Growth through a profit-driven Google Ads strategy
HoukemaTools started in 1997 as a tools shop in the DIY market. After 12 years, in 2009, they decided to start the online shop. They moved to a larger warehouse. This has been succesful, but not without a challenge.
The challenge: Limited profitability and no insight into profit margins.
One of the biggest challenges for Houkema Tools was maintaining profits during the off-season, combined with significant differences in margins between products. This made it difficult to manage campaigns effectively, as margins were not taken into account in the conversion measurements and were purely based on an average ROAS, which could not be achieved for every order.
How our focus on POAS instead of ROAS delivered impressive net profit growth for HoukemaTools.
Situation before the collaboration with Adverge:
Although there was an average ROAS that generally generated sufficient sales, margins varied considerably per product, as is often the case with online stores. The bidding strategy focused on revenue targets, which was not ideal for more expensive products such as large machines or tools with high shipping costs, which actually yielded higher margins.
In Google Ads, campaigns were guided by a tROAS objective, with revenue as the main goal. This resulted in an optimization of bids for maximum turnover per euro spent, which, due to the varying margins, says nothing about the ultimate profitability of the campaigns.
Our approach at Adverge
We implemented ProfitMetrics from the start of our collaboration. This not only gave Houkematools insight into the margins per order and product, but also showed how much was left after deducting costs. ProfitMetrics also facilitated improved conversions and offline conversion tracking, which improved conversion attribution across all channels, including Google Ads. We implemented consent mode V2 to be fully compliant.
It quickly became clear that the existing bidding strategy was suboptimal, with too much spending on low-margin but high-revenue products. After a period of collecting data for the new conversion actions, we set the profit goal as the primary conversion.
The Results
After a learning period of approximately two to three weeks, our new strategy began to take effect, with an increase in net profit without any loss of conversions. After this period we even saw a 30% increase in conversions, while costs only increased by 17%. Normally, HoukemaTools would see a seasonal decline in the number of sales on the webshop during that period.
After just one month we achieved an increase in net profit across the entire webshop, even taking into account a seasonal decline.*
This success story illustrates the power of our approach and how a strategic focus on profitability rather than just revenue can lead to significant improvements in net profit. We are excited to also help your e-commerce company gain insight into the actual net profit and make effective use of this within Google Ads. Are you ready to increase your profitability from your Google Ads with us?
*We would have loved to share more specific results, but that’s not helpful for them in their market.
Want results like this too?
Are you enthusiastic about this opportunity to work with a young but experienced agency and shape the future together? We would love to hear from you! Please contact Marieke Cozijnsen at marieke@adverge.com.
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