How to Increase Your ROAS
As an advertiser, improving your return on ad spend (ROAS) performance should be your ultimate goal. For those unfamiliar with ROAS, it is a measurement of how many dollars you will receive for every dollar you spend on advertising. ROAS answers the essential marketing question, “What will I earn if I put $X into this marketing campaign?” Marketers typically use ROAS to evaluate the effectiveness of a specific campaign, ad group, ad or even keyword.
What is Considered a Good ROAS?
An acceptable ROAS is influenced by profit margins, operating expenses, and the overall health of the business. While there's no "right" answer, a common ROAS benchmark is a 4:1 ratio — $4 revenue to $1 in ad spend. Cash-strapped start-ups may require higher margins, while eCommerce stores committed to growth can afford higher advertising costs.
You also have to consider that your ROAS targets might fluctuate throughout the year, depending on your peak and off-peak periods and the performance you expect to achieve each month.
At Pennock, we tend to say a good ROAS not only doubles your investment, but is a metric that keeps improving through conversion rate optimization and rigorous testing.
How to Improve ROAS
There is no single way to improve your revenues or ad successes. However, we’ve compiled a list of 6 strategies that can help deliver a seamless customer experience that will lead to more conversions.
Improve your ad copy: You could be selling the most innovative product out there, but if your ad copy is generic and uninspiring, then you probably won’t experience much success with your ad campaigns. Instead, try social proofing your copy; using testimonials, reviews and ratings (millennials, in particular, trust user-generated content 50% more than other media).
Focus on the Buyer: In all marketing and ad choices, you need to keep the user journey and buyer persona in mind. Their journey starts with a click, but that is only the beginning! Make sure that your ads reach targeted buyers, and that your campaigns are optimized for the right audiences.
Tailored Landing Pages: One of the biggest mistakes advertisers make is using the same landing page for all their ads, regardless of the different messaging or audiences. Your landing pages should feature content that’s coherent with the ad copy. For example, if you’re promoting a 20% discount on an ad, the landing page should highlight the same offer.
Create Mobile Ads: More than 75% of all Internet searches are performed from smartphones. If you’re not optimizing your ads for your mobile audience, you’re not getting the conversions that you could. You need to create ads specifically for mobile devices and make sure that you use mobile search filters like distance, location, or business hours when you can to cater to local searchers.
Adjust Bids: You can adjust your paid ad placements by the time and location to help reduce the cost of the ad spend. Choosing ads in less popular time slots or on different devices could reduce your spend or increase your profits, which both improve the ROAS in the end. By making minor adjustments to where your advertising dollars are allocated, you can make big improvements to your revenue.
Watch the Competition: If your competitors are investing in paid campaigns and doing well (or not), you can take advantage of that insight. Take a peek into what others are doing and see how the biggest names in the eCommerce world are generating business with paid marketing.
Conclusion
Marketing isn’t reinventing the wheel—it’s figuring out how to make the wheel work best for you. By determining your present ROAS, then taking the time to reassess your marketing strategy and making tweaks and improvements, you’ll be well on your way to improving your company’s ROAS for advertising and marketing campaigns in the future.