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How experimenting with their Google Ads Strategy helped Octopus Energy sign up over 2 million customers

Goals
  • Grow overall business
  • Increase number of new customers
  • Raise brand awareness and positive brand reputation
Approach
  • Switched Google Ads bidding strategy from a target cost per acquisition to a target return on ad spend to reach new customers
  • Used YouTube for Action to drive direct sales
  • Utilised predictive analytics in Google Ads to increase sales
Result
  • 80% increase in domestic customers since the beginning of 2020
  • 2.6x increase in revenue in the fiscal year.
  • 36% decrease in cost per acquisition by switching bidding strategies
  • 714% increase in YouTube conversions through YouTube for Action campaign

“The Google team suggested switching our bidding strategy which resulted in decreasing our cost per acquisition by 36%, and saw the absolute top of page impressions increase by 22%.”

Max McShane – Head of Digital, Octopus Energy

About the company

1600+

employees across 12 countries on 4 continents.

3.1M

Customers in the UK alone

4.8 out of 5

based on 60,000 reviews on Trustpilot

About the goals

Octopus Energy was launched as an energy provider in 2016. CEO Greg Jackson saw a way that long-established energy companies could better structure their pricing and serve their customers, while having a more positive impact on the environment – so, he decided to use his tech background to radically disrupt — and hopefully improve — the sector.

“One winter, I saw the newspapers just full of stories about energy companies hiking prices, and low income households were literally having to choose between heating and eating,” says Jackson.

The headlines struck a chord. "I was brought up in a low income household by a single mum, and we would get cut off,” he recalls. “And that really does leave you with an understanding that in sectors like energy, companies should be fighting hard to drive prices down, not put them up.”

Jackson, who joined Greenpeace at the age of 16, was also shocked to learn how resistant energy companies were to adopting cleaner energy systems.

“All these things came together to make me think we could do better,” says Jackson. “And so, some colleagues and I came up with the idea of using technology to drive down the cost of energy, improve the way it looks up adjustments, and help the fight against climate change.”

On the same day Octopus Energy launched, the team started creating Kraken – a cutting-edge technology platform that uses advanced data and machine learning capabilities to drive efficiency and make green energy cheaper.

The business set its sights on positioning itself amongst the UK’s ‘Big Six’ energy providers, but how would a startup convince energy customers to switch?

Approach

The first challenge was getting Octopus Energy in front of potential customers, and the company turned to Google to work on brand awareness and consideration.
“Google Search was top of mind very early on in our marketing strategy, and in the beginning, it helped us appear alongside larger, more established competitors,” explains Max McShane, head of digital at Octopus Energy. “As we gained momentum, we continued to use Google Search alongside additional Google Ads products and platforms that have been available to us going through the Google Accelerated Growth Network programme, And because we've seen success, it’s strengthened our trust in the brand.”

One of the company’s strengths has been its openness to try a huge variety of Google Ads products, often at beta-testing stage. “We've probably tried the majority of products Google has to offer in terms of Ads,” says McShane. “I think one of the most surprising successes has come from YouTube ads. We’ve always had it in mind to help build awareness, but actually, through testing, and using a number of different audiences, we saw YouTube start to get some direct sales, and it started to achieve the sort of cost per acquisition that we look for in our direct acquisition channels.”

By utilising a YouTube for Action campaign, Octopus Energy not only saw brand consideration lift of 3.5%, brand awareness going up almost 5% and brand capability increasing by 9.7%, but the number of views through to conversions increased by a mammoth 714%.

The other big success story has been shifting their bidding strategy from target cost per acquisition to target return on ad spend, which they did at the start of this year. “Typically, the focus isn’t return on ad spend, we don’t look at profits to indicate the success of an ad, which sounds a little crazy, of course we make sure our cost per acquisition isn’t higher than what we want it to be but our big focus is on customer happiness and creating great experiences for them. The consequence of doing that really well is more people switching to greener energy.” Says McShane “So we never would consider a ROAS strategy, but the Google team suggested that we would see more sales using it, and we did. We reduced our cost per acquisition by 36% and we saw the absolute top of page impressions increase by 22%.”

Google Ads account for the biggest chunk of Octopus Energy’s digital sales, and they’ve employed a number of reactive keyword strategies to act on news about energy price hikes on a number of occasions, as well as testing keyword messaging when informing consumers that Octopus Energy customer services and phone lines were running as normal during the pandemic.

“During the lockdown, we switched up the copy of our ads to reassure our customers that our customer service was still 100% operational, we did this at a time when we typically see a seasonal dip in sales around the Easter bank holiday,” explains McShane. “There was initially a dip in sales year on year, likely a compounded effect of the holiday plus COVID-19, but a couple of weeks later, we saw a huge uplift for the same campaign with different messaging.”

Octopus have also utilised predictive analytics in Google Ads. “It has helped us identify what percentage of the market share we have and roughly how much more we could realistically achieve,” says McShane. “While we did double our spend after looking at Google's predictive modelling for keyword search terms and clicks, our clicks increased by nine times and sales by five times from the previous year.”

Results

Just over five years since launch, Octopus Energy is sitting in fifth place in the ‘top six’ with over three million customers in the UK alone, and they’ve used Google Surveys to determine growth in brand awareness. While just 6.7% of the online public had heard of the brand in its first year, that figure has gone up to 43.4% this year.

Now Octopus Energy is the fastest growing Energy provider in the UK, and Kraken has now been licensed to some of the biggest energy providers in the world, including E.ON and Good Energy in the U.K, and Origin in Australia. The team plans to have reached 100 million energy accounts through Kraken by 2027 and say Google will remain a core part of that journey.

“We're inspired by companies like Google,” says Greg. “I first got into Google AdWords in the very early 2000s, with the first business I built. Everything we've done, be it innovating new ideas where we want to test them quickly, to building huge businesses, we've worked with Google relentlessly – and I can't wait to see where we go.”

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