How Perfume Brands Can Effectively Run Google Ads Campaigns
Running paid advertising for perfume brands can be a huge struggle to reach profitability. So much of the success in ad spend relies on having a large amount of brand recognition in the fragrance space. The actual perfume product category itself is difficult to run paid ads as discussed in this article. Running non-branded ads to cold traffic is almost never profitable for a product that is intended to be smelled. The only exceptions that we have come across in our research are designer brands bidding on category keywords such as ‘gourmand perfumes’ or ‘aquatic perfumes’.
Outside of some edge cases, most perfume brands are not running Google ads. And if they are running Google ads, they are almost certainly running branded campaigns. Meaning they are only bidding on search keywords for their brand name or specific perfumes in their collection. It is a calculated risk bidding on these terms if you have any major distribution.
Why is it a problem to bid on your branded keywords if you have distribution?
Because you are then competing for auction placement for your branded keywords with all other retailers carrying your product.
Let’s take this example of Chanel No. 5 for Google Shopping Ads
when you search “Chanel no 5” we get:
If Chanel wants to run a branded google ads campaign, it is bidding against Walmart, FragranceNet, Sephora, Poshmark, Macy’s, and Ulta. Bidding on the same keywords leads to an increase in Cost Per Click (CPC) and ultimately a higher Customer Acquisition Costs (CAC).
Then why are they bidding against themselves if it is their own product?
Chanel is bidding on branded terms because their marketing department ran a few numbers. They realized 3 things:
Bringing customers to their own site leads to higher Average Order Value (AOV) due to other product offerings, bundles etc
Bringing customers to their own site allows Chanel to potentially collect their email, even if the person does not buy
The costs to acquire a customer through their own paid advertising still provides them with a higher profit margin than the margin that Chanel gets through selling to distributors, wholesalers, and retailers
Just because Chanel has a large advertising budget to run tests and optimize their site, this does not mean it is impossible for smaller perfume brands to run similar tests. In fact, smaller brands are much more agile and subsequently have more room to make bigger and bolder changes to their website and product offerings than larger brands.
Let’s Get Into the Weeds of How Perfume Brands Can Optimize Their Google Campaigns
The goal with brand campaigns is to maximize your contribution dollars and to generate the widest delta between ad cost and revenue generated. From years of experience in performance marketing and running Google Search campaigns and Google Shopping campaigns, it is made apparent that you CANNOT run brand campaigns on a tROAS or tCPA strategy without wasting money. When you run brand campaigns on these bid strategies, the target is almost always set too low, and your CPC’s become inflated because Google can spend more money on clicks and still hit the target – so it will.
A telltale sign that this is happening is that your ROAS or CPA is much better than the target that you set.
If you set your tROAS too high, Google will stop giving you ad impressions because it knows it cannot achieve the tROAS you set.
Running brand campaigns based on a target impression share bidding strategy with a bid cap is how we do it. This reduces CPCs substantially and optimizes for impressions. In other words, the target impression share bidding strategy aligns with the goal of a brand campaign, to be seen. On average CPCs drop by 30-80% with a commensurate improvement in ROAS and CPA when switching from tROAS/tCPA to target impression share. This involves some triangulation around determining a max CPC bid cap.
How We Determine a Max CPC bid
Using the Keyword Planner, take the Top of Page bid as the lower range and Abs. Top of Page as the higher end of the range. Add them together, then divide by 1.2, 1.4, 1.6, 1.8 depending on how aggressively we want to bid. This gives us an adjusted average. Sometimes, we will set the average to be above 2 if we are on a very tight budget. In that case, we might stick closer to the lower bid range and see if it gets enough quality clicks to convert. If we start getting conversions at a cost that we deem successful, we then start moving up closer to the higher end of the Max CPC bid range because if we are converting, then getting even higher quality clicks; AKA at a higher position on the SERP, is something we are willing to spend more on.
This is how we determine and optimize CPCs on a keyword level.
On an adgroup/campaign level we try to keep Max CPC above the individual keyword Max CPC’s bids in order to prevent Google from spending one day and not at all another day. This also applies to the daily budget for the account and keeping it above the ad group/campaign daily budget.
Setting Campaign Objectives
Whatever you set as the campaign objective has not shown to have any bearing on the bidding or performance of a campaign. They merely change the configuration of the dashboard slightly. Google will also give you different recommendations based on the campaign objective. With that said, we recommend setting the campaign objective to ‘Brand Awareness’ considering that is most closely aligned with the goal of the camapaign.
Understanding Conversion Events
This is going to be one of the most important aspects of creating your Google Ads campaigns because these events will be the metrics by which you measure your campaign success. Setting a conversion event and assigning values to the event allows marketers to:
Run more effective A/B experiments
Allocate budget for a higher ROAS
Change bidding strategies
Example of a Conversion Event: A purchase event. This event would get triggered anytime someone clicked on your ad and then went on to buy a perfume from you. You can assign a value to the event based on what the perfume is worth. If the perfume is $110 then you can assign 110 as a value to this purchase event.
Attribution Window: This denotes how many days you can attribute a conversion to the Google Ad.
Example: If you set a 30-day attribution window, that means that if someone clicks on your perfume ad, and they eventually buy a perfume from you within 30 days of when they first clicked the ad, that will be counted as a conversion. If the person clicks on the ad and decides to buy a perfume from you 42 days later, the conversion will not be attributed to the ad.
This tracking of the ad is done through a cookie that is installed on the user’s computer browser.
The general rule for setting an attribution window is that for products that do not have a long consideration phase, you want to set a short attribution window. We recommend a 7-day attribution window. Why? Because perfume does not have a long consideration window. The average consumer is not spending weeks researching perfumes and alternatives. If you are running ads for a B2B subscription software that costs $950/month, people are going to be spending a lot longer in the consideration phase, researching the software, alternatives, etc. In this case, a 45-day attribution window might be appropriate.
Another reason why shorter attribution windows are preferable is if you are running any sort of omnichannel marketing strategy, if you do not have Marketing Mix Model software that can properly attribute the sale and you are using a longer attribution window, you will end up with very murky and inaccurate data.
Example: You have a 30-day attribution window set and you are running Google ads, Facebook ads, and have email marketing in place. Someone clicks on a Google ad but they don’t buy. 3 days later they are on Facebook and they click on your Facebook ad. They don’t buy but they do sign up to your perfume brand’s email list for discounts. 5 days later they get an email from your brand for 10% off and they buy. In this case, your email marketing platform would count the conversion, but so would your Google ad and Facebook ad. On paper, you have 3 purchase conversions but you only sold one bottle of perfume. This is why it is so important to accurately set up your conversion event attribution.
Primary vs Secondary Conversion Events
A primary conversion event is what Google will optimize for when you set up Smart Bidding. If your Primary Conversion Event is a purchase conversion, then Google will try and find users who will likely purchase based on the user’s previous search behavior.
A secondary conversion event does not affect bidding, it is simply there for observation purposes.
Read more about these conversion events here.
Conversion Events for a Branded Keyword Campaign
You only want to have 1 to 2 primary conversion events per campaign. Simple is always better. Why? Because having 5 primary conversion events won’t give Google a singular direction to optimize towards. You want to steer the car in 1 direction, not 5 different directions. You can set as many secondary conversion events as you like.
Some primary conversion events you should consider:
Visitors who visit 3 or more web pages
Purchases
Add to Carts
Some secondary conversion events you should consider:
Newsletter/Email signups
Visitors who visit a product page
Visitors who spend over 30 seconds on site
The primary conversion events are for someone who purchased, or someone who has a high intent to purchase based on their behavior on your site. For a branded campaign that has a target impression share bidding strategy, using a mix of the primary conversion values listed above will be suitable.
Setting Up Your Conversion Tracking
If you do not set up the conversion tracking correctly, all of your efforts will be wasted. This article will not cover the specifics of setting up conversion events. Instead, see the below resources for a thorough walkthrough of getting everything set up.
Analytics Mania Guide on Connecting GA4 and Google Tag Manager
If you set up your perfume advertising campaign as we have just suggested and you continuously optimize the campaign then you should be well on your way to seeing a positive ROAS.
We will cover how to optimize your Google Merchant Center feed in another post.