Measuring performance is the most important step to managing any Google Ads campaign. After all, how can you make strategic decisions if you don’t know how you’re doing?
One thing that folks often overlook, however, is the difference in results between branded and non-branded campaigns. Of course your overall account wide results are incredibly important, but today we’ll discuss why these don’t tell the whole story.
For the purposes of this article, when we talk about results, we’ll look at our favorite top line metric, Return on Ad Spend (ROAS)
What is ROAS?
ROAS a ratio that shows for every dollar you put into your ads, how many dollars in revenue you are getting out. So if you run an ad campaign and you put in $10 and you get out $50 in revenue that’s going to be a ROAS of 5 (or 50 divided by 10). You’ll also sometimes see this number written as 500%. As long as you are properly tracking your conversion values, in the Google Ads interface, you can find ROAS in the “Conv. Value/Cost” column.
A proper target for ROAS will vary based on your business environment. Factors like your profit margin on each sale and the lifetime value of a customer will certainly affect how much you’re willing to spend for each dollar in revenue.
Most clients want to know one main concept: “how much did we spend and how much did it get us?” ROAS tells us this and answering this question at the account-wide level is very important. What many miss, however, is the importance of determining the breakdown between branded traffic and non-branded traffic when looking at ROAS.
What is the difference between branded traffic and non-branded traffic?
Let’s start with an example. Imagine we have a men’s wear clothing boutique called Jazzy Joe’s.
Branded traffic for Jazzy Joe’s would come from searches that use Jazzy Joe’s “branded terms”. This may be the brand name or a specific product name that is only offered by Jazzy Joe’s.
If a User Searches for “Jazzy Joe’s Shirts” and clicks on an ad, this would be counted under branded traffic. Essentially, searches for any terms that you would trademark can be considered branded.
Non-branded traffic comes from users searching for more generic terms. For example, if a user searches for “men’s sports coats” or “men’s golf polos, then sees and ultimately clicks on an ad for Jazzy Joe’s, this would be non-branded.
As you can imagine, non-branded traffic is going to be a little bit higher in the funnel as these users are looking for more general products and haven’t decided on a vendor yet. Branded traffic represents users who have already searched for your brand, meaning that they are likely closer to completing a purchase decision.
What are the different ROAS for branded and non-branded traffic?
These are two very different types of traffic and the results will always reflect this.
For non-branded traffic to an ecommerce site, we’re often shooting for a ROAS of 3.5 – 5 (for every dollar we’re putting into ads, we’re turning around $3.50 – $5 in revenue. Because your site would likely not have ranked for these more general searches without paid ads, purchases from non-branded traffic likely would not have happened without them.
Depending on the business, that 3.5-5 ROAS figure may be the profitable level for new sales when taking product and shipping costs, overhead, etc. into account.
The ROAS for branded traffic will typically have a much higher ROAS (sometimes greater than 10 or more) because people are specifically searching for that brand. They already want to buy your products, so they’re likely to complete the purchase once on your site.
Of course, it’s possible that if the ad wasn’t shown for a branded search, the customer may have clicked on the organic listing for Jazzy Joe’s site and the purchase would have happened anyway. After all, they were already signalling intent to buy from Jazzy Joe.
It’s usually still a good idea to be running ads on branded traffic. This is both a defensive play to prevent competitors from bidding on your branded terms as well as a way to give you complete control over the listing that’s shown when a customer searches for you.
Luckily, branded traffic is often quite cheap as your site is the best match for the customer’s search queries. Google takes this quality factor into account in ad auctions, allowing you to pay less for these clicks than your competitors would.
To make up for the cheaper traffic and the fact that some of these purchases would have occurred without the ads, we want to make sure we’re hitting those higher ROAS targets when placing ads on branded traffic.
Scaling Results with Non-Branded Campaigns
Once we’ve gotten Google Ads campaigns running profitably for a client, the next step is typically to scale them up as much as possible while maintaining those profitable ROAS targets. After all, if it’s profitable for Jazzy Joe’s to trade $10 in ad spend for $35 in revenue, surely trading $100 in ad spend for $350 in revenue would be even better.
It’s important to remember that branded campaigns typically only scale so far. There’s only so many customers searching for Jazzy Joe’s directly, so these campaigns will top out once all that traffic is captured.
Non-branded campaigns, on the other hand, will typically scale much further. There’s many more people searching for “men’s shirts” than “Jazzy Joe’s shirts,” so if you can profitably advertise on these non-branded searches, you’ll have a lot more headway to grow your campaigns.
It’s always important to know “How much did we spend and how much did it get us?” but remember that this only tells half of the story. The blended, top-line ROAS may look great, but if it’s driven entirely by branded traffic that would have converted even without the ads, your campaigns may not be profitable.
Additionally, if your account-wide results are driven too strongly by branded traffic, they’re not likely to be scalable when you want to grow.
To make sure you’re not fooling yourself when it comes to account profitability and scalability, make sure to understand your brand and non-brand results separately.