👋 Hey, Jon here! This week we are going to dive into February 2024 PPC performance (Google and Microsoft Ads/Bing) with month-over-month and year-over-year analysis. Plus, this is the first week we are doing campaign-specific performance, looking at branded vs. non-branded, since so many of you have asked, this will be part of the PPC edition newsletter going forward.
As a refresher, here’s the final PPC performance data from January (all of the data below is year-over-year):
Conversion Volume: +60% (YoY)
Paying Customers: +28 (YoY)
Customer Acquisition Cost: -12% (YoY)
Total Revenue Opportunity: +11% (YoY)
Closed Revenue: +14% (YoY)
34% of closed revenue did not convert via phone calls
Note that the February spend on PPC for the accounts in this sample decreased 17% month-over-month and increased 27% year-over-year.
HVAC PPC Conversion Volume Decreased by 38% Month-Over-Month and Increased by 19% Year-Over-Year
Much like organic performance, month-over-month conversion volume from PPC dropped significantly, despite a 55% month-over-month increase in January.
While it is February, right in the thick of the shoulder season, the decrease in demand is more notable than what it was in 2023:
In 2023, revenue opportunity from PPC went down in February, but only slightly, before bouncing back up in March and starting the upward trend to peak opportunity in June.
Conversion volume is only part of the revenue story, but if you got the feeling that leads were down in February, you would more than likely be correct for your business.
It’s also worth noting here that match rates only increased slightly (1%) and paying customer rates decreased by 3%.
This means that February leads converted to a lower rate than they did in January.
Paying Customers From PPC Decreased 35% Month-Over-Month and 15% Year-Over-Year
Whenever conversion volume drops, it’s safe to assume that the number of paying customers from those conversions will drop as well.
In this case, paying customers from PPC dropped a whopping 35% month-over-month, and 15% year-over-year.
When conversion volume drops, we typically see an increase in match rate and paying customers (CSRs and sales teams aren’t as busy with fewer leads) but this month that didn’t happen.
Weather can certainly play a factor in the urgency of these customers, but this is a double-whammy with paying customers dropping at nearly the same rate as conversion volume.
Customer Acquisition Cost Increased 30% Month-over-Month and Increased 32% Year-Over-Year
PPC customer acquisition costs rose by 30% in February, but average tickets also rose by 11%, offsetting some of that additional cost.
It’s not out of the ordinary for paying customers from PPC to cost more in February, but this is more of an increase than in 2023:
I would anticipate those costs coming back down in March, with the lows happening in June, but it is critical that with rising costs you measure ROAS for Google and Microsoft Ads (Bing).
If costs do continue to stay higher in 2024 than in 2023, operations (lead handling, follow-up, etc.) will play a role in how well your business can stay efficient with this marketing channel.
Total PPC Revenue Opportunity Decreased 28% Month-Over-Month and Decreased 11% Year-Over-Year
As you probably expected, the total revenue opportunity (unsold estimates, sold jobs, and closed jobs) dropped noticeably month-over-month and year-over-year.
However, the total revenue opportunity from PPC in February was 10x from the spend.
So for every $1 spent on PPC in February, $10 in revenue opportunity was generated.
This is why it is important to look at the full picture (especially the agencies out there!).
Yes, leads were down and we can feel some type of way about that, but make sure you evaluate the total picture. We’d love to do better MoM and YoY every time, but in a down month with much fewer conversions, a 10x potential is still very profitable and enough opportunity to continue investing in PPC.
33% of Revenue Opportunity Did Not Convert via Phone Calls
Every conversion counts, always.
But when conversions are down, making the most of every opportunity matters even more.
Over the past several months, non-phone call revenue opportunity has remained consistently in the 33% - 36% range.
Over a third of your total opportunity is not calling your business, but rather scheduling online, filling out forms, or chatting with your business.
For example, Schedule Engine chat conversions had by far the highest average tickets in this sample.
The point is: do not underestimate conversions that convert in non-traditional ways.
This is especially important in a down month with fewer conversions.
Closed Revenue Decreased 27% Month-Over-Month and Decreased 16% Year-Over-Year
PPC generated a 5x return on ad spend (closed revenue) in February for this sample of businesses.
$1 spent on PPC generated $5 in closed revenue.
So, even though those numbers decreased 27% month-over-month and 16% year-over-year, these campaigns were still profitable.
Just keep in mind that the margin of error (missing leads, poor sales follow-up, etc.) is much smaller in months like this with less demand.
Campaign Specific Performance (Branded, Non-Branded)
In this newsletter, I wanted to add some details about campaign-specific performance, as many have asked.
So, if you made it this far, you’re getting some extra data this week and this is something I will include in each PPC newsletter going forward.
In this sample, less than 10% of the budget was allocated to branded campaigns.
Whenever you are comparing your performance data to this benchmark, be sure to know what percentage of your budget is allocated toward branded vs. non-branded.
Branded campaigns tend to perform very well, so if you have a much higher % of budget allocated to those campaigns, your performance could look a lot different.
In this sample, that 10% branded allocation generated 30% of the total closed revenue for the month.
The other 70% of closed revenue was generated by non-branded campaigns, with heating service campaigns leading the way with over half of that remaining closed revenue generated.
February was service-heavy (as expected) but the paying customer rate from those campaigns was about 10% higher than install campaigns, so the success rate helped to generate more revenue even with lower average tickets.
One more thing to keep in mind as you compare your PPC performance to these benchmarks: some of these accounts (managed by multiple different agencies) are using SearchLight’s new RevSync product, which uploads conversion, revenue, and other data back to ad platforms to help their algorithms optimize for performance.
This has been a very popular product, so it has been difficult to produce a sample size large enough with accounts that aren’t using it to boost performance.
So, if you aren’t using any type of offline data product today, and your numbers are a bit lower than what we report, that’s likely a big reason why and is not a cause for concern.
Until next time . . .
-Jon