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Could you be leaving profitable growth on the table? In this case study, we'll explore how Adaptive & Co helped LivTours, a company offering over 350 individual specialized tours in Europe, to calibrate investment in search to what each of their tours can actually support, thereby unlocking the profitability of their product catalogue.
LivTours provides small group, specialized tours to travellers to Italy, Spain, France, England, Austria and Germany. Adaptive & Co has worked with LivTours for several years, helping the company to grow its brand and realise more business online.
When LivTours started working with us, their Google Ads account was managed against a single, generic return on ad spend (ROAS) target, which was applied across all tours, with no reference to each tour's actual margin. Historically, ROAS across the account was extremely high, often 600 to 800%, against tours whose true break even sat between 214% and 534%. This meant the account was leaving profitable growth on the table by capping investment far below what the margin could actually support.
To enable LivTours to attain more profitable growth, we started by calculating a break-even ROAS for every tour individually, using average margin data (adjusted 15% for cancellations and agency fees), rather than applying one blanket target across the whole account. This gave us a “headroom” score for each tour: the gap between its actual ROAS and the minimum it needed to stay profitable. High headroom tours like Rome, Vatican, Florence and Venice could clearly absorb more spend, while other tours needed to stay closer to their current levels.
Instead of scaling the account evenly, we used this analysis to build a safety net ROAS approach. We increased investment specifically on high headroom tours, with the understanding that blended account ROAS would come down as a result. That was expected, and acceptable, as long as it stayed well clear of break-even.
Spend Up - 129%
Online Sales Up - 62%
Revenue Up - 62%
As a result of this tour-by-tour strategy, blended ROAS eased from roughly 1,235% to 856%. Although this translates into a 31% decline, it did not represent a drop in efficiency. Every tour scaled under this strategy stayed comfortably above its individual break-even ROAS, so the full revenue increase was captured profitably rather than at the expense of margin.
The results of this project changed how LivTours looked at account performance. A falling blended ROAS isn't automatically a problem if it's driven by scaling into headroom that margin analysis has already proven is safe.
The account moved from being under invested relative to its true profitability ceiling to one where investment is now calibrated to what each tour can actually support.
If you believe that your search advertising should be working harder than it is, get in touch and we'll connect you with one of our senior consultants.
