Building a successful digital advertising strategy can be challenging. And as consumer behavior continues to change, you might be reassessing your own approach to achieving different goals or reaching your customers in new ways.

Step1: Use data to set goals

Set campaign goals that: can be clearly measured, go beyond what you would achieve without any media spend, and produce a positive return on investment. At Google Marketing, the standard metric for our performance campaigns is Customer Lifetime Value (CLV).

Step 2: Use conversion measurement to unlock automation

Once you have conversion measurement set up, use automated bidding to efficiently optimize your campaigns to hit your goals. And use responsive search ads, and other dynamic creative, to automatically tailor your ads to different customers and contexts.

Step 3: Consider waterfall budget planning

Waterfall planning allocates budget to different channels based on their efficiency. To do that, allocate your full budget to the best-performing channel until it captures all available demand within your goals. Then begin allocating additional budget to the second best-performing channel, and so on.

Let’s dive deeper into each step, shall we?!

Step1: Use data to set goals

You have to always structure your campaigns towards clear goals.

A simple thought process should look like this:

What do you want to achieve with an ad campaign?
- This is our marketing objective (MO). Google ads performance products are designed with a particular focus on these four objectives: Lead Generation, Online Sales, Offline Sales, and Mobile Growth.
What metric do you have to improve so that you can fulfill that MO?
- This is your key performance indicator (KPI).
What value does the KPI have to hit in order to be successful?
- This is your campaign goal. This value is determined by the ROI (return on investment) required by our business based on the Customer Lifetime Value.

What are the types of performance goals?

This framework helps you evaluate the effectiveness and cost-efficiency of our marketing efforts.

Source: Google.

How to chose a goal

A useful campaign goal is:

Quantifiable
- Results can be clearly measured.
Incremental
- It goes beyond what we would naturally achieve without any media spend.
Commercially viable
- Produces positive return on investment.

The gold standard for performance campaigns is CLV (Customer Lifetime Value)

Performance Campaign Metrics

When you work on campaigns to grow sales or revenue (which are called “performance” or direct response” campaigns), you typically should set targets for:

Cost per acquisition (CPA)
- This tells you how much you are willing to pay to acquire new customers. The reason CLV is to vial is that it helps you to set CPA with the appropriate financial return.
Return on ad spend (ROAS)
- This tells you the revenue returned for every dollar of ad spend invested in your campaign.

Step 2: Use conversion measurement to unlock automation

Why conversion tracking is critical? Because:

It shows whether the campaign is effective in driving the desired KPIs and goals
It allows us to calculate the campaign ROAS or CPA, to see if the campaign is cost-effective.
It allows us to save time and improve efficiency by unlocking automated bid strategies in Google Ads.

Automation

Google Ads uses powerful machine learning algorithms to help you get the right ads in front of the right customers. Once you set up conversion tracking, Google Ads will always implement automated bidding. What does automation do:

Optimizes your campaigns towards a metric or objective (eg. CPA)
Saves you time, providing both flexible control options and insightful reporting tools.
It’s guided by CLV and target ROI
Ensures efficiency by placing the right bid at the right time.

Dynamic Creatives

Another great form of automation is accessed via conversion tracing dynamic creative formats.

You should use dynamic creatives because they deliver more revenue/sales per media dollar spent.

These ads are driven by machine learning algorithms to show images and/or text tailored to different customers & contexts.
With up to 30 individual text, logo, video, and image variations, there are 45K+ potential permutations available to test.
Examples include Responsive Search Ads and Responsive Display Ads. They can be used in Search, Display, Shopping, Discovery, and App campaigns.

Here are some examples of Dynamic Creatives

Source: Google

Step 3: Consider waterfall budget planning

What is a waterfall? A waterfall methodology allocates budgets to different channels based on their efficiency.

The best-performing channel receives full funding until it captures all available demand within our CPA and ROAS goals.
at this point it’s considered fully-saturated; only then does the second best-performing channel begin receiving funds, and so on.
We continue prioritizing channels in the way until our overall CPA and ROAS reaches our goal set by our CLV.

Here’s what waterfall budget planning looks like illustrated. (source: google)

Why you should use waterfalls?

When you run multiple campaigns and products across Google Ads it can get complicated.

Prioritizing our best-performing channels ensures that you remain financially laser-focused and measurement-oriented.
The waterfall approach works equally across large and small budgets and for both single-country and global campaigns.

The waterfall for Lead Generation

Every company and campaign is different, but here are the products that you can use at each waterfall tier, depending on your marketing objective.