Using data for growth

Boosting return on ad spend

Driving sales for your business is the most important goal of online advertising, especially when it comes to paid search because the people you usually target are at the bottom of your funnel. However, this doesn’t mean your campaign will be successful and worth the spend simply because you have successfully targeted them and that’s when ROAS makes an entrance.

What is ROAS?

Return On Ad Spend (ROAS) is one of the most useful paid search metrics as it helps you measure your returns on ad campaigns so you have a better understanding of how your ad campaigns are faring and whether or not you should continue with them.

Determining your ROAS

Good conversion tracking is the first step to using ROAS to better your ad campaign because if you are unable to tell if your ads are performing, you also won’t be able to see if you are generating returns. Fortunately, most ad platforms are aware that tracking is a great way to tell how your campaign is performing so they build in tools that help you track them.

ROAS vs clicks

You may be wondering, what’s so great about ROAS? You may also be thinking click tracking is enough to get a picture of which ads are doing well and those that aren’t. The truth is, relying on clicks alone can send you down the wrong path. In a situation where you run a series of campaigns and get a high volume of incoming clicks from a particular campaign, at first glance it may seem like that campaign is performing very well however it might be entirely different upon closer inspection if the clicks are not converting.

How to boost your ROAS

Knowing how important it is to track ROAS, it’s now time to see how it can be optimized. The main goal is to generate more revenue from the ads you spend on. Its sounds simple enough but it hardly is, here are a few tactics you can use to boost your ROAS.

Be manic about performance

Just like we already mentioned, if you don’t know what your returns are, you cannot improve your ROAS. First, to make gains you have to be aware of your starting point. You should keep close watch over all your ad tools you use to enhance your performance which could mean reviewing your campaign performance every day or more frequently if you can.

In the past, you would have to consult spreadsheets to see how your ad campaigns were performing which could be quite tedious. The data that answers your questions on ad performance can be found in your ad platforms and before now the only way to access it would be by building a script to pull data from Google AdWords API, Facebook Insights or drawing it out in a CSV format. Now there are tools that help you streamline the whole thing so you can easily take data from your ad tools and insert them into a single SQL database that gives you deeper analysis than the ad tools.

Getting your targeting right.

Targeting the wrong people with the wrong message can be a major reason for the failure of your campaign. For your ads to do well, you have to connect the right user to the right message at the right time. Use the data you gather on customers to get your ads to the people who would actually be interested in them. You can use tools to target users in line with behaviors they have executed on your channel before.

Keep your campaigns fresh

Keeping your campaigns fresh is one of the golden rules of digital advertising. The more creative and fresh your ads are, the more effective your campaigns will be. This means keeping your targeted list for audiences with known users and similar seed audiences frequently updated with new information for your users. It can take a lot of time to do this manually so automating it is better as it will benefit your ROAS immensely. You’ll have to work with your design team to create a store of creatives you can whip out whenever there are dips in your performance.

Use suppression lists

Suppression lists work with the other two tips we’ve shared and they can also be used to ensure that they are current. You can share suppression lists with ad tools so they exclude some users from your campaign. People on these lists could be your loyal customers that don’t need to be reminded to engage since they are already active. You can also create suppression lists for customers that may be unhappy with your brand because of a recent bad customer experience.

Aggressively test different channels and formats

Before figuring out what works best for your business, it doesn’t hurt to test some other channels as there are now many ad formats and channels to choose from. Any of these options could be what helps you connect with your audience depending on their tastes. Look out for new channels and ad formats and test them aggressively to see if they will work well for your business. You can allocate a small part of your budget for trying out new formats and channels so that whenever there is a new release, you have enough funds to try them.

Increase your app or site conversion rate

One of the best methods of increasing your ROAS is by improving your site or app conversion rate. This may not really be a part of the digital marketing space but it does affect your ROAS so if you are able to boost the number of people that convert on your app or site, then you’ll see an increase in your ROAS. Critically examining your app or sites flow for new users can help you identify where friction should be removed and breaking down drop off points will make your digital ad strategy stronger.

Benchmarks to aspire to

Each business will define their own ROAS individually depending on their profit margin, the health of the business and overall expenses. Although there is no standard guideline, a benchmark most people aspire to is a ratio of 4:1 where $4 is revenue and $1 is ad spend. For smaller startups with not a lot of cash, you can use a higher margin and for a large and well established company that wants to increase awareness, you can go for a benchmark that is lower.