Increasing online sales is a marketing goal that can be very competitive. With hundreds of products just click away, how do stand out and differentiate your brand?
One way is to ensure that you invest in your digital advertising. Companies spend more than $125 billion on digital advertising, making a return on ad spend (ROAS) which is a critical metric for measuring the success of your marketing expenditure.
What is ROAS?
ROAS stands for return on ad spend—a marketing metric that measures the amount of revenue your business earns for each dollar you spend on advertising. By calculating ROAS, you can determine which ad strategies work well and apply those techniques to other ad campaigns. Keep reading to learn more about ROAS. If you need professional assistance and insight into your ROAS, Web Choice Online can help you with our digital advertising services, contact us online or call us at 1300 766 691 to learn more today!
How to calculate ROAS?
Since ROAS is such an important and powerful metric, you might think that it is a complicated calculate. However, it is a straightforward formula that requires your revenue divided by your advertising costs.
ROAS = Revenue/ Advertising Cost
What determines a “good” ROAS?
When it comes to determining a good ROAS for your company, you need to think about the following:
- Your industry
- Your profit margins
- Your average cost-per-click (CPC)
Once you figure out these specifics, you can uncover the optimum dollar amount for your business. Here are a few tactics that can help you improve your ads and take your ROAS to a new level.
1. Launch a branded PPC campaign
A branded PPC campaign, which targets your company’s name, can help your business earn a better return from your advertising efforts. Branded searches often generate conversions because users searching for a brand generally want to make a purchase or contact the company.
2. Use negative keywords
Add negative keywords to help improve your ROAS. With negative keywords, you prevent your ads from appearing in searches that feature those keywords. These keywords like your targeted keywords, tend to go outside the scope of your business, products, or services helping you focus on only the keywords that matter to your customers.
3. Optimize landing pages for speed, usability, and conversion
Your landing page, or where your ads send users when they click, can have a tremendous impact on your ad performance. Campaigns that use slow-loading, heavy pages will lose valuable leads and sales because those landing pages provide such an unfriendly user experience.
If you want your landing pages to make buying your products easy, you need a fast, reliable, and easy-to-use page.
Why Is ROAS Important?
Today’s marketing best practices are all about data, increased traffic, followers, and visibility are no longer enough. Company leaders want to know exactly how much revenue marketing and advertising campaigns generate. ROAS also lets you produce reports showing exactly how much revenue your ad campaigns generate for the business. It also allows you to determine which ad campaigns are most and least successful and if running ads is even worth the cost which helps you continuously refine your spend to eventually generating the most revenue for the least costs.
You can improve your digital advertising performance a lot by monitoring your ROAS. ROAS is one of the most useful metrics for measuring how well your marketing is doing what it’s supposed to do. Monitoring it will allow you to increase your profits by upscaling profitable campaigns and avoid overspending on non-profitable ones. It will also help you refine your marketing strategy.
If you’d like help calculating out your own ROAS or using it to make marketing decisions drop us a message or comment below and we will get back to you.