Episode 13 | November 7th, 2023

How Is Your Business Being Affected By Google's Rising Costs?

A2O Digital meets with hosts Brandon Falone and Justin Bencsko to dive into the Google PPC landscape and how the rising costs in pay per click are affecting the home service industry. Are you finding it difficult to maintain profitability year after year? Listen to our episode to learn more on how you can prepare and tackle Google's rising costs.

Brandon 00:19

Looking forward to talking to Justin Bencsko. Today we're discussing some the trends going on in this service industry, specifically the garage door industry. My name is Brandon Falone, I've been in the garage door industry for nine years. I'm currently the president of Precision Door in the New York metropolitan area along with Houston.

Justin 00:42

Sure, yep. Justin Bencsko. I work at A Second Opinion. We're a digital marketing agency. So we actually do the marketing for all Brandon's locations, have done it for a long time. And yeah, you know, have experience in paid search, SEO, all types of things digital marketing. Today we're going to be talking specifically about Google Pay Per Click advertising and kind of the rising costs that we're seeing as a general trend in the industry. So obviously, Brandon this is, you know, hit your guys market a lot in the past couple years. We want to talk about that, we're going to kind of dive into that a little bit. I have here in 2022, your costs increased by 30%. And this year is on track for increasing another 67%. So like huge increases here.

Brandon 01:43

Yeah, yeah, it's it's, it's funny, because as over the last couple of years, we've seen this increase in costs, a lot of them make sense. Because to the especially to the to the guys who are paid on their production, and we had to increase prices and stuff. Whether it was prices or motors or parts. That all make sense, when we start to see increases here, it's really hard to explain it to the team. And especially from my side, I just don't know when it's going to stop and what we can do to kind of slow it down. We're definitely at this point where you feel like you're you have to be in business with Google. That's where a majority of our leads come from. We're lucky that the our marketing agency is on top of this, we just don't know where it's going to stop. I mean, from your side, what, what has it been? What does it look like from your side? For me, I'm like I said, it's been a disaster, just I just don't see where this runaway train is going. You said 66%. It's hard to run the business and know that I have these costs just rising at this rate.

Justin 02:43

So I'll say generally, the trend is that costs continue to go up. That's just kind of what we've seen over the years, right? Google's, you know, for a lot of people, that biggest source of leads. And that's just a trend, you see, this market by market has varied quite a bit. Because it's an auction based system. And your competition plays a big part in what you are going to spend. There are some markets where their costs haven't increased at all over the past couple of years, right? You guys in particular, were probably pretty lucky a few years ago, and that wasn't crazy competitive. You know, your cost per click wasn't up there with some of the more competitive markets. So you were kind of, you know, probably fortunate for a while. And now that's kind of caught up. And you probably you have more competition, and we've seen these costs go up. So you know, if you were around, let's say $10 to $12 cost per click before you get some competition that goes up to $17 $18. That's a 50% increase in what you're paying for every single person, every single click that comes in, that's where you get to where we are.

Brandon 03:58

Yeah, it's it's funny, you bring up the word fortunate. And you, you don't ever think you're fortunate. It's just the way it is. And you want to point the finger and blame somebody, you know, when when costs are going up. When it came to part. You could blame the rise in steel cost the rise in labor cost all of that. Google. Yes, I get the competition. But a lot of our business is shifting, you know, we lost business on Google LSA, you know, the local services, and you kind of blame them, you're saying well, they tried to shift their their costs. So it's funny, in my seat, they I definitely never feel lucky. When things go bad, I want to blame somebody. And when things are good, I say this is how it should be always and that's kind of how I've always looked at Google. So with these costs going up at the rate that they're going it's definitely put us on with some concern.

Justin 04:51

I don't like it his level of off so like for your account in particular, there was like a, you can kind of look at the numbers and there's a time period of a couple of months where like, oh my gosh, it went way up, especially this year. And then it kind of has leveled off. So it's kind of been the same cost per click for a while now. There was like kind of almost this one event where you saw it spike. So, you know, you could be looking next year where it has leveled off, and it's kind of finally found its equilibrium. And you may be looking at, you know, the same thing next year. Again, there's no way to tell with any of this. It's an auction based system. Yeah. So, but, again, they don't have a crystal ball, where there's no way for me to tell you, hey, it's gonna, you know, you're not going to pay more next year or it can go up, you don't know.

Brandon 05:39

Yeah, and we we've known each other for a very long time. And the one thing I'll say is, and we joke around, because I say you're the logical one, and I'm a more emotional one. And when stuff like this is happening, and you go to this emotion side of it, you get frustrated, you get angry, and there's, it's a really hard conversation. I'll say that to explain to people, because they start coming up with conspiracy theories. I mean, there's, there's a lot of owners and you know, people who run businesses that I've spoken to, and they're like, Well, Google is behind all this, they're just trying to make their money, people are trying to raise their costs because of inflation. They're making their money. This is not a coincidence that's happened. Have you heard that?

Justin 06:16

Yeah, we have heard people say that, I mean, they're not doing it, you know, individually to you, there's been some stuff that has come out in the in the news that, you know, when they're trying to, you know, hit their quarterly number, they, you know, can tweak a couple of dials and make people pay a little bit more. And it sounds like that may be something that they that they do, ultimately, you know, if they did that too much, it would get so expensive that no one would be able to afford to advertise in Google. So you know, I don't think that it's something that will get to that point. You got to make sure you know what you're doing and pay per click, and the more expensive it gets, the more you need to do everything, right, and make sure whoever you have managing it is managing it correctly, is making sure that you know, you're only showing for the right things like it is very easy to go into pay per click and do it wrong and have really, really bad results. So again, when like costs continue to rise, you have to make sure that whoever's managing this really knows what they're doing. And that's going to be even more crucial, where you may be able to get away with doing some things, you know, and having some issues in your account. And with the low cost per click, you can get away with it. If that makes sense.

Brandon 07:39

Yeah, no, it does. And I have a deep level of trust in you, you know, you obviously oversee our accounts. What recommendation, would you give somebody if they don't use you as an agency? What questions can they ask to make sure that they are managing those costs appropriately?

Justin 07:58

First of all, I want to talk to other people, right, that that that agency is using and see if they've had success stories, particularly in the industry that you're in, right? Like, a lot of this is knowing the industry, like we work in the garage door vertical. And there's so many things that we learned from doing multiple this for multiple customers over long periods of times, and you get better at it, where, you know, if you give us some other industry that we've never done before, we you can learn that over time, right, but you're you know, kind of behind the eight ball from someone that that knows it. So that that's that's one thing that I would potentially look at. I mean, we can get deep into the weeds of what's important with managing account how you structure the campaigns, how you're managing your, your keywords, right? There's also something called negative keywords to make sure that you don't show for things when someone doesn't have the intent to try and purchase something.

Brandon 09:04

It's a loaded question. Yeah. So it's a loaded question. I will say what you did say about talking to your peers, I constantly do that. I mean, that's one thing that I'm really lucky. I've have a vast network of different people in the industry. So when I do get frustrated, I'll reach out to somebody else. And usually they've got the same frustration and it's not at all I'm not using that emotion where I'm freaking out about something I know more logic that this is happening across the country. And I know that it's hard and and the one thing that I definitely struggle with is explaining this to our staff, our team members because it's not black and white. You know, there's stuff that we don't know that's going on the competition, the rising cost, I've definitely struggled I will tell you figure out how to, you know, maintain my budget maintain my targets for profitability, based on these rising costs you know. And that's that's been probably one of my biggest frustrations back going back to it is because I see things going up. And I was able to raise my prices, because everybody saw the cost of items physically, physically going up, they're going to the store, they saw bread going up, they saw milk going up, they saw things going up over the last couple years. This, you can't explain it to your team as easily and you can't explain it to customers. So I think that's what gives our industry the biggest challenge. And obviously you sitting on the other side of it. You are the one you're the one who is seeing all the actual information. I'm sure if a customer or like us or customer tried to talk to you about it, you'd be like, I can tell you, but it's really confusing. Not confusing, but it's it's not a black and white answer, right? There's, there's no way to say when it's going to stop or how it's going to level off. Because it's this bidding system.

Justin 10:53

Yeah. Where this is going and we've talked to our customers about this with paid search is, you know, you got we're focusing more on like, moving towards return on investment and like, actually looking at, okay, what did we spend here? And what did we get back? There's actually something in Service Titan, which is the CRM that you guys, and a lot of our other clients use, where you're integrating your Google ads campaign or accounts with Service Titan. So in the future, what this is gonna look like, right, you be able to see, okay, I spent however much you know, it was, let's just say you're spending $50,000 a month in PPC, but here's my return on it, right? I spent $50,000. But I made $300,000, or whatever the number is, and moving towards that, with managing your account. And listen, there may be some places where you look at it. And like, it is just unprofitable to advertise on certain keywords or in certain places, right, get to that. So you looking at it from that perspective to make sure that you can be profitable, right. Like, I think that's where this is going. And this wasn't possible. A few years ago, there's just now tools that are being created to be able to do this to kind of combine, you know, your Google Ads account in your in your CRM. So definitely, that the other parts of this that I think is important that you need to think about is your brand. You know, if brand plays a big part in even the results that you get in Pay Per Click, we see it with customers that have invested in their brand, it's a known brand in their area. Their ads perform better, they convert better, they have more branded search in your markets, a branded a conversion where they search for Precision Door costs 85% less than a Category Search. So someone goes in searches, Garage Door Repair, I don't know the exact number. So let's say that costs you $100 To get that lead, a branded search is costing you $15 to get that lead. So if you have a brand and you have more people searching for you, that's going to you know, make your your costs go lower. But also you have that brand, even the category searches. So they do search garage door repair, and they've seen you before and they see your name, it converts better. So like thinking about that. This is like just another thing to think about with all this.

Brandon 13:40

Yeah, it's it's funny, investing in brand, the ROI isn't as clear. Because it's strengthened. I know, You've told me this right? It's it strengthens those other.

Justin 13:51

You see all your other advertising sources, if you kind of have that brand perform better.

Brandon 13:56

Yeah, it's, it's, you know, the name of the game, right? You're in business to make money, profitability. And marketing is one of those things that can get out of control really fast. You could be spending on something if you're not managing it correctly. Like I said, you're you're you oversee that for me. You know, our costs are percentage, based on revenue has definitely gone up. But it's still a really great place. I'm loving where we are from a profitability standpoint.

Justin 14:26

Can I ask you a question? Yeah. You know, with these rising costs, what have you done to combat that? You said you like where you're at, from a profitability standpoint, like, you're spending more so what have you done? To make sure that you're, you know, still profitable? Did you change anything, you know, on the operation side or anything like that, like how, what, from your perspective, what's looking at it?

Brandon 14:49

Well, you know, profitable it's funny because you can only raise prices so often, you know, there there is a tipping point. It's not just tipping point with customers, but with your staff that's going out there, your team that's going out there, and you know, they're on the, on the streets working their tails off. So raising prices wasn't as much of an option for us, because we had those, you know, few price increases that we that were necessary. We started trying to attack different parts of the business, you know credit card processing fees, you know, other ancillary costs that we had to try to attack those knowing that, you know, we can help to bring down our overall operating costs. Because, yeah, marketing has gone up significantly. And that's, that's kind of the name of the game. But they're probably if this, if Google keeps doing what they're doing, it's going to cause another price increase. And if they keep doing what they're doing, my fear, and I hate to see this, a lot of small businesses that I'm rooting for, I really am rooting for everybody, I'm rooting for people in our area, people I've met you, when costs go up, you can justify that to raise your prices, when marketing goes up. If you're not managing it correctly, at the end of the year, you're gonna go wow, I didn't make as much money as they made last year, but your revenues up. So revenues like it's completely a vanity number, that profitability is your sanity number. So I'm always looking for other places that I gotta pull more attention to, you know, it may reduce some of our other areas that were a little more, our budgets a lot higher than it should be shifting some budgets around. But yeah.

Justin 16:26

Yeah. So you got to really buckle down on all of your like, operations and those things on your end, make sure you're as efficient as possible and doing everything you can there. What are you talking about credit card processing fees. What are like, you think the most important numbers kind of from your end that end up affecting the profitability? I'm sure ticket average is one of them. Is that something that you guys continue to like, look at?

Brandon 16:53

Yeah, I mean, that's, again, that's a whole whole nother bag of worms, it's, it's a lot, it's my KPIs. It's not just driven on, you know, average ticket, you know, in the industry, everybody's, what's your average ticket, what's your average ticket efficiency, we pay hourly employees, we have to keep that in mind, when overtime, can start to affect overall profitability. So that whole salary aspect of what we're paying people, our operating costs, you know, knowing that we're also having some of these, you know, listen to a couple years ago, when it's 2021, it was unbelievable. Business was nonstop, it was advertising, we're doing everything we can, we're being a little less, you know, a little less free with some of the things that we do. But we're definitely trying to find cost that we can cut always I, if I give anybody any advice, the foundation of your company, which is the the operations, there's always places that you can make a little more leaner and meaner. You put that focus on that. And from a KPI standpoint, knowing that we are dispelling some bad information. You know, it's funny, we started talking a few weeks ago about, we have a tune up special, and the guys are saying, Oh, it's a really bad lead for us. But it's not a bad lead for us. And it starts to be a cost effective, it is a cost effective one for us, and the guys think it's bad. But once you show them the data, they realize that, oh, it is a good lead to go to and all of a sudden, there's taken averages spike up, because some of the head trash goes away. So just little things, I could talk for forever about KPIs and, and what kind of ultimate leads to that year end revenue number. Yeah. But I, um, I'd say, for me, kind of, in conclusion with this is it's hard. I've never I you put trust in, I put enormous amount of trust, I'm very lucky to have a great marketing agency and you to kind of guide me through this. I don't know where it's going to end, I'd say the emotional side of me is a little a little scared, because I feel like Google can do whatever they want. We're kind of at their mercy. As we can see, we see all our advertising costs go there. I don't know where, where this is all going to end. But it's something we definitely need to be talking about as groups talking about it in the service industry. And my recommendation is always just to know, to use logic, when looking at this, you know, take that emotion out, talk to your peers, talk to people try to educate even the team members that are out there. You know, let them know earlier on, I kind of had that conversation with my team members. I said, Listen, guys, I'm looking out for these icebergs that are coming. And what other ways are we going to strengthen our brand and we're really focusing on different ways you're talking about brand. You know, we're focusing on reviews, we always focus on reviews, we focus on the things that are that we can control because there's so much out of our control. You know, I say that's one line. I always use control the things you can control There's so much out of your control. So I'm really doing that, and I'm putting my trust in you, I'm putting my trust in you to kind of keep pointing me in the right direction from a marketing standpoint, that's kind of where I am. How often? What do you think? Where's where's your head at with all this? Right now? Where do you see this going?

Justin 20:15

Um, it's a good question. I don't have a crystal ball. So it's hard to say I don't, you will still Google ads, Google Pay per click is still going to be a very important thing. And a big lead generator. Again, like, is this something where, you know, you can just you know, back in the day, when cost per click was really was, you know, low, I want to show for everything under the sun no matter what, like always, and you're still, you know, able to get leads that are profitable. Now, you probably can't look at it that way anymore, you got to kind of start to get the scalpel out and figure out okay, how do I trim the fat a little bit, you know, and having those conversations and, again, that's why having a good partnership, right, and understanding, you know, what jobs are most profitable for you as a business? And what things are, and where can we cut? And, you know, you got to kind of got to look at it that way. Whereas before, you could just kind of like, you know, hey, we're gonna show everywhere, no, this is great. It works. So that's where it's going. It's not going away, though, it's still gonna, you know, going to be your biggest lead source. Yes, I think, you know, you always got to be thinking as a business, right? Like, how else? How do I diversify myself away from Google? How can I get leads from other places? How do I build my brand, so that people are coming to search directly? You know, for me, so like, all those things, you definitely want to you know, think about, but it's not going away, you just got to make sure you're smart about it, and you'll still be profitable with it. Yeah, your leads, your cost went up. You're still profitable, right?

Brandon 21:56

Yeah, yeah. But yeah, you have to readjust your expectations a little bit, right, and understand that there's gonna be these ebbs and flows. But you're right, we are compatible. And I will, this is a next episode, kind of thing. But I know one thing that we have talked a lot about recently is maximizing those leads that are coming in, make sure we're booking them at the highest rate possible from all these different vehicles. And I think that's a whole I think that's our next episode is to really, really dive into that, because you've really been hammering me on that is knowing that, hey, listen, there are leads coming here. And if you want to be cost effective, take advantage of them, because you're wasting money by not effectively booking these jobs.

Justin 22:35

Yeah, I mean, that goes into the, you know, operations, right? Like, the more expensive the leads cost, the more you need to have everything buttoned up on the operation sides. And most people think like, okay, sales, you know, that type of thing, but answering the phones correctly, and booking those calls, right, you spend so much money to get every single lead. And you can't imagine listening to some calls, like the dumb mistakes or things that happened. And you know, paying attention to that, that's just as important as getting the marketing lead itself, you can call the lead when you answer the call to write or if you're really good at that you're taking advantage of those leads. So it's a math equation, right? You're spending $100 to get the lead. And if you book 50% of those jobs, what's the difference between bulk and 50 and 80% of those jobs, that's a I don't have a calculator in front of me, that's a huge difference in the number of leads that you're going to give to your guys to go out and make money. So like that's a sometimes people kind of overlook that one. Which I think it does make sense that to dive more into that and another episode.

Brandon 23:38

Yeah, we're not we're not overlooking that anymore. We're really trying to put them microscope on it. And like you said, there's just so many I see customer service is it's a sale with no actual money transaction, but then also the operational side. So yeah, next, next next episode, we're gonna really hammer that home. But this is awesome. I really appreciate your your support. If you can do what you can to help lower that cost even more, you know, tell the people on Google, I really appreciate that.

Justin 24:08

Wish I could Yeah. Which is just a phone call to complain a little bit and all sudden costs went down.

Brandon 24:14

And if the conspiracy theories are correct, I will get to tell you I told you so a lot of people will tell you they told you so but I don't think there's a conspiracy going on. But now I'm looking forward to. I'm looking forward to our next conversation.

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