different campaigns. That's, you know, probably a little less on the individual founder starting for the first time.

But we see that a lot from when we inherit campaigns and, and add accounts from other agencies. So back in the day, it was very common that you might. All these different campaigns and very specific long tail keywords. And you want to have a different bid for, you know, if somebody searches for you know, just very specific descriptors of your product.

But these days everything is automation based. So you want to have, make sure that one, you're sending the data back from your site when somebody does make a purchase make sure you have all that going. You're not just, you know, paying for clicks and not telling Google what happened there. But then.

don't get too complex with it. You know, you have one campaign and then you're sending the data back into that same campaign to tell Google kind of what's successful, what's not successful. At least as you're getting started, you can grow from there. But a lot of the success that you're gonna find in Google Ads is all based on the data that you're feeding back into it.

And if you're breaking [00:11:00] everything up with a thousand campaigns and a thousand ad groups and a thousand keyword, You're just splitting your data that many more ways. So Google isn't really able to kind of understand what's actually happening from the ads and, and optimize properly. No, I think that's, that's really smart.

A lot of people will, maybe is way too complicated when creating the ads themselves. Are there things that you've found in terms of the, the structure of the ad that helps with conversions? Like, you know, are you putting the main tagline for your product? Are you talking about benefits? Are you sharing emotional versus functional benefits?

How do you approach. And it's really all those things. And what's cool about it is nowadays with all the different ad types, Google, when you see the listing, you're seeing, you know, just the, , it's typically, it's two or three headlines and then two descriptions. But nowadays, when you're creating that, you don't have to tell Google, these are the exact headlines that I want to show, and these are the exact descriptions you can say, Hey, Here's 15 headlines and 15 or five descriptions, and Google's gonna mix and match [00:12:00] those and optimize them to give you the best outcome.

So all those things that you mentioned, you wanna make sure you know, first and foremost, at least one of your headlines should be, you know, your brand name official website. So people, if they are searching for you, they know what they want. They're gonna find that, hey, this is the place to come to. But then beyond that, you know, it's all about you know, speaking to the customer, talk about some of the problems that the customer has.

So talk about some of the, you know, , the reasons why they may select your product over your competitors. And then get to the product as well, , so, You know, is it all organic? Is it gluten free? Is it any of these different things? Make sure that's up there in your headlines. And then Google will optimize.

And what's cool is they're optimizing not only for what works best in general, but also what works best for a given consumer. So theoretically, if you had enough data coming back in, Google may be able to start to say that, Hey, you know, for this particular demo, Talking about, you know, this is the cheapest way to get protein into your diet is really helpful.

Whereas for this particular demographic, talking about the taste profile [00:13:00] is a little bit more, more helpful. So let's switch in the different headlines, you know, for different people in different demographics, which is really cool. Yeah, that's awesome that they have that type of learning going on. So really, as you're creating the headlines, you should keep each as a distinct kinda selling point.

Is that a good way to think about it? Yeah, I think that's a, a good way to sell to, to do it. And one kind of technical point around that is to make sure that you know, hey, they're gonna be switching these in and out. So make sure that they can kind of flow together. You know, sometimes people put in either too many that are very duplicative and you don't want, you know, kind of three headlines that all say the same thing.

Or certain things , that just don't kind of jive together. Make sure you keep that in mind that all the headlines need to be able to flow if they can be put together in different combinations. No, I think that's great. And in terms of budget, what's kind of the minimum budget for someone just getting started to see any type of consistent.

So we want to think, and again, it's all about getting that data back into the model. So you want to think about how much do I need to [00:14:00] spend to get about 50 purchases per month back into the model. If you're getting much less than that there are some different strategies you can try and different things that you can do.

If you know for your situation, you're not gonna be able to get that many but for the most part you want to try to get about 50 purchases coming back in. So when you go to translate that to. You have to start thinking about, well, what is my average order value? And I just told you earlier, we're shooting for like a two to three x row as, so if we're thinking of a two to three x row as basically take your average order value, multiply it by 50 to figure out, hey, if I get 50 purchases times my average order value.

That's gonna be your total monthly revenue. Okay? Now, if I told you a two x two x row as, go ahead and just divide that by two to kind of figure out what your ad spend should be. Right? So your average order value multiplied by 50, divided by two. And that should give you kind of a good starting point.

 I always kind of. Caution people too. You know, you don't have to go in and spend a ton of money all upfront, all at once before you see any results. I always kind of tell [00:15:00] people, start off slow and go ahead and get profitable first, and then we can think about how you scale up and how you grow from there.

But definitely you wanna be measuring your results. Start with a reasonable budget and what you can afford to spend. And don't go ahead and, you know, really ramp that up until you see results come in and, and you're seeing some, some good profitable. That's good. I just did a little back of the envelope math.

So if we say if your average order value is about $30 on your site and you're expecting about 50 orders a month, then your revenue for that would be about $1,500. And so half of that would be about $750 or so. The starting point, if you're starting to see those returns and what they're going to to get free.

Okay. Definitely. And then those probably gonna vary up and down to, you know, a thousand dollars maybe or $500. But somewhere in, there's a good starting. Definitely. Yeah, I think that's a, a great start, but I definitely wouldn't go too much below that. Because you wanna make sure that you are getting that data in.

And it may take, you know, a month or two months before you really start kind of optimizing and hitting profitability. So make sure that [00:16:00] you're, you know, putting up an initial budget spend that you're comfortable with and you can lose for a month or two as you're kind of testing this out and experimenting to see if this is gonna work for you.

But, but yeah, I think that's probably a, a good starting point depending on the size of your. I was gonna say, is that usually the, the base investment return time of about a month to two months, or do you see some time it takes even longer? So it depends if you're thinking like investment return time in terms of like, when am I gonna get paid back for everything that I put up?

It may even be a little bit extended beyond that. But if I'm running your ads, I'd love to see. You know, at least signs of profitability. So we talked about say a two x row as maybe after the first month, we wanna make sure that we're at least breakeven, right? So now obviously if you hit breakeven right at the end of the first month, you put up a good amount of ad spend there before you, before you really got that.

So it's gonna take a little while running at the better results to recoup, you know, what it took to get you to that point. But yeah, I would say that one to two month range is. If you're not profitable by that point, that's when you really gotta [00:17:00] start asking some questions and saying, okay, well are we doing, you know, do we need to do something differently?

Or is this channel just not gonna be profitable for us? And I have to say, you're using a lot of the right words. I love hearing things like profitability, break, even reviewing the account to make sure it's working for you and that this channel is good because. A lot of brands have been burned by agencies who think or say things like, Hey, you need to be spending $10,000 a month and it's gonna take you six months before you start seeing any potential return.

And brands are thinking like, Hey, I just don't have the time or budget their money to be able to do that. And they're kind of sold the dream and always disappointed. And so I love that you're, you're talking about how to, how to reasonably approach this for. Yeah, I think that's, that's so important, and especially as you're dealing with agencies.

You know, oftentimes this can get a little bit technical and there's a lot of data involved, but at the end of the day, if somebody can't translate it to a point that you understand, and if you're asking questions like, Hey, this is the money I'm spending, where's it going? Like, Somebody has to have an [00:18:00] answer to you for that.

So like if you're not seeing actual purchases coming in and you know, sometimes, like I said, it might take a month, might take two months. So, but even in that month or two months, you should be able to point to, hey, on this metric we're starting to improve and we're seeing a trend in the right direction, or whatever it is.

But yeah, I would say if you're running, especially at higher ad spends and you're not seeing any purchases coming through and somebody can't explain to you why you're not seeing them yet or tells you, you know, it's gonna take six months before we see anything. Those are the points where you really gotta ask some hard questions.

I love that. And Annie, what's the best way for brands to get in touch with you or they're interested in learning more, potentially working with you? Definitely. So you can always reach out, follow me on LinkedIn. That's where I'm posting a ton of content. Or if you come to our website, ppc pit, we actually have an assessment there where the, a lot of the things we talked about today are kind of that first step to make sure you're ready to turn on ads.

But we have a, a step-by-step checklist to see, you know, are you at that first level or are you at some of the other levels? And at each level, what's [00:19:00] the next best thing for you to really focus on for your brand specifically? You can get to that at ppc pit You can download that, that'll put you into our newsletter flow.

And from there, you know, you can kind of stay up with the, the, the content that we're putting out, some of the points. If you're interested in what we talked about today, that's kind of all we're doing on a regular basis there. So come on out. I love that and I'll put a link to that in the show notes as well.

Andy, thanks for being on today and sharing all the tips. All right. Thank you for having me.