Key Takeaways
- Google Ads ROAS Benchmarks vary across revenue tiers.
- Small businesses should focus on budget efficiency and remarketing.
- Mid-sized businesses benefit from diversifying ad formats.
- Large businesses need to manage CPC and balance acquisition and retention.
- Small businesses can target high-intent keywords for better ROAS.
- Mid-sized businesses should use automated bidding strategies.
- Large businesses can leverage Performance Max campaigns.
- Mobile-first strategies are crucial for improving ROAS.
- AI tools enhance ROAS by Effective audience targeting is another strategy I can recommend. A targeted audience campaign with AI will solve this issue exactly.
Understanding Google Ads and ROAS Benchmarks
Google dominates the search market, making Google Ads a powerful tool for eCommerce businesses, especially during peak shopping periods like Black Friday and Cyber Monday (BFCM).
Return on Advertising Spend (ROAS) is a critical performance indicator that helps advertisers measure the revenue generated per dollar spent on ads. ROAS expectations vary depending on factors such as ad budget, competition, and consumer trends—especially around BFCM, where ad competition spikes.
In this blog, we explore Google Ads ROAS benchmarks for Shopify stores across various revenue tiers. By analyzing data from previous BFCM seasons, we’ll provide insights on ROAS trends and offer optimization tips specific to each revenue bracket.
1. ROAS Benchmarks: Small Businesses (<$1M in Annual Revenue)
- Average ROAS: Small businesses typically aim for an ROAS of around 2.5x to 3.5x during the BFCM season.
BFCM Trends for Small Businesses
For smaller Shopify stores, BFCM presents both opportunities and challenges. As Google Ads sees heightened demand, smaller businesses often face rising costs-per-click (CPC), requiring a focus on cost-effective strategies.
These trends mean one thing: small businesses with optimized, highly focused ad campaigns tend to perform better than those with broad targeting.
Key Challenges and Strategies
Budget Constraints
Smaller businesses often operate with limited ad budgets, which can restrict their overall reach. During BFCM, when CPC rates rise, staying within budget while reaching the target audience becomes even more challenging.
🎯Strategy
Focus on core products or bestsellers rather than advertising an entire catalog. This approach helps concentrate ad spend on products with proven performance and customer interest, increasing the likelihood of better ROAS.
Effective audience targeting is another strategy that digital marketing professionals can recommend. A targeted audience campaign powered by AI can address budget constraints through machine learning-based smart budget optimization.
Precision Targeting and Keyword Selection
For small businesses, targeted keyword selection is crucial to avoiding overspending on competitive keywords. Google Ads in the BFCM season can see increased competition on general keywords, making it harder for smaller businesses to maintain ROAS on broad searches.
🎯Strategy
Narrow your focus to high-intent keywords. Rather than bidding on “Black Friday deals,” small businesses may find better success with more niche terms like “discount [specific product] for Black Friday.”
Additionally, using negative keywords can help filter out unqualified clicks, saving budget for more relevant traffic.
Tips for Optimizing ROAS
1. Leverage Remarketing
Remarketing to previous visitors who did not convert can significantly improve ROAS. Shoppers who have shown interest in specific products are more likely to purchase when retargeted with relevant ads.
📌Practical Tip
Set up remarketing campaigns to show ads to past visitors, especially those who abandoned carts. A compelling reminder during BFCM can encourage them to complete their purchases.
AI Remarketing guarantees the most powerful ad campaigns with only the most interested website visitors making remarketing more effective in terms of revenue.
2. Ad Scheduling for High-Conversion Times
With a smaller budget, ad spend is more effective when directed toward periods with the highest conversion potential.
📌Practical Tip
Analyze data from previous campaigns to identify peak times (e.g., evenings or weekends during BFCM) when conversion rates are higher. Adjust your ad schedules accordingly to make the most of these high-conversion windows without depleting your budget.
3. Prioritize High-Intent Keywords
Small businesses should avoid broad, competitive keywords and focus on specific, high-intent terms that indicate strong purchase intent.
📌Practical Tip
Use keyword research tools to identify phrases that signal purchase intent, like “buy [product] now” or “[product] discount.” These are likely to convert better, enhancing ROAS while reducing costs on non-converting clicks.
2. ROAS Benchmarks: Mid-Tier Businesses ($1-5M in Annual Revenue)
- Average ROAS: Mid-sized businesses typically achieve an average ROAS of 3.5x to 4.5x during the BFCM season. This range often surpasses the benchmarks for smaller companies, as mid-tier businesses can generally allocate larger budgets to their campaigns, enabling them to sustain or improve their ROAS.
By carefully managing their budget and taking advantage of Google Ads’ diverse tools, they can maximize reach and engagement without significantly sacrificing efficiency.
Key Challenges and Strategies
Balancing Reach and Spend
For businesses in the $1-5M revenue range, customer acquisition cost (CAC) and budget constraints are two major considerations. While mid-sized companies often have more resources than smaller ones, BFCM’s intense competition can drive up ad costs, putting pressure on profit margins.
These businesses need to find a balance between expanding their reach and maintaining efficient ad spending. Too much focus on one area could lead to high acquisition costs without sufficient returns, or limited reach that fails to capture BFCM’s full potential.
Ad Format Variety
Mid-sized businesses are often better positioned to experiment with different ad formats, which can be an advantage during BFCM. Using a mix of video ads, product ads, and display ads can enhance user engagement, especially in a crowded marketplace.
By diversifying ad formats, they can capture attention across Google’s ad network, from YouTube to Google Shopping. Experimenting with formats also allows these businesses to identify which ad types resonate best with their audience during peak shopping periods.
Tips for Optimizing ROAS
Implement Dynamic Retargeting
Retargeting is also crucial for mid-sized businesses aiming to re-engage high-value users who have already shown interest in their products.
Using dynamic retargeting, which serves personalized ads to users based on products they’ve viewed or added to their cart, can significantly increase conversion rates. This strategy taps into users' existing intent and reinforces brand recall, often leading to higher ROAS during BFCM.
Those who are interested, the following source could be helpful on Google Remarketing: 👇🏼
🟩Shopify Google Remarketing Ads for Black Friday 2024
Automated Bidding with Target ROAS
Google’s Target ROAS bidding strategy allows businesses to set desired return on ad spend goals, enabling the platform to adjust bids automatically in real time. This is particularly helpful for mid-sized companies looking to optimize each bid for revenue potential without constant manual oversight. Target ROAS helps businesses maximize returns while focusing on high-intent audiences, increasing the efficiency of their ad spend.
Build Lookalike Audiences
Expanding reach effectively while maintaining an optimal ROAS can be achieved through lookalike audiences based on existing high-value customers. Google allows businesses to create custom audiences that closely resemble their best customers, which can be a powerful way to attract new, high-intent shoppers during BFCM.
By targeting lookalikes, mid-sized businesses can expand their customer base with users who are more likely to convert, without heavily inflating acquisition costs.
Additionally, consider AI Lookalike Audiences. It quickly established its place in the market as an AI audience targeting tool.
If AI can drive cars and write poetry, it can definitely help you find the perfect audience for your online ads right?
This advanced targeting option uses artificial intelligence to analyze patterns in user data. So, what does that mean for you? Well, not only will your ads reach more people, but they’ll also hit the ones who are most likely to care about your Black Friday offerings. Your targeting goes from “eh, close enough” to “wow, that’s spot on.”
So does your Google Ads ROAS.
3. Large Businesses ($5-10M+ in Annual Revenue)
- ROAS Benchmarks: For large businesses with annual revenues between $5 million and $10 million, achieving an impressive ROAS during the BFCM season is both feasible and essential. These businesses often set benchmarks around 4x - 5x or higher, leveraging their extensive budgets to maximize reach and impact.
However, with larger budgets come unique challenges, particularly when competition intensifies during BFCM, which can significantly impact ad efficiency if not managed carefully.
Key Challenges and Strategies
1. Cost-Per-Click (CPC) Management
Larger ad budgets allow for a broader audience reach and higher impression volumes, but they can also drive up Cost-Per-Click (CPC). The intense bidding activity during BFCM, combined with aggressive spending, can lead to inflated CPCs. Without careful budget allocation and CPC monitoring, these businesses risk overspending with diminishing returns.
🎯Strategy
Consider segmenting campaigns by audience intent and focusing higher CPCs only on high-intent keywords, ensuring better control over ad costs. Additionally, utilize automated bidding strategies within Google Ads to dynamically adjust bids based on performance data, helping to maintain competitive CPCs.
2. Balancing Brand Loyalty and New Customer Acquisition
Large businesses often face the challenge of balancing efforts between acquiring new customers and retaining existing ones during the BFCM rush. While expanding the customer base is crucial for growth, fostering loyalty among existing customers can lead to repeat purchases and improve lifetime value, especially if exclusive offers or early access are part of the campaign.
🎯Strategy
Develop targeted campaigns for both groups. For existing customers, focus on personalized offers or loyalty rewards—for instance, giving VIP customers early access to BFCM sales or exclusive discounts. For new customer acquisition, promote competitive discounts on high-demand products and highlight value propositions that differentiate your brand from competitors.
Tips for Optimizing ROAS
1. Leverage AI Audience Targeting
Utilize AI-powered audience targeting tools to create tailored segments of existing customers based on their previous purchasing behavior. Since machine learning analyzes user behavior in the most effective way possible, it stands out as a powerful tool. Offering these groups exclusive deals during BFCM not only boosts loyalty but can also lead to higher conversion rates due to the increased relevance.
2. Utilize Performance Max Campaigns
Performance Max campaigns in Google Ads allow for an integrated approach to ad placements across Google’s vast network, including Search, YouTube, Display, and Discover. This tool is especially beneficial for larger businesses during BFCM, as it enables them to reach audiences across multiple touchpoints without creating individual campaigns for each platform. PMax dynamically adjust budgets and placements based on real-time performance data, helping large businesses achieve maximum exposure with optimized spend.
3. Implement A/B Testing for Ad Creatives
With a high volume of ad impressions, large businesses have the advantage of gathering significant data to optimize their creatives. Running A/B tests on ad copy, visuals, and calls to action can provide insights into what resonates most with different customer segments. For example, testing different promotional messages can reveal which offers drive higher engagement and conversions.
Key Trends in Google Ads for BFCM 2024
Google Ads strategies and trends for BFCM have evolved significantly, shaping the way businesses approach their advertising investments. Let’s examine some of the top trends affecting Google ROAS and what they mean for Shopify and e-commerce businesses.
1. Increased Competition
Each BFCM season sees an increase in the number of brands investing for attention, leading to higher CPC rates. With more companies bidding on popular keywords, competition for visibility drives up the cost of online advertising.
And, higher CPCs can compress profit margins and make it harder to achieve a positive ROAS. Brands need to focus on precision targeting and high-conversion audiences to justify these costs.
2. Shift Toward Mobile
Consumer behavior has increasingly shifted toward mobile, with a large share of online purchases now made on smartphones or tablets. Over 70% of BFCM traffic for e-commerce sites comes from mobile devices.
Mobile-friendly ads and seamless, fast-loading landing pages are no longer optional. Google Ads' mobile optimization tools, like responsive search ads, help advertisers adapt their message to mobile-friendly formats.
Ensuring that ads and landing pages are optimized for mobile improves user experience, potentially boosting conversion rates and overall ROAS. Businesses not adapting to mobile-first audiences could see lower returns on their ad investments.
3. AI and Machine Learning Integration
Google’s AI-driven ad solutions, such as AI Ads have become crucial for optimizing campaigns in high-traffic seasons like BFCM.
These tools leverage machine learning to adjust bids based on real-time data, aiming to maximize conversion potential while controlling ad spend.
Dynamic remarketing enables brands to personalize ads for users who have previously visited their site, making it more likely to drive conversions. This customization is particularly effective during BFCM, as returning shoppers are often primed to make purchase decisions.
Leveraging AI and machine learning can significantly improve Google Ads ROAS by reducing wasteful spending and honing in on high-intent customers.
Automated bidding helps brands win competitive auctions efficiently, while dynamic remarketing ensures ads remain relevant to potential customers.
Strategies for Improving ROAS During BFCM
Achieving optimal ROAS during the BFCM period requires a strategic approach that leverages insights, targets the right audience, and ensures a seamless user experience. Here are some key strategies to help e-commerce and Shopify merchants drive better results:
1. Leverage Data-Driven Insights
Using real-time data to guide your advertising efforts can make a substantial difference during BFCM. Tools like Google Analytics and Google Ads reporting provide actionable insights to enhance your campaign performance. Here’s how to make the most of these tools:
- Analyze past campaigns to see which SEO keywords yielded the highest ROAS. Focus on allocating more budget to these top performing keywords.
- Use demographic data to identify the age groups, genders, and locations that engage most with your ads. Adjust your bids to prioritize these segments.
- Not all ad placements perform equally. Monitor which placements drive the best results, and adjust your settings to prioritize these areas for maximum efficiency.
- By concentrating your budget on the highest-performing segments, you can make your ad spend more effective, ultimately boosting your ROAS.
2. Prioritize High-Intent Audiences
BFCM presents a prime opportunity to target customers who are ready to buy. By prioritizing high-intent audiences, you can allocate ad spend more effectively and enhance conversion rates. Key approaches include:
- Customer Segmentation: Use audience segmentation to target different groups based on their purchase behavior, frequency of visits, and engagement levels. Prioritize those who have shown interest in similar products or interacted with your brand.
- Remarketing Campaigns: Set up remarketing campaigns to re-engage visitors who previously explored your site but didn’t complete a purchase. Offering exclusive BFCM discounts or highlighting special deals for returning visitors can improve conversion rates.
- Lookalike Audiences: Create lookalike audiences of your most valuable customers to expand reach. By targeting individuals with similar characteristics to your best buyers, you increase the likelihood of high conversion rates.
3. Optimize Landing Pages for BFCM Offers
Once a user clicks on your ad, the landing page experience can make or break your conversion rate. By designing dedicated BFCM landing pages, you create a seamless, targeted experience for shoppers. Here’s what to consider:
- Speed and Mobile-Friendliness: Ensure landing pages load quickly and are fully optimized for mobile users. A slow-loading page can lead to high bounce rates, diminishing the potential for conversions.
- Clear Calls to Action (CTAs): Include prominent and persuasive CTAs that guide users toward purchasing. Using phrases like “Shop BFCM Deals Now” or “Get Your Discount” can drive action.
- Streamlined Checkout Process: Minimize the steps in the checkout process. For BFCM traffic, a simple, fast checkout can increase conversions and make your Google Ads investment more profitable.
A well-optimized landing page ensures that the traffic you’ve paid for has the highest chance of converting, which boosts overall ROAS.
Conclusion: Preparing for BFCM Success Across Revenue Tiers
Whether you're a small Shopify store focusing on budget efficiency or a large enterprise managing higher CPCs, understanding your unique challenges and leveraging the right tools can make a significant difference during BFCM.
The strategies you employ should be tailored to your revenue tier, focusing on maximizing budget efficiency, targeting high-intent audiences, and using data-driven adjustments throughout the campaign.
For small businesses, precision targeting and remarketing can make a significant impact, especially when powered by AI to optimize audience reach.
Mid-sized businesses can benefit from diversifying ad formats and utilizing automated bidding strategies, while large businesses can maximize ROAS with Performance Max campaigns and AI audience targeting.
AI Ads, in particular, is revolutionizing how businesses approach Google Ads, enhancing the ability to target the right customers with the most relevant offers. By integrating AI-driven features into your campaigns, you can ensure more effective use of your advertising budget, making your efforts during BFCM not just impactful, but profitable.
