We're gonna dive right in. And the topic for today, the discussion topic is gonna be MER Media Efficiency Ratio. And what MER is Media efficiency Ratio is thinking like company roaz, so all cash spend out on paid media versus all revenue in. The reason why this is important is because you are gonna have multiple ways that a person's going to convert post the first click. But the first part is where did that first click come from? That is scalable, that's trackable, that's measurable, and that can also have an initial ads been dumped into it. A lot of times Google ads agencies fall too much into brand. They say, well, brand's got the best raw as and raw eyes must be the great measurement. So I'm gonna focus on raw eyes and. 600% roaz on my, on my campaign. So everything must be working fine. What they're seeing is only scratching the surface, of what is actually going on. So when you run only brand, you're capturing the last step of the sequence or sometimes the re step in the sequence. What I mean by that is your existing customers, the existing customers will purchase from you by Google your brand name, clicking on the first thing that they see, and then going, buying again. Now that's not acquiring a new customer, but. Mer looks decent. However, it's in the wrong audience. So we're gonna be talking about the audience selection Mer, the difference between K and LTV versus Roaz, and we're gonna do the proper way. To identify what's actually working, how you can scale it, and what is actually delivering you a solid return. Now this works a little bit better when you actually have a campaign, or when you're running Google Ads just by itself. It's a lot easier to understand. So I have a, example that I'm gonna share today of just a company that has been running only Google Ads for a few years. Just with us. We're gonna identify the actual cpa, we're gonna identify the actual MER and we're gonna identify. what Google Ads says versus what happens in reality. And we're going to be able to restructure what we believe was our target to what our new target can be. So hopefully it'll take away, kind of a different way to think about Google ads and your different ways to think about audience. Different way to think about automated processes that Google has put in place when focusing specifically on conversion value, because that's not a good indicator of success, conversion value. Roaz is simply an indicator that a purchase took place to cost this X, but it, was it new? We're not sure. Was it repeat? Don't know. Was it an existing customer? or was it remarketing? We, we don't know. What do they first find out about you? Through a Facebook. Not sure we're going to identify top conversion pass and where you should put the ad spend and in what channels so that you are not falling into the, well, my raw eyes looks good, but my new customers keep declining. How is that happening? Here's what we're gonna be starting off with here, is I'm gonna go ahead and share screen, and I'm gonna come up, or I'm gonna grab this campaign here. Now, this campaign, is running a performance max, a dynamic search ad, another performance Max, and different group products, and a standard shopping campaign that was just launched. And what we can see is in the last 30 days, oh, and, and by the way, we have a 20. $30 c p a goal. That's what we want to spend in a cost per conversion. Now, sometimes we hit it, sometimes we don't. This is more of a Black Friday. so we're a little bit above goal right now, but it's okay because here's where we can kind of identify what's going on. We know that we've spent 18,000 and if we made 180,000 in conversion value for a close to a thousand row, And we have 551 sales. Now I'm using the Google Ads conversion tracking, which typically Google Ads. Conversion tracking is actually fairly accurate. It's not coming from the website, or not conver coming from the conversion source of analytics. It's coming from the website we're using. Tag. Tag is supposed to be very, very good at identifying, post click 90 days. But what we found is that with iOS 14, with more privacy issues and more kind of, disruptors in the technic. Ecosphere, we find that Google is actually tracking less and less and less conversions. That's okay. But also means that the way you measure must be different. So we have to look at this. If we're looking at 18,001 80 in the last 30 days, let's just look at all of the analytics and what has been attributed to all the, revenue. So we know that in the last 30 days, we've actually made 335,000. Now that's. 335,000 is much bigger than the 180,000. Well yeah, it says, you know, organic search made 76,000. We have direct to made 78,000. We have 138 that's attributed to paid search. That looks, you know, a little bit less of a Google Ads track. So that's okay. But here's the interesting part is Analytics, which is a last click, same day attributed network showing 138,000. Were showing 180 here. That's fine because people that come back, You know, we're gonna see that to people that come back organically. We're gonna see that. But what was really interesting is this may be, the last click, but there also is people coming in organic search. There's also people coming back directly. But also people come back through email. they change devices, they change IP addresses, they change wifi connections. They start their laptop, at Starbucks. They go home and they finish on the computer at at their home. There's many different ways that we are going to lose a person throughout the conversion journey. So let's look at MB R then. So let's not focus on Roaz. Roaz says we have, you know, 9 95. However, we already know that there's more transactions coming through here and here, and this is what I. Look at what they call the model comparison tool. This is a simplistic way to kind of prove a situation is actually taking place, the first interaction and the last interaction in your model comparison tool in ua. Now, GA four is gonna have something similar. It's not working right now. It's a little bit broken, but it's a good way for us to identify, hey, what it may actually be working right now. So we can see here now, spend is not actually pulling through. That's okay. It's for some reason, UA and, and Google ads are not, they're not speaking properly right now for some reason. But long story short, what we can see is that just inside of the analytics, the first interaction to the site that was coming from paid search was responsible for 434 conversions. The last interaction is 245. Now this is outside of, you know, u t m tracking. This is and, and what the Google ADSD tag is showing. This is a different method of attribution, but we know we're losing 43.55% of all of our conversions that come in through Pacers, through other different channels. Some are referral, some are using social. Some are coming back organically, some are coming back directly, and the way that you can kind of prove this, you're looking at what they call the top conversion path. Again, you don't need nor being to identify what's going on. You would need NorAm if you want this number to match up pretty well. But what we can see here is that the people that choose one path length are 376, but the people that choose more than one path length is a thousand. So there's almost three times, or actually more than three times, the amount of people that take more than one path before they convert. That is going to be the first indicator that you're losing some conversions. Inside of both your Google ads and Google Analytics, from the original source. The next thing you wanna look at is if you look at all of the conversion paths, for example, and you go down here and you type in paid this in the last 30 days, is gonna show that there is a lot of conversions here that are coming through other sources. So people that click on a paid ad and go directly, that's the second most used. And that is 34,561 pay search to two directs. That's 25. 25 conversions, that's 7,000. So you can see that there's a lot of paid search, obviously is the first section, and that's what we're trying to drive as much, most amount of cold traffic as possible. When you see this here and you see the pay search. is most often number one. Direct is most often number two, and then you kinda lose 'em between, you know, sometimes organic or you know you have another direct or you have another paid. But you do see that there's a lot of people that come back directly. Now, what this means though is that the direct conversions that happened initially, and let's go back to the model comparison tool. The direct conversions that happened initially are not usually direct conversions that started from a first interaction. There's very little. and everyone, I believe if you kind of take off your, potentially just Google ads hat and just think of, just think about normal day-to-day life of a person that's shopping. Very little time. Do you just think of a website, type it in directly into your browser and then go by. that doesn't happen normally if they haven't mentioned that website. You type in the name of the company, you come through organic. So why are we having 334 first time transactions in direct? Well, those are just the people that we cannot see. Google cannot identify them. They say we don't know where they originally came from. They somehow typed in. The URL of the company perfectly and clicked enter in the URL bar, visited from the first time ever and then converted. Oh, and by the way, those people that have never been to our website before that just found us directly by typing at our website perfectly. They, are 15,000 users. 50,434 are new. That's not true. This is. Just in the window that you're looking at. So the last 30 days, these people are quote unquote new, but they're also new 30 days ago, and they were also new 60 days ago. So these are the, the repeat people, and those people have the best, or one of the best conversion rates we're talking about, not email and and referral. So our direct. Has a better conversion rate that are paid, has a better conversion rate than organic, and they're also new. And there's just 272 people that just found us out of, you know, just sheer luck. And that happens for years. So we know that cannot be the case. Google Ads misses these, Google Analytics misses these, these are people that come back to the site where Google cannot string along a previous visit. And I know this is the case because we've only been running Google Ads, even not even social traffic for many, many years. So that brings us to. So how do you calculate mer? Now what are we talking about? We talking about merr? Well, let's go back to the actual aspect here. We know there's 18,001 40. So let's do this. Let's pull in a calculator and we have 18,001 40. Okay, now let's pull out another calculator here. And that's actually taken the revenue. So 3 35 1 62. So this is MER is all of your revenue divided by of your spend. So 33 5 1 62. So this is divided by three, sorry, 18. Uh, one 40 and we have an 1847 mer. That's actually the company roaz Google Ads is getting us a thousand, but everything that it can track, all adds up to an additional 847. Well, that's a big difference. That's a, that's a very large difference. So you say, well, John, some of those, you know, are organic. Yes, absolutely. But there are also those people that are clicking on Google Ads and then coming back organically. There's also people that visit organically by tapping in the brand name that. That Google can't track how they even found out about us. So MER is a really good way to identify what the all cash in all cash out model is because theoretically, if you were to increase this 18,140 in spend, you should equal a higher, revenue. So just remember the 1840. Now here's what's interesting is when you kind of go back to April, or sorry to January 1st, we've kept everything pretty, pretty safe. If we look at January 1st to December 29th compared to the previous period, and we hit apply on all the channels here. Let's see. 3% more users. 3% more revenue. It's almost identical. 3.24. 3.34, and the transactions are up a little bit here. So what does this mean? Well, we've been keeping the same ad spend and we've been keeping the same, not not ad spend. We actually spent a little bit more just because ad ad spend became a little bit more traffic, but we switched from standard shopping and search to smart shopping to Pmax, doesn't matter. All of it's basically the same thing. That's why I have a. that's why one of the next episodes we're talking about is a standard is, performance Max actually working? And if it's remarketing too much existing users. But here's what's really interesting is when you switch campaign types, all you're seeing is the reallocation of things. Why did organic go down 11? Why did pay search go up 42 then, you know, why did direct stay the same but also made 22% more sales, but 22% less sales in organic was 7% more in paid search. So that's a big increase for not a big return. it doesn't matter. All of this is just you're, you're identifying the different path flow of traffic through all of your individual channels. But the main goal is if your traffic is staying about the same and your revenue is staying about the same, this really doesn't matter too much. There's not a whole lot of actual, changes in actual user behavior or ad spend or amount of visitors. It's just the way that Google decides to reallocate it. Here's what. Before last year, we were running a lot of smart shopping. We also ran dsa, we also ran standard shopping. We also ramp brand, et cetera. This year we're happy Pax. Well, PAX, what Pax did was take away from your organic search and give it back to itself. So we started robbing from this area and we started giving it back to this area. But the people, because we were running a brand campaign when they started to, Google search us again, or when they started to search us again in the browser, they'd come back here most often and they would actually start to convert. So this Aspen here is directly tied to these two areas here. So a 42% increase equals a 23 plus 11%, and there are some, obviously other, referral and that kind of stuff is, getting more and more revenue. This is actually just from a different payment sequence on the website using different pay apps. Take credit for it as referrals are referring our own traffic back to ourself and that's where the actual aspect is going. So don't really pay attention too much to the singular channel because when Google says, Hey, you know what, I'm just gonna go up to your brand name more often and I'm gonna scope of all people try to look for you organically. Well, that happens here. And you're like, oh no, my organic, my SEO's going down. No, your SEO is 25% brand. And Pvac decided to take it. MER is important to mer. If I put a little bit more money in, get a little bit more traffic and we get a little bit more revenue. The worst thing that a paid ads person, whether is Facebook, Instagram, Snapchat, TikTok, doesn't matter. Worst thing that can happen to a person a uh, an ads person is you add 50% more ads spend and get very little new traffic, but more repeat traffic and they make the same amount of sales and you just cut your profitability in half. So this is a way to calculate Mer and what's interesting about this is when you. At the all cash in all cash out model, you can start to identify areas that are actually going to help you move the needle. You'll know that inside of Performance, max, this one here, for example, we just started this one a few months ago, but it has worked really well, but we can look at things like, is there a lot less? is there a lot? You know, I do have, you know, a non-brand here that has conversions. I do have a non-brand here that conversions. I have a brand here that's not too bad. but a lot of this is gonna be nice, good cold traffic. So would I, would I kill this campaign? No. I'm just actually going to try to add more. of a standard shopping approach to the performance Max and see if I can start spending on that one. And it is, it's started to actually spend immediately within the first day. This one's still in, its its bid strategies. There's seven days left from running. I hit my daily budget right off the bat. I'm just seeing if this will run in conjunction with these two here. Now, when I say merr, what do I mean about Mer Mer? Because we go back to that media efficiency ratio, all the money I put in versus all the money I've been able to take out, what this is going to do is identify areas that that money actually started to show a return. So if I put it into pmax, you have to identify what Pmax is going to do with it. Is it going to go after new cold traffic? Is it gonna go after repeat traffic? Is it like your existing customers? Is it gonna go too much remarket? And if you're only running Google Ads, it's going to usually perform the best. If you're running more omnichannel, it's going to look better, but you're going to lose. What I mean by that is you are gonna see more users and more revenue attributed to your paid search, but like I showed you, in that media mix, you're robbing all of your return traffic or all of your branded organic. That would've come in through other channels. So Google ADSD spent more Google ads made more money because Google ads took more credit. Then your directory organic went down, but you spent more but your gross profit's the same. Your net profit is now down cuz your ad spend increased. So mer means if this is actually a cold traffic campaign and I'm using the majority of my dollars on new users. That means that mer, which is that media efficiency ratio, let's just say 18, should stay roughly the same. If I add 30% more ad spend by MER, should stay the same. About the same, and I should get 30% more revenue. Lately, we've actually been seeing that Pmax does not do that. Pmax, especially when you're running omnichannel MER dips. Would you add AVE to Pax? Why? PAX has a pushing rope. What I mean by that is you are only about 30 to 40% effective at growing new customers for every dollar you put in. So 30 cents to 40 cents of that dollar you put into Pmax is only going to do traffic. Pmax is designed to find roas. It's designed to find sales cheap sales that have high value because maximize conversions or maximize conversion value either way, doesn't matter. Same. just you're measuring two different sides of the same coin. A sale. So when you're looking at performance max, performance max uses search shop, YouTube, gsb, display, discover, and it also does new existing and and repeat or new existing and remarketing traffic. Well sounds in theory, like it's gonna be a good thing. You say, okay, well if I put another dollar. My mer, my ratios just say the same cause it'll gimme more traffic. That's already performing good. No, you put a dollar in and it takes 33 cents of that dollar. It gets a new person who takes 33 cents and remarks the existing customer hoping that they buy again and takes 33 cents of a person yesterday and saying, are you ready to buy? That is good. Theoretically, where this gets. is because that 33 cents that went to new cold traffic is going to start to go to your website, start to convert over time. You put a dollar in, get 33% of that dollar more return. So now your MER dips a hundred dollars in $33 of new customer. That's a bad. The reason why this happens though, is because of Google's algorithm targeting people that they think are going to buy. Same thing that happened in smart Shopping was that he put a dollar in and says, okay, this person's been on the website for a week, so hopefully they buy, so I'm gonna put another ad, or I'm gonna show up for a branded ad, click for that person, or I'm gonna start to display your market. Or, you know what? Even better, I can spend this money all day long on YouTube. And it shows it a YouTube ads to them. But you pay per impression. F max will find a way to spend. Doesn't mean it's gonna spend it right, but it will find a way to spend, it has outbound capabilities so it can show as to people that you'll pay for, even if they don't like the ad, not even clicking on the ad, like YouTube just saying there's a fail point in there that it will fall into, which is the point of diminishing returns to the additional ad spend that you put in. So when you're talking about will I, will I see an equal return in pm m. Most often not, and most often, or, or even more often know if you're running omnichannel. Now, what I mean by omnichannel is This problem that I'm talking about gets exacerbated when you're running third party, not third party. Other sources of traffic like Facebook or Instagram, What Pmax can do is it's going to look at all the traffic that's existing on the site and say, Hmm, that's my low hanging fruit right there. Those people have been looking at three or four products. They've been here for the last 18 minutes and they haven't hire 'em into their cart, and I'm going to start to show up more often for those, for tho those people that are there. Well, you put in money into Pmax saying like, where's all my new traffic? It says, yeah, we gave you new traffic. Remember new traffic and analytics, they're new today. Haha. And those people are still not buying yet. So you're hitting a point of diminish of return to put dollar in. No more sales, but dollar more, more sales. Put dollar more traffic. No more sales. Why? Because you're simply showing up more. Often to the people that are in their eight day sales cycle. And no matter how much more money you add in doesn't mean that those people are going to buy any sooner. People don't make their decision quicker because you added in Aspen knowing in the history of time, it says, you know what? I bought that motorcycle. Why? Well, they doubled their budget I had to buy it. I sell the YouTube app three more times today. Geez, I better buy that cuz a roaz is gonna hurt. That's not, how things work. So when you're looking at the conversion path, like we talked about, we're looking at mer, you have to forget everything. Post the first click initially, do they come back directly? Yes. They come back organically? Yep. They come back through email? Yeah, they come back. Referral. Uhhuh. They come back through social? Yes. How do I get more of those? Where do they originally come from? That's where you put your dollar. The top conversion path means one point in time that a person converted. Here is the kicker though. If we look at, and I'll share a screen here again, if we look at what actually happens though, here is a top conversion path over a little bit of a longer time period. So let's just say October, November, December. Let's just use all three months here. There are 565 different path. For 2,994 conversions. So 3000 conversions, over 500 different ways that a person got there. Well, that gets really interesting now because now you're getting into the point where it's, you know, inorganic search and then nine additional pay search and then organic search, and then a three additional paid search of one sale. So what's the roaz What? Let's do this. I'm gonna take a paid. take a paid starting point cuz they kind of lump all these together. what's the roaz and what's the attribution model on, you know, these group, the people here? Well, you got like a paid search or organic and referral and a pay shares and three more directs. No one sale. Okay. So that's one path. All of these paths here are one time in place. People wanna say, well, what ad worked the best? 12? Was it that ad? Was it that ad or was it that? Yes. Well, did they come Google search my brand name? And did they then come back through a branded campaign or even an R L S A? Did they look for reviews online? And then you found us again and you did another paid search and you found us again probably through the brand name because you've already been here 1, 2, 3, 4, 5, 6 times and then you made one sale. MER is the only way this really works. You cannot control 560 different paths for only 3000 sales. What is that? The same path, one in six times. that's not very, very frequent. You're trying to scale and, and, go so deep. You'd be like, well, let's look at the actual, what was the device? It's like, well, are you talking the 13th visit? That device click was okay. Like you're looking, you're we're looking at one snapshot and a huge amount. We're we're looking at one tree in the forest and be like, well, why does that treat taller? Well, it's from the nuclear power plant down the street that grew all the trees. we're missing everything that's right in front of our. And so here's what's really the part that I wanted to take home with all this is when you're calculating MER Media efficiency ratio, you should be able to add in Aspen two a channel that regardless of the return path, you are going to see a return because you're simply going after more of these people. More the same type of people. I wanna share with you a couple other scenarios cause I think that this starts to, give you a good indication as to what starts to happen when you go after really good quality cold traffic, and the scalability of it. That everyone that's probably, or hopefully still watching it, I don't even know if anybody's still watching it anymore, but this is the important part of this. Here I'm gonna share with you a campaign type. Well, I can't paint time. I'm gonna share with you a company here, and I'm going to share with you something that's actually really interesting is this year, let me just get pulled up on the screen. okay. So everyone would love to have the time to just say, Hey, I would love to, how do I just add in more ad spend? Just get more out. Like each time I increase my, each time I increase my ad spend, my row has. I hear it every single day, every single, uh, 50 times a day, which is why we're switching off of the, q and a type platform, and I'm going into more education and teaching. why when you add in Aspen, does Roaz dip? That is a, when you're talking about automated targeting, that's where every person will lose, except for Google. They'll win. Google will win. They'll take your money all day long. Whether you get interested or not. It doesn't matter. You will lose every time unless you focus on non-branded cold traffic. I have a thousand of these examples, but I'm gonna share with you something that's in addition to, uh, some pmax campaigns here that I'm running to. What about this one here? Standard shopping we put on 8,800, got 13,000. Cost for conversion is 1 0 9. Okay, fine. But what if I took this $300 on up to 900? Well, yeah, your cost per conversion will go two bucks. Well, that's interesting. Cause you mean my roaz isn't really gonna dip? Nope. All right. Well what about, you know my furniture one? This one? Yeah. You can go from 50 to 150. Your cost per click will decrease a little bit and have an increase of clicks. Was too soon to find out what the convers rate is. Okay, fair, fine, fair. Let's talk about some other accounts here that I'm starting this with. and actually I'll, I might be able to give you an example. no, I can't. That's a publicly traded company, so we'll be able to do that one. But this one here I think is also really important when we're talking about, The effect that a standard shopping campaign went run alongside of even a Performance Max campaign. You're affiliate in gaps that Performance Max is missing and what you can control and what performance Max can pick up. So let's do this one here. I'll give you a small example here. So this one, again, we're, we're crushing with this account. We spent, you know, 76 grand a make a half million in the last 30 days. Awesome. Well, how about this standard shopping campaign? This one, Hey, if I go from a hundred dollars a day to $300 a day, my cost per conversion is gonna go $0 more or $0 less. Well, that's interesting because what is this campaign doing? Oh, that campaign? Yeah. You're getting a 3 48 roaz. Okay, so a 348% roas, as long as I have this campaign in this, in a good situation, if I can just add in triple the amount of money, what is my C P A gonna go to? Nothing. Your CPA's gonna stay the same as long as they buy roughly the same type of products in that one campaign that's serving only that group of products. You will see a scale. Now I have a very specific structure way that I do that, very specific T Row as goals that are a little bit, ah, in the way that we actually start to set up the night of keywords instead of that. But my, point is, and I can't just, give away our client secrets cuz they pay, handsomely for these secrets. But what I'm trying to say is when you hit a point of diminishing returns, the, the key factor is you're letting automated targeting find who it's going to show automated targeting will go to the people that it knows and wants to. Yes. Good. That works. It's going to go to the people that they know are going to buy. Okay. If you spend more, will they buy sooner? No. So when you increase your ad spend, do they buy more? No. Do they buy it later? Yes. But did you pay more for the same sale? Yes. Did any sales increase? No. Okay. So that's why your row ads dips 10 people are gonna buy in seven days. Let's just use that as a fact. 10 people will buy in seven days. Good. What if you doubled your Aspen on those 10? Still gonna buy in seven days. What did you spend two times more? How many more sailors make? Zero. Same, seven. That's why you add an ad, spend your ROAS dips. That's because it's trying to go after the people it knows are gonna convert fine. So what this means is that when you're using automated targeting, you just simply go to the level that the market dictates. The market's going to dictate how much it's going to spend with you. You're not going to. you know, Susie, who's dropping her kids off at soccer, has to pick up a dry cleaning and then go pick up her husband at the airport that, hey, you know, those, the leggings you want ice spent double. Where are you at Susie Buy now doesn't work like that. Everyone, for some reason, believes that you could just, program a person driving their car and pull over and buy because you increase your ad spend. Doesn't work like that. That's what people miss. They miss the fact that you're letting Google choose the same five people to show more and more and more, and more, more, more ads too. And you're like, why aren't they buying faster? And for some reason, this is lost on everybody. That's why I'm trying to take to Google Ads live and do this for free by saying, stop. Stop letting Google dictate where it wants to go. If you want to scale, medium Mix is your friend. What is Pmax good at doing? Pmax is really good at remarketing. Pmax is really good. Getting the right person at the right time and when they're ready to buy, good. Well, PMAX, find whole new people. Yes. If you're grossly underspent, know if you are at a good enough spend without a t rows. Without a T cpa. And your row as is good. So this means that if I put a hundred dollars to make it $300 in sales, good. If I put $200 to make 320, what happens? You overspent. Pullback. Okay. Because this is what the market is going to dictate, that Google has found a market that will buy. Are you gonna force more people? No. How do you get more people in there that Google loves to remarket? Grab 'em from some other source. YouTube standard shopping search, DSA discovery display. You run those channels, you run those placements, and you dictate that this person has not been in my website. They have not seen an ad on my YouTube channel. They have not Google searched my brand name. They're not one of my customers. Those are excluded. And then you start to slowly crank it up. Think about your time lag as a seven day time lag. But if that seven day time lag, you start to increase cold traffic, wait a week, do they start to convert? Aha. Or is Pmax stealing those conversions? Who cares? MER is the same. You bring in a new person from YouTube and Pmax remarks them. What is your mer? The same, you made more cold traffic and more sales, so they come back directly. Who cares? MER is the same media efficiency ratio, Rachel says, but increase, but isn't increasing the budget, letting Google find more people. It depends on if you are choosing the target. If you said, Hey, I'd really like the people that on Tuesday search this keyword between two o'clock in the morning at three o'clock in morning because that's what I want, you get to choose it. If you said, Hey, performance Max, go and look at this signal. Yes, because they're gonna say, ah, I'm ignored that you have a lot of Facebook Travis, that looks pretty good. I'm gonna go. Why? It's a signal that I get to ignore if you are choosing the keywords, the placements, standard shopping, it's the non-brand, all of the areas that you can control, which all of us here that are good. Google ads managers built our whole education and systems on. When Pmax came in, it was good. It was very good. It found new traffic. I launched a company for free for a client and it's a t infuser and we've five x that company in six months just on YouTube, because I ignore. C p a and I ignored Roaz and I just focused on mer. We approved it with the post-purchase conversion surveys. But, what the, the moral of that story is I went on YouTube and said, here's these exact people that I want to be in front of. And I waited. So I got to choose it, and then every two weeks I increased it 20% in ad spend. That was a small startup. I love the people to death, Gavin and Paul for watching. Love You Guys. but we figured out a way that we basically just go after a lot of cold traffic, ignore every other metric, but mer and grow that way, because if you have the right message to the right audience at the right time, ignore all of the, here's what's going on. Here's what Google is saying is happening, because Google only knows half the story. Now, we already know that all of your direct traffic that's coming in inbound is not your, is not your brand of traffic. That woke up one day. I said, I wonder if s sol eight.com is a thing. It's not. it's fake. So you have to look at where they're coming from before and you have to put your good marketing hat on and identify the areas that you are scaling. Is it called traffic? Yes. Can you crank it up? Yes. Are you able to attribute more sales to that who care? Did your sale, did your spend go up globally? Yes. Did your sales go up globally? Yes. Is your MER increasing? Yes. I'll give you a good example here. There's a company that we did this with. Recently and I use Norian cuz this is actually really important for everyone to see. And in this company I'm gonna take actually even before Black Friday, even before Cyber Monday, before all that stuff. And I'm gonna share with you a really interesting thing that no one is going to be able to be able to explain here. And because it's not something that anybody has any idea. that happens unless you obsess about the data. Here's what's funny. Before Black Friday and Summer Monday, when typically it's a slow time cause everyone waits, I took 13% more ad spend and created 76% more revenue and 56% more m e r media efficiency ratio and a $31 less cost per conversion, a cost for new customer. And I brought in a 33% new visits and 15% less cost for new visits, all by doing one simple. Turning off Pax. So here's what's funny is I went all standard shopping, killed Pax, went all standard shopping as a test. Now the roaz that I was measured to by the client said, Hey, you need to have a three X in Google. I said, okay, I give you a 12,000 x if you just let me go after all of your brand name, but you're gonna die as a company. Does that sound good? No. So I'm not saying that's how the conversation went, but that's how it was kinda leading to in a conversation. So in our Google Ads account, I have a two x Y, well, I'm only going after one click, brand new non-branded cold traffic customers. So just people that are Googling, specific keywords about specific type of products. And then they're clicking on my ads and then they go to my site and then they leave. And then I say, okay. Get another one. I'm not remarking why the sales cycle was long. People always came back direct. Remember this, the sales cycle was long. People always came back direct. That is a, that is a Pax nightmare. Why? Well, when the sales cycle is long, Google's going to focus on them for longer, and when they come back directly, or usually, which means come back through the branding, PAX takes that credit. This thing is not going to. So I did, as I said, shut up everything off, just do a hundred percent pure cold traffic. And what ended up happening is my spend went up by 20%, and you see, I'm 17,000 of the 20,000. Facebook was doing pretty much just remarketing. But when I started increasing my small amount of ad spend on a standard shopping campaign, my revenue went up exponentially. My merr went up exponentially, my cost required. A customer went down. There's no way. If you look at it, how does a 1 48 and 6 0 3 equal a $64 tax? Is that possible? Those two don't average down to that little is from what he can't track, so what he can't identify? Well, my organic traffic started to go up 140%. My email Travis started to get new signups, has started to convert my organic search just from Google itself, phone up 67%. My YouTube ads started getting more remarketing and that actually made more sales. People started Googling this company named coupon code and share. Affiliates started picking it up and Facebook has marketing start to increase. This is all through Black Friday, separate Monday. So we take 20% more or 13% more total spend to make 76% more even during Black Friday, separate Monday, and then Black Friday s Monday rolled around. And then, you know, everything was, was in lamb milk and honey it was, we would hit a thousand x. I still, I'm still at a four x, but somehow we globally went down to a $30 cost per new customer y learn your top conversion path. And what Merck will do when you start to scale coal traffic and you start to pay less for that coal traffic to return. And when you. Spent even less to pay for that cold traffic. To find you in your branded campaign, it means your dollar to get a new customer and a new user, a brand new visitor to your site that wants to buy from you because it's the bottom of the funnel Standard shopping campaign. Those people that are going to buy or they're going to not, even if I spent 2, 3, 4, $5 after that $1 click saying, please, please, please, please, please, they say, nah. I wasted $7 on one person where I could have wasted $1 on one person. Got six additional new people for the same exact cost. Very, very. Mer Don is media efficiency ratio. All cash in. All cash out. It's at the beginning of this recording. It'll be up on YouTube, but it's basically take your company revenue divided by your company ad spend, and that is mer. Think of Roaz for all of your ad spend because your top conversion pass, you're gonna go through. 500 different paths for 3000 conversions. you'll be able to watch this. It'll all become very clear. I'm right now I'm not doing any more q and a. We're gonna be doing focused learning. I'm gonna teach you guys all this stuff. It's gonna be brilliant. Fantastic. But when we're talking about the, scaling up that cold traffic murr matters, why? Well, that campaign spent a whole bunch more money, but the ro I still didn't get a three. Now, the, the client won and we, we six x to 10. In one month when we couldn't hit one X before, because we let Google identify as target. He says, this person's gonna buy. They may be right, but I don't wanna spend 20, 30, $40 on the same person, spend $2 and I'll, take my chances. When you look through the top conversion path, we're losing 70% of all of our first clicks, paid search traffic to our direct channel. Coming back, I have a 70% chance that this person's gonna come back and buy shit. I'm not spending any more money on 'em. I'll take my chance. It's a great chance if this person comes back and buy, I'm not gonna just hit 'em with, more and more and more display ads on cnn.com and say, man, hope this really convinces you. Those people already made their decision. We're in an instant gratification. We're in an Amazon age now. You look at Amazon age or you look at Amazon ad or a product and you're like, yeah, I'm either gonna buy that now, I'm gonna wait. You might get Remarketed too, but unless you see something that is outside of Google, like your favorite influencer doing an hour long episode on it, you may pick up more sales. it's not within the realm of Google unless you wanna do a, YouTube campaign with influencers. But here's the lessons and the takeaways. Mer media efficiency ratio, what was or overall revenue of your company divided by the overall ad spend of all of your channels that will give you a Merck Media efficiency ratio. How efficient is your media if you are use utilizing 80 to 90% of cold. you will be able to scale that campaign until you hit a point of diminishing returns, which is simply just maxing out your search spread share and or click share. So you're pretty much maxed out. And then you have to think about something else. But my philosophy, my, typical use case is you can spend two, three, 4 million a month before you hit that point of diminishing returns. You're in a real good standing. So when you think about mer, it's company RO ratio. Do you wanna spend more for the existing users ratio's gonna go? Do you wanna spend the same amount of money on these new people to bring them to the site? MER stays the same. All even goes up, and that's what MER is and that's how you need to calculate everything. If you look at the difference between CAC and L tb, that's actually what we're gonna be doing next week. I'll stay that for next week is right now I just wanna have Mer, we're gonna do k and l tb. We're gonna do the fail points of automated targeting by audience definitions. We're gonna have a whole lot of fun here. It's gonna be, it's gonna be like the good old days, but these Friday lines are gonna be, costume's gonna be joined, I think next week, and we're gonna have kind of a podcast episode where we beat up models. anything that, you all have learned so far, they have questions about, I want to keep it very tied to this topic. I can't answer questions about other, scenarios, so I want to keep this video. Like training, ask version. But any questions on Mers so far? more of the story is people are gonna come back and buy in different ways that they already would like to buy, and they're also gonna go through your omnichannel performance, what your new traffic inside of Google will be remarketed to inside your Facebook. It's okay. Facebook's usually a fairly inexpensive remarketing campaign. Don't spend too much money on remarketing globally. That's a good lesson to take home just no matter what, network you're on. But scaling cold traffic winds. We had a client that we actually moved off of Pmax and it cost us one third to make the same amount of sales. Now a roaz is lower, but we went from 2,800. average new customers a week to 6,500 new customers a week with about 140% more. So we tripled our new customer growth with 140% new Aspen because both Facebook, Instagram, and I say Facebook, Instagram, both Facebook, Instagram, and Google went just pure traffic. Rather than beating up on their existing customers and too much brand, we really started moving along. So this is a really, really, really good use case for everyone to kind of wrap their heads around and think about, okay, if I can look at cold traffic, ignore Google Roaz and start to look at Company mer, because these people sometimes come back through email campaigns and they send to their friends am by hitting the right group of audience that starts to scale, and it's not too much of my existing customers and not too much existing traffic. Then you can start to see a good, a good scale. oh, we got some, some questions. I think. in that case, what bidding strategy would you use on standard shopping? I like either manual cpc, maximize clicks if I have really good feed, or even a low T row as Those are areas. My primary one is a low T row as my secondary one is manual cpc, and my third one is maximize clicks. But that's a very specific use case. low T Row as like just something that is not going to hinder, spend too much, but allow it to have a slight learning, strategy about itself, mean that it's just gonna stop going after the high spend relevant, keywords if they don't actually make any sales. So it's a good way to kind of have a, an automated negated keyword tool built into it. how do you use MER to identify what new campaigns to introduce or where to. Perfect. this one is actually, first indication is, if I look at a non-brand cold traffic campaign and I look at my roaz or my C p A there, you have to actually look at, If you have to, ignore the roaz and look at the c p A there. So, for example, MER is a good way to identify a o v divided by cost per new customer. And then you have to know what is. Difference between people that are coming through paid traffic and then lost Twitter channels. I'll give you a really, really fun example. let me share screen. And I'm just gonna do a big, a big notepad here and I'll give you a really good example. here's a great way to calculate mer. all revenue lasts 30 days equals, let's say a hundred thousand dollars. Okay? All spend in Google Ads. Let's just say you're only using Google Ads right now is 25 anti people. $25,000. So, And, but then, Google conversion value shows, let's say 50,000. This is important as MER is a hundred thousand that just took place, period. We have a hundred thousand fine. 50,000 of that though Google took credit for it. Good. Is it actually a hundred? Could be. Is it 90? Possibly. It's somewhere in between 50 and a hundred. We know that cuz Google's not tracking. So just know that Google Ads conversion tracking is tracking 50,000. So our mer, which is Rev divided by spend, equals 400% because we made a hundred thousand, we spent 25 all cash into my company. Well, some of that was emailed. Sure. Where do those people come from? Oh yeah, Google. Ha. So we have, that's what I'm saying. We have to look at this thing in a very, very specific vacuum. All of the revenue that comes. Uh, divided by all the spend because you can last click attribute them for where they came from. But if you're only advertising on Google, obviously it has to come from there. But Google won't track all of that. Sometimes it's 60, sometimes 70, sometimes it's 30 to spinning out a long sales cycle, or fusing analytics. That's a converted tracking source. So this is Mer right here. MER is 400. Okay. Now we have to look at is what campaigns are non-brand bold traffic keywords, non-existing website visitors and non customers, not customers. The questions that you have to. So things like a non-brand standard shopping or a non-brand search, or a dsa that doesn't really have too much brand. Pax? No, can't use pax. PAX is not good because it dynamically remarks people that are existing on your website from even organic. It's gonna take credit for it. That's not cold traffic. You can, you have to go with what you can control. Now the problem is, is those campaigns are usually about a 100% roaz or, a 200% rise. That's okay. That singular click, non-brand call drive versus visit five, whatever. What this means though is if you have a seven day conversion lag, seven day conversion lag, that Oh, lag. That means that your brand and look, yeah, that's good. Look. Very happy Where'd they come from? You're non-brand cold traffic campaign. That's how they found out about you. Well, what is these campaigns here, if they're at 100 to 200%, let's just say it's 200%. So 200% roaz, but physically, but, but the CPA is 45. And Roaz is 700%, your CPA is seven. Why? They're pretty traffic For this campaign right here. The people that found out about you for the first time, Google a brand name. Now what's the, now what's the combination between the two of those 400%. Ah, it is 400%. You know why? That's by mer. Now it's starting to make sense, right? Okay, so now if we know that, this campaign here that is 200% ROAS and has a CPA of, $45. it's got a little crazy. What if we added, I don't know, let's say 30% more ad spend to it? Hmm. What we add 30% more spent to it. Roaz does not move. CPA does not move. Okay. So that's good. So why are you scaling a campaign that only has a 200% raw as we're gonna lose money? Well, because after I added my 30% raw as to it, all my revenue in the last 30 days after, for, let's say two months, but for one 30 and all my spend here moved up to, what was this, like 35? I don't know, 40, 45. I dunno. That's just bad of math But your MER stays about the same, but now you're starting to. Because you're taking a campaign that doesn't have that great of metrics, but it is brand new cold traffic, non customers not existing and putting more aspect to it. So when you use MER to identify with new campaigns, you're measuring a point in time and you're taking the campaign that has the highest chance of increasing just pure new, brand new cold traffic. To you it's saying if this stays about the same and my CPA stays about the same, does my overall revenue go up? And TJ. If that is the case here, you should have a campaign that looks like this. Well, if I just go for a hundred dollars up to $300, is my CPA increase or decrease? Nope. Ah, so my MER will stay the same. Pull that campaign. Yeah. Are you profitable? Yeah. cool. so long story short, PMAX is used for marketing audience sources. No, not necessarily. What Pmax is really, really, really good at is finding a group of people that it knows will buy, spend up to a point of dimension returns, hang tight. It's not gonna be pushed to find more traffic. They'll be pushed to remarket, but those people don't buy you faster. as you take in PAX and you say, okay, I hit a hundred dollars a day, $200 a day, $300 a day, $400 a day. My roaz went from 300%, 300%, 300%, 200%, okay. Back down from 400 down to $300 a day. My RO goes from 200% up to 300%. Lock it in there. Don't use a tcp, a, don't use the few RO as that is going to remain there for a long. you've said Google, how many people do you know next week that'll buy this can of almonds? Says, here's it. I'm like, Hey, can you find more? Nope, I'm not built to find more. Why? I'm built to convert. Why aren't you gonna find more people? I don't know if those people are gonna convert. I know these people will convert. That's what PAX does. It's very good up to a point that you have to stop it, and then you look at other channels to push, even if the metrics look bad. Focus on your. that will be the decid factor if you scale the right traffic. this becomes increasingly more valuable. Store has returning visitors, returning sales, I mean, LTV to the moon. Well, I'm very, very, very, very, very glad you said that. I'm gonna have some fun with you real quick and I'm gonna show you a really quick snapshot. I'm going to change the name of this So check this out, tj. When you do this for one or two years, for example, you get to a point where I was gonna take like the last seven days for fun. I changed the name of this company and said, no son, no can see it. But my media fist ratio, my mirror is now 20. It's been 165 grand last week to make 4.38 million. This isn't just like some, oh my gosh, it's amazing. No, this company was up and running for 20 years. It's been growing now a lot more. We went from 21,000 new customers to 65,000 new customers per quarter in a year by following this. So when you look at your cost of acquiring a customer download or 40. My Google Ads campaign right now is we're gonna get a six x and I don't really care. I could care less what the, what the MER is my cost per required. New cus went down Y. This is a company that sells medication to animals. Well. People that buy medication for animals buy all the time. they have, their LTV is like 3, 6, 9, 12 orders per year. I'll pay for them one time, let them come back and just increase my revenue because my cost per conversion is so low. I'm gonna get a whole bunch of new customers every single week that I don't have to pay for ever again in my mer. Skyrockets in the moon. So exactly when you have good L t V, that's, uh, tj, you're jumping ahead too. Actually join us next week. We're gonna do CAC versus ltv. Cost acquiring a new customer versus a lifetime value of the customer. How do you pay for that customer less? Imagine this, here's a great one, tj, if you had a cack in LT V model, what is a cost per acquired new customer for the first sale? Well, 500% cost be $50 to make $50. Good. Are you running a brand campaign? Yeah. It's got a great return. I'm sure it is. What's your brand's cost for conversion? $20. Awesome. So the $50 made the first time and you pay $50 for it. That person come back and spent another $50 and you didn't pay anything, right? Your customer? No, I spent another $20 on it. Well there goes your profit margin now do that for a few years. and your brand campaign eats away at all your profit but has a good Roque. and that's where people fall into it. You look at ROEs and think, well, that must be. Nope. You just take all that cost for a conversion. Every single one of your brand conversions just chuck out the window. Why? Because this is like, I don't know, the 17th conversion that person did with us this year, or this decade. So yeah, you, you simply just hack off all of your profitability to have a good roaz. Google wins, you lose, but hey, Roaz looks fine. Right? Who cares? amea. Doesn't Pax go into more audience signals when we bump up? Sp Nope. What it does is it first exhausts all the available lowest hanging fruit, especially for any tcp r t Roz on Pax. Why says, Hey, I need to maximize the conversions. Well, what's going on? Well, I need to maximize conversions. Where am I gonna go? the bob who is googling a keyword? No, that, that doesn't seem right, but Ted just put a item in his cart and Mary has visited 13 times. I'm going to those two people. Well, here's more Aspen. Great. I'm gonna go after them harder. That's what happens. And when, I mean, if you try to scale Pax and you find a time where you couldn't scale, scale, scale, scale, scale, scale, scale to the moon, your ClickSure is only 12%, but your row ass keeps dipping while you keep adding it. More Aspen, it's trying to remarket too hard. TJ says, so interesting. I'm trying to use dynamic search to increase new customers that use PAX for retargeting. It makes knowing how the campaigns function at each level of the funnel more important. So Good. You're exactly right. Just know that this though, you don't have to necessarily scale pax. Actually, I'd actually hang tight on Pax, just scale dsa. Why Pmax will use more and more and more of its ad spend to do more remarketing on all those seven channels, and that campaign will simply become. Efficient with the more cold traffic that you have. So don't scale Pax, because then it's gonna go off on its own plus remarket years at the same time. Andrew says, how do you determine when to kill lower brand campaigns since you can be paying for attorney customers who would have converted anyway? I spend the least amount as humanly possible in order to capture a branded conversion that I was going to get that sale anyway, because it's very easy to make that sale. here's a good, good method. when you're running heavy cold traffic, run very little. brand traffic. Now, I'll give you a scenario that's been true since the dawn of time and history of mankind, but you look at this, screen here in the last July aug, I mean, it, this campaign runs very well. Like there's, I mean, conversion spike up here because it's running pmax, so have to spike. I'm spending, it's gonna happen. Conversions and then go back down. Cuz again, Pash just does have your marketing. They run a lot of Facebook ads. Everyone's happy. In this scenario, our C looks great. But, if you look at the brand campaign, I spent 706 $9 to make 133,000. My cost for a conversion is 60 cents. Would you pay 60 cents for a branded conversion? Yeah. Well, why is it 60 cents? Well, my insights tab, or I'm sorry, my auction insights tab. so I'm the only one there. Perfect. Well that's why Solo, of course John, of course your branded campaign is gonna be low. there's no one there and that's all I'll spend on Another person comes in and starts to bid up a little bit. I bid five pennies over him and or her, and I just hang tight. I will not spend more than what it needs to protect myself, cuz if I'm not measuring ROAS in Google, I could care less. It's a snapshot in time. I look at CAC versus ltb and. But I need to protect myself from all the investments I'm making in the cold traffic because if I get three clicks on, three brand new people that are semi-interested, and then they come back and Google my brand name cuz they're ready to buy, but they've only been there once or twice before, they don't remember my name, I lost that money. So I'll protect myself to get the return traffic. I paid for it, I heard, but I'm not gonna just crank it up, even though the raw eyes looks like it's a million percent. It doesn't matter. That was fun. Everyone, let me know. I know there's like 21 people here. I'm gonna try to do some q and a at the end. It should be very topic discussion, but, uh, lemme know if everyone had a good time. I had a blast. I've been speaking for 58 minutes now and, yeah, it's a good topic. I love this stuff. so that's good. way to think about how Google Ads actually affects your business. thank you Andrea. And then, uh, I mean, have you found a way to see what channels are hidden in the direct traffic? direct traffic is simply just someone going to the browser and typing in your URL directly and clicking enters. Normally it's returned. The reason is, is because if you've ever gone to Google, you open up a new tab and you type a g o, it's like, oh, you wanna go into Google? And you're like, yep, that's direct visit. Usually it's return. so, Sergey says, best Friday ever. I see you a great time. Happy. Woo is the best one so far. Good. I'm so glad you guys like this. it's gonna be just knowledge bombs, that are just gonna be flying out solutions eight, and you're gonna start to think and learn like I do. So it's cool stuff. Everyone, I appreciate and happy new everyone.