HVAC Demand Trends: September 2024 PPC Performance
NEW DATASET
👋 Hey, Jon here! This week, we will analyze September 2024 PPC performance (Google and Microsoft Ads/Bing) month over month and year over year with a new, larger data set!
As a refresher, here’s the final PPC performance data for August (updated with data from a larger sample size) with a +134% YoY change in spend:
Unique Leads: +210% (YoY)
Paying Customers: +177% (YoY)
Customer Acquisition Cost: $612.79 (-16% YoY)
Total Revenue Opportunity: +161% (YoY)
Closed Revenue: +170% (YoY)
30% of total revenue opportunity did not convert via phone calls
ROAS Potential: 10.7x (+11% YoY)
ROAS Closed: 4.5x (+15% YoY)
This new and larger sample of brands more aggressively spent on PPC in August 2024 compared to 2023, and it paid off, bringing in $9 million of additional closed revenue on ~$2 million more in spend.
With that, let’s dive into September performance! Note - these are primarily HVAC companies, but some also offer plumbing / electrical services. This data includes all business units.
**Spend on PPC increased 58% from September 2023 to September 2024.*
Unique Lead Volume Decreased by 16% Month-Over-Month and Increased by 43% Year-Over-Year
Spend decreased 15% month-over-month, so it makes sense that we would see a similar proportional decline in lead volume from August to September, especially heading into the shoulder season.
However, it is worth noting the 43% increase in year-over-year lead volume driven by a 58% increase in year-over-year spend.
That level of spend increase is aggressive, but still, unique leads were only 11% more expensive than in 2023 ($118.47 cost per unique lead), and the cost per booked customer actually decreased 5% year-over-year to $297.70.
Book Rate (+13% YoY), Match/Run Rate (+17% YoY), and Paying Customer Rate (+11% YoY) all increased, meaning the active customers in the month moved through the sales funnel at higher rates than in 2023.
**If your book rates, run rates, paying customer rates decreased in this same time period, the aggressive spend could come back to bite you. These are brands that have been using the SearchLight data platform for 1+ years monitoring operational performance closely and knew they could handle additional lead volume.
Paying Customers From PPC Decreased 19% Month-Over-Month and Increased 63% Year-Over-Year
Book rate (-2%), Match Rate (-2%), and Paying Customer Rate (-5%) all came down slightly month-over-month, again, expected with the shoulder season but this does mean on top of an already slower lead month, fewer of those leads converted in each step of the revenue flow funnel.
This resulted in 19% fewer paying customers month-over-month, but year-over-year, paying customers were up 63%.
And because the number of paying customers outpaced the proportional spend increase (63% more paying customers vs. 58% spend increase) we’ll see below that it was actually less expensive on average to acquire these paying customers!
Customer Acquisition Cost Increased 6% Month-over-Month and Decreased 3% Year-Over-Year
Let’s look at a break-down of customer acquisition costs by month and year for August and September:
August:
$726.51 customer acquisition cost in August 2023
$612.79 customer acquisition cost in August 2024
September:
$671.02 customer acquisition cost in September 2023
$650.06 customer acquisition cost in September 2024
August ‘23 was a bit of an anomaly with a price spike, and month-over-month we’re seeing what we would expect when demand slows down, a slight increase in CAC.
But looking year-over-year, customer acquisition costs from PPC came down $21 despite a significant increase in spend.
That increased spend drove an increased amount of unique leads, which converted at higher rates through every step of the funnel, and those customers spent 5% more in September 2024 ($3,062) than they did in September 2023 ($2,927).
Total PPC Revenue Opportunity Decreased 3% Month-Over-Month and Increased 58% Year-Over-Year
58% more year-over-year spend drove an equal increase, 58%, in total revenue opportunity generated from PPC.
The return on ad spend potential was the exact same from September 2023 and 2024 at a 9.7x, but because of improved booking rates, run rates and paying customer rates, these brands were able to spend more while maintaining their ROAS numbers.
As a reminder, if you only spend $1,000 on a marketing channel, it is easier to hit a high ROAS (you only need 1-2 installs to get above a 10x) versus spending $10,000 and $100,000 and so on. There are always dimished returns (which shows in the data as a reduction in ROAS numbers).
Maintaining a 9.7x ROAS potential while increasing the volume of that opportunity by 58% is the ideal outcome of any major budget change.
The holy grail is always to both increase volume and efficiency of that volume (ROAS) but can be difficult to do once you get into higher dollars being spent on PPC.
Let’s see how closed revenue did 👇
Closed Revenue Decreased 25% Month-Over-Month and Increased 70% Year-Over-Year
Closed revenue did come down pretty noticeably month-over-month, by 25%, so I hope those of you who experienced similar decreases or planned for decreases were able to execute maintenance, membership and existing customer messaging strategies.
But zooming out, closed revenue was up a significant amount, 70% year-over-year.
That translates to $58,000 more in closed revenue per business in this sample, while each business only had to spend $13,000 more to get that additional closed revenue.
However, it is important to note that ROAS closed in September 2024 was just a 4x (at minimum we recommend a 4.5x) so a choice was made to sacrifice some margin to go after the volume.
Some of you may look at that and for your own business, would not call that a success (you’re more focused on efficiency) whereas others see the volume increase a big success.
That’s why it is so important to think about how you want to approach growth with your business and continually track the data to make sure your strategies, budget and execution align with that you’re trying to accomplish.
Happy Halloween! 🎃
Until next time . . .
-Jon