In today's competitive advertising landscape, acquiring new customers is essential for sustained business growth. While paid search is typically viewed as a bottom-of-the-funnel tactic, driving continued efficiency can become increasingly difficult without a focus on new customers or brand building. This is where the client groans as the conversation usually shifts towards an upper funnel recommendation. But, there is actually an intermediate step you can take to focus on driving new customers to your brand. Google Ads offers a powerful tool: The New Customer Acquisition goal allows advertisers to optimize their campaigns specifically to reach and convert users who have never interacted with their brand before.
Understanding the New Customer Acquisition Goal
The New Customer Acquisition goal is a unique bidding strategy that allows Google Ads' algorithms to identify and target potential customers who are new to your business. By focusing on these long-term profitable segments, you drive sustainable growth.
Key Benefits of Using the New Customer Acquisition Goal
- Targeted Efficiency: By focusing on new customers, you can reduce the amount of budget spent on targeting existing customers who are already familiar with your brand and have a higher likelihood of returning.
- Sustainable Growth: By continuously attracting new customers, you can build a strong and sustainable customer base for your business. If you continue to nurture these new customers, you can increase their customer lifetime value. Grow these new customers into your best customers!
How Does the New Customer Acquisition Goal Work?
Google Ads utilizes your existing customer data to create a list of known customers. This information is used to identify users who have not previously engaged with your brand. The platform then automatically adjusts your bids to prioritize reaching these new customers by using a new customer acquisition value. This added value helps to increase the algorithms’ aggressiveness in the auction to show your ads and drive conversions. Additionally, you can opt to target new customers exclusively if you want to focus solely on new customer acquisition. Similar to other bid strategies, you can make adjustments depending on performance, but there are a few things you should consider before activating new customer acquisition in your account.
Important Considerations
Defining your "Customer:" Clearly define who constitutes a "customer" for your business. This might involve considering factors such as purchase history, engagement level, or specific actions taken on your website. At Eight Oh Two, we usually recommend using all converters from the last 12 months. You can include up to five lists in your customer definition. How each advertiser defines a customer will be unique to their business and their acquisition goals.
Targeting and Bidding Strategy: Decide whether you want to target new customers exclusively or simply bid more aggressively for them. Additionally, consider softening your bid strategy targets to maintain efficiency for new customers, while reducing spend on existing customers.
If you opt to target new customers exclusively, you will not need to define a new customer acquisition value and your ads will show to only those not in your customer definition.
Assigning a Value: Determine the appropriate value to assign to each new customer acquisition. This value should reflect the long-term revenue potential and profitability of a customer. Google also helpfully provides a suggested valuation, determined using average order value from past campaigns and the typical purchase frequency.
Addressing the New Customer Acquisition Value in Conversion Value Reporting
There is one additional challenge to consider! The new customer acquisition value is included in the conversion value metric by default. Let’s consider what this means for an e-commerce client: If your new customer acquisition goal is set to $100 and a new customer makes a $200 purchase, the conversion value reported in Google Ads is $300, artificially inflating your revenue. This can make it difficult to accurately assess the performance of your campaigns and skew reporting. To determine your true revenue, you can use the following calculation:
True revenue = (results value) - (new customer lifetime value)
To see true revenue reporting in Google Ads, follow these steps:
- Add the results and results value columns to your reporting view
- Segment reporting by conversions, then select value rule adjustment
- Review the report. True revenue is calculated by subtracting the New vs returning user value from the Results value.
In this example, the true revenue is $6,247.74. (6,617.90 - 370.16 = 6,247.74)
- Original value (rule applied) = purchases and revenue impacted by new customer acquisition
- The new vs returning user = the total new customer value adjustment
- Original value (no rule applied) = revenue with no new customer acquisition impact
It’s worth noting that the new customer acquisition value does not change revenue totals in GA4, only within the Google Ads platform. The GA4 platform will always reflect the original transaction values without adding acquisition value. If the inflated revenue is a difficult hurdle to jump, consider testing it with a very low customer acquisition value before leaning in entirely.
The New Customer Acquisition goal in Google Ads is a valuable tool for businesses seeking to expand their reach and acquire new customers. By effectively leveraging this strategy and carefully considering the factors mentioned, you can drive sustainable growth, improve your ROI, and outpace your competitors in the auction. A data-driven approach is key to maximizing the effectiveness of this tool!
Eight Oh Two is a proven leader in paid search marketing focused on driving results. Contact us today to learn how we can help jump-start your Google Ads campaigns to grow your business and drive new customer acquisition.