Understanding the Challenge

A growing D2C skincare brand had been investing heavily in Google Ads, focusing on metrics like click-through rate (CTR) and website traffic. While these metrics were strong, the brand wasn’t seeing proportional growth in sales or revenue. The team was unsure how to connect their ad performance to meaningful business outcomes like purchases and customer retention, resulting in wasted budgets and unclear decision-making.

The Role of Peter

Peter was brought in to help the brand move beyond surface-level metrics and focus on what truly drives business growth: return on ad spend (ROAS), cost per acquisition (CPA), and customer lifetime value (LTV). By analysing the brand’s campaigns and aligning them with revenue goals, Peter was able to guide the team toward smarter decisions and more impactful optimisations.

Peter’s Approach to Monitoring the Right Metric

1. Deep Campaign Analysis:
   Peter identified a gap between high CTRs (3-5%) and low conversion rates (below 2%). For instance:

   • A campaign for a new moisturiser had a CTR of 4.2% but only generated $1,200 in revenue against $2,000 in ad spend.

   • Another campaign for a cleanser bundle had a CTR of 3.1% but delivered $4,500 in revenue from $1,800 in ad spend.

   This revealed that campaigns generating higher traffic didn’t always correlate with profitability.

2. Shifting the Focus to ROAS and CPA:

   • Peter recalibrated the brand’s campaign goals to prioritise ROAS and CPA over CTR or impressions.

   • Ads with better ROAS were allocated larger budgets, while low-performing campaigns, despite high CTRs, were paused.

3. Custom Metric Dashboards:

   • Created a real-time dashboard for the team, tracking ROAS, CPA, and LTV alongside CTR and traffic.

   • Peter highlighted insights like the long-term value of customers acquired through specific campaigns, showing which products brought the highest repeat buyers.

4. A/B Testing for Strategic Alignment:

   • Ran experiments to test different ad creatives and landing pages designed to boost conversion rates.

   • Tested product-focused messaging (e.g., “Hydrate Your Skin for 48 Hours”) against bundle deals (e.g., “Save 20% with Our Skincare Starter Pack”).

Results Achieved

• 3x improvement in ROI: Focusing on ROAS allowed the brand to allocate resources to the most profitable campaigns, increasing return on investment from 1.5x to 4.5x.

• 40% lower CPA: Optimised campaigns led to a significant reduction in the cost to acquire a new customer.

• Clear decision-making framework: With real-time metrics aligned to revenue goals, the team was able to make data-driven decisions for future campaigns.

Insights

Before Peter’s intervention, the brand’s average ROAS was 1.5x, with a CPA of $45 and monthly ad spend of $12,000. After optimisation, the average ROAS increased to 4.5x, CPA dropped to $27, and monthly revenue from ads grew from $18,000 to $54,000—all while maintaining the same ad spend.