How Camicado improved profits while increasing revenue by 73%

The company wanted to scale their ad spend while ensuring that the growth was as profitable as possible.  

Camicado and their strategic agency, Cadastra, had been working with ROI Hunter for more than two years already, improving their revenue and return on ad spend (ROAS) by enhancing their dynamic campaigns with product performance insights. 

The challenge was with how their inventory was set-up: as a marketplace, Camicado had far more 3rd party products than 1st party products, and the margins for 1st party products were an average 30% higher. 

Using an ROI Hunter strategy like focusing their budget on high revenue products, they couldn’t guarantee profitable growth, because the Meta and Google algorithms would still be choosing what to promote from the full inventory, without regard to profit (e.g. a high revenue 3rd margin product was more likely to be picked, and more likely to be low margin). 

What Camicado needed was to apply separate optimisation strategies to 3rd party and 1st party products.

In August 2023, Camicado leveraged ROI Hunter’s technology to divide their inventory into 1st party and 3rd party products. From there they split the groups again to create product segments, and applied different strategies to each group to create two separate PMax campaigns.

1st Party Products - PMax Campaign

These 1st party products carried a significantly higher margin for Camicado, and they wanted to focus on selling the most popular products in the group, while excluding any product that wasn’t performing well. 

To achieve this, they launched a PMax campaign that:

• Supported products in the top 15% in terms of revenue
• Excluded products with ROAS <1 and ad spend > R$100

Camicado also connected the margin data for this group, enabling them to create a “gross profit” metric in ROI Hunter and track the profitability of each item.

3rd Party Products - PMax Campaign

At the same time, Camicado launched a separate PMax strategy for their 3rd party products. They still wanted to promote their high revenue bestsellers, but as the 3rd party products carried a lower average margin, they also wanted to ensure that budget wasn’t wasted promoting inexpensive items with a low conversion rate.

To achieve this, they launched a PMax campaign that:

• Supported bestsellers (products in the top 2% in terms of revenue)
• Excluded products with a low price
• Excluded products in the bottom 1% in terms of conversion rate

1st Party Products - PMax Campaign

Now that Camicado was able to apply the bestseller strategy to the 1st party products separately, they had much stronger results. The 1st party products generated 73% more revenue than they had back in August before the 1st and 3rd party split, even though the spend was roughly the same. 

Spend for 1st party products was the same in August and in November.

Despite the same level of spend, the campaign produced 73% more revenue in November.

Not only that, but with their margins connected, Camicado was able to look into the effect on profitability as well. The gross profit during the high season (Sept-Nov) for all 1st Party products increased by 14%, a very significant improvement considering the campaign was launched during the “sale” time of high-peak season (Sept-Nov).

3rd Party Products - PMax Campaign

With the lowest-priced 3rd party products excluded from promotion, Google’s algorithm focused the spend on the higher priced 3rd party products, which brought more profit. 

As a result, they saw a 19% increase in the channel's overall average selling price between periods of adoption (Jun-Jul vs Aug-Sep).

It was also possible to see the impact during the “sale” period of Black Friday, as they had an average selling price drop of only 5.7% from October to November across the entire inventory. This was a 31% improvement year-over-year compared to the same period in 2022.

                                                    2022                                                                                                    2023

FINAL THOUGHTS

By separating their 1st and 3rd party products, and applying the right strategies for each, Camicado achieved a profitable peak season in 2023.

By focusing on the bestsellers within the 1st party group, those products managed to deliver 73% higher revenue than before, as well as a 14% increase in gross profit compared to their previous BAU campaign. 

And with a focus on higher-priced, high performing products within the 3rd party group, Camicado increased the average selling price of the channel, and achieved greater profitability during their peak season campaign than they had the previous year. This all meant a successful peak season for Camicado, with healthy, profitable growth.