BACKGROUND
SportStop.com is an online retailer of lacrosse gear. Before coming to Omnitail, their previous agency was pushing spend higher and higher for PLAs, Display, and Paid Search ads.
But was the extra spend driving justifiable revenue? Or simply increasing the agency’s fees? They came to Omnitail to find out.
120%
Increase in Google Shopping Profit Year/Year
124%
Increase in Non-Branded Profit Margin Year/Year
32%
Decrease in Cost Per Order Year/Year
INVESTIGATING
THE ACCOUNT
SportStop.com came to us after a period of declining profits and increased spend. We suspected inefficient bidding and misdirected spend was the issue. We also knew the previous agency may have had an incentive to keep spend high to preserve fees. With all this in mind, we dove into the account to get to the root of the problem.
1. Overspending
In the months prior to signing on with Omnitail, SportStop.com averaged between 3 and 4.5x return on ad spend (ROAS.) These numbers looked fine on the surface, but after accounting for cost, the ads were generating very little profit relative to spend. In fact, paid search ads were operating at a loss.
In reality, SportStop.com wasn’t the entity making money in this scenario. Any revenue was sent to Google and their PPC agency, which was charging based on a percent of ad spend. With higher spend directly driving the agency’s paycheck, their agency had no reason to cut back on ad cost—even if it meant increased profit for their client.
2. Improper Bid Management
Bids were also not being managed correctly. The agency had been making some adjustments, but the strategy was flawed and the changes were not timed well. As a result, spend was being misdirected to out-of-season or unprofitable products. Little effort was made to cut the overall cost of the program, even where overspending was a glaring issue.
This poor strategy cost the agency key opportunities to redirect spend to profitable products. In failing to manage bids correctly, the agency also missed the window to capitalize on seasonality—an extremely detrimental outcome for a highly seasonal retailer.
Omnitail's Advertising Strategy
The main pain-point in this account was excessive spend. We remedied that with a profit-driven strategy, then applied a combination of other account management techniques to drive success for SportStop.com.
Optimizing Ad Spend
In the first month after Omnitail took over, SportStop.com was going into peak season. During this time, most agencies would spend more, but our strategy resulted in cutbacks, reducing spend by about 30%.
Primarily, these cuts were made to ads for a handful of products that were consistently bleeding money. Cutting back on these products freed up spend for items that we discovered could perform well.
You might think dramatic cuts in spend would reduce revenue and further limit profit. In fact, the opposite happened. Revenue has been on the rise nearly e very month since Omnitail began managing the account , and profit has increased drastically —including an almost 10x increase in the first month after the takeover.
This is a prime example of why Omnitail does not charge by percentage of ad spend. We were able to improve the performance of this account because our agency w as fully aligned with the client’s goals. Their previous agency, like most agencies, had an incentive only to raise spend, regardless of whether that was in the best interest of the client. At Omnitail, spend decisions have nothing to do with our bottom line and everything to do with yours.
Bid Management and More
We implemented our other tried-and-true strategies for success: product feed optimization, intensive query segmentation, and profit-driven bid management. We also assigned our client a dedicated analyst to manage bids and make timely adjustments in accordance with SportStop.com’s seasonality.
Prior to launch, we optimized the product feed, and performed a query intent analysis. Segmenting search queries by intent helped us determine where budget could be most effectively allocated, and allowed us to target search terms that would drive revenue for SportStop.com. Even better, profit-driven bidding meant the client got to keep more of that revenue as profit.
CONCLUSION
SportStop.com has been with Omnitail since January 2019 and they are thriving. In terms of profit, growth has been very consistent.
The first week we took over the account set the tone for how we would continue to manage ad spend. Compared to their previous agency, Omnitail could spend a lot less, while bringing in more profit at a higher rate of efficiency
