Background
Since 1968, Penn Tool Co. has been selling a wide variety of industrial power tools, including metalworking products, precision measuring tools, power tools, and accessories. Penn Tool’s website offers over 100,000 products; all featuring a price match guarantee. In addition, the veteran-owned company ships their products internationally and offers equipment financing with decisions in just a few hours, making Penn Tool a great choice for companies all over the world.
Key Metrics
18x
Return-On-Ad-Spend
2x
Monthly Sales Record Broken Twice
50%
of all Website Traffic Generated from Paid Search
Why’d They Come to LP?
Penn Tool Co. had been using a digital marketing agency to manage their Google Ads account, but the agency was having a hard time making the account profitable. In addition, the agency didn’t give Penn Tool access to their own Google Ads or Google Analytics account; this left Penn Tool questioning the benefits of online advertising. When Logical Position (LP) reached out in 2017 and mentioned that Penn Tool would have ownership over all of their accounts, the company decided to try again. Their initial goal was to achieve a 5x return-on-ad-spend (ROAS).
What Strategy Was Used?
When Penn Tool first partnered with LP four years ago, our paid search team did a deep dive into their business and the products they carry. Since Penn Tool has so many different products (as in, hundreds of thousands of SKUs), we knew Google Shopping was going to be where we focused most of our efforts. Our initial shopping campaigns utilized a manual bidding strategy, and we segmented our campaigns based on price point. As the years went by, our campaign segmentation started to become inconvenient—we had so many shopping campaigns that our budget was being spread too thin. Our team identified the “problem” and was able to quickly craft a solution; this came in the form of a Smart Shopping campaign. This campaign works well for businesses with a large product catalog, as Google’s algorithms are able to efficiently and cost-effectively determine what products are working best.
Our smart shopping campaigns allowed us to consolidate all of Penn Tool’s products into one campaign (yes, one!) With Smart Shopping, Google gets positive and negative feedback as it serves the ads, which allows the Google Ads platform to identify winners in Penn Tool’s product catalog easier. Plus, our campaigns were no longer spread too thin—all of our budget was allocated to just one campaign, which made conserving our spend easier. We also had Penn Tool start on Microsoft Advertising, since the Bing platform offers an entirely different user base to serve ads to. Being on both Google and Bing allowed our team to cast a wider net for our paid search campaigns; it ensured we were capturing all of the market share that was available to us.
What Were The Results?
This year, Penn Tool—with the help of LP—set multiple sales records for their business. In July, they recorded their best month on record, earning the most revenue they’ve ever seen in a single month. Two months later, in September, they had their second best month ever.
When new campaigns are launched, it usually takes a few weeks for Google to get accustomed to them; there’s a learning period that can cause a drop in revenue. But this never happened when we launched our Smart Shopping campaign—in the first two weeks after launch, the campaign spent $2,000 and brought in $36,000 in revenue—an 18x ROAS. Across Google and Microsoft, our shopping campaigns are generating an 8.5 ROAS—far surpassing Penn Tool’s initial goal of a 5x.
Year-to-date (YTD) in 2021, we’ve increased our budget by $48,000— which brought in an extra $741,000 in additional revenue. Cost has increased by 18%, while revenue has grown 34%—which shows that we’re able to generate more revenue for each ad dollar we’re spending.
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