Solutions 8 Helped PetMeds Significantly Lower New Customer CPA While Maintaining a Consistently High ROAS—and Earned a Congratulatory Email from Google
PetMeds is a publicly traded online pet medication distributor that serves millions of customers throughout the United States. Although they spend $1.5 million monthly with Google, they need to ensure they are maintaining a high level of new customer acquisitions at a relatively low cost. Due to the nature of their business, using automation is challenging because the existing customer converts well at a low cost per acquisition (CPA) and a high return on ad spend (ROAS).
On March 1, 2022, Solutions 8 began running 35 Performance Max (PMax) campaigns to replace the client's existing Smart Shopping (SS) campaigns, which were too heavily focused on existing customers. PMax is more heavily focused on New Customer Acquisition because of its omni-channel targeting of avatar signals, so the Solutions 8 team was able to break free of the considerable Display remarketing aspect of SS and greatly increase the number of new customers while reducing the client's cost of acquired new customers by 65 percent.
Primary Challenge: Choosing The Right Google Ads Products To Achieve The Client's Specific Marketing Objectives
Prior to the introduction of PMax campaigns, Smart Shopping was a significant upgrade to Standard Shopping campaigns. The built-in remarketing was an excellent addition to the campaign capabilities. However, one fail point the Solutions 8 team found was that sometimes, the bidding strategy of Maximize Conversion Value tends to favor repeat purchasers. While it has a favorable CPA and high ROAS, new customer captures did not increase in any significant way by changing the bidding strategy to bid higher for new customers.
PMax, however, took the best aspects of Smart Shopping and combined them with a dynamic search ads (DSA) element and outbound prospecting on the Google Display Network (GDN). Together with remarketing, this allowed Solutions 8 to not only keep the number of returning customers high for our client, but also to make a concerted effort to focus on new customers with the ability to control (to an extent) who we were targeting with our assets.
Secondary Challenge: Successfully Utilizing Automation Technology In Order To Improve Campaign Performance
Solutions 8 has consistently been a big fan of automation for both the targeting and bidding strategies aspects. PMax rolled right into this ideology perfectly. For campaigns where we did not need to make a specific ROAS but needed to focus on New Customer Acquisition, Maximize Conversions was an excellent way to make an aggressive push.
For campaigns where we needed to keep consistent CPA and results month to month, Target CPA with a sizable budget allowed us to see 20 percent improvements, month over month, with minimal optimization efforts. The Signals were controllable enough to point in the right direction and the expansion built in allowed us to capture more audience than we could have thought of with a traditional keyword strategy.
Solution: Developing The Right Strategy To Effectively Deliver Results
For this client, Solutions 8 used a new Conversion Action of Imported From Clicks. This allowed us to take new customers with Google Click ID (GCLID) exported from the client’s CRM tool and import them to identify the campaigns that had the best new customer acquisition. We also used our customer list and segmented by New vs. Returning customers inside of Google Ads to verify their accuracy.
With the campaigns delivering 60 percent new customers and 40 percent existing customers, we were also able to: 1.) start bidding higher for new customers by appending a 90-day customer lifetime value (LTV) to each new customer sale, and 2.) use the New Customer Only acquisition modeling of the bidding strategy if we needed to get more aggressive on new customer acquisition. These two measurements—GCLID Import and Customer Match—along with the bidding strategy control, gave us great information about how effectively we are driving new customer sales.
An advanced strategy the Solutions 8 team discovered is that if our goal was to increase existing customer acquisition in a PMax campaign, we would add our existing users combined with all website visitors, which, after measuring, allowed us to use our Signals to control what type of customer we wanted to focus on.
The Result: How Solutions Helped Petmeds Meet Their Business Objectives
When Solutions 8 started with this client in December of 2021, their new customer acquisition percentage was only 11 percent of all sales and their new customer cost of acquisition was $287. They needed their new customer acquisition cost to be under $100 to become profitable. In addition, because this is a publicly traded company, this was an extremely difficult and urgent need.
The introduction of PMax to their account heavily vested in Smart Shopping was able to bring their New Customer Acquisition Cost down to $94, and no repeat customers were lost. Upon seeing the earnings call, a Google employee emailed us to congratulate us on a successful turnaround.
The Future: Continued Optimization And Growth
We are tremendously proud of this accomplishment and will continue to work with PetMeds to drive growth and keep costs low. The experience and insight the Solutions 8 team has gained so far working with this client will enable us to help other clients see the same positive results.