What is ROAS? How To Increase Your Return on Ad Spend?
For the creative folk in digital marketing, advertising is the right spot to work on. Innovation and out-of-the-box thinking set every advertising campaign unique in the digital space. It is important to know the performance of the ad campaign. Ads specialists in Viral Mafia, Digital Marketing Agency in Calicut analyze the data to measure the advertising campaign’s effectiveness using the revenue generated from the ads. This measure is called return on ad spend (ROAS).
What is ROAS?
ROAS – Return on Ad Spend is a key performance indicator used to measure the profit and effectiveness of an advertising campaign for every rupee spent.
Why measure ROAS?
Every company that spends on ad campaigns has to measure the performance of its ad campaign or marketing. It helps to understand and improve the ad strategies. These insights offer great knowledge of the parameters that make the sales conversions as well as the amount of revenue-generating through the conversions. The actionable and valuable insight into the ad strategies will help you to do better in the next campaign.
How to measure ROAS?
The more ROAS the better. ROAS helps to measure the effectiveness of your efforts in advertising. More advertisement is equal to more connection with your target audience which implies more revenue for each rupee you spend on advertising.
Measuring the ROAS in Google ads accounts is hassle-free. You can measure it at the account level, campaign level, and also ad group level. All you need to know to measure ROAS is the spending and earnings of the particular level.
The Formula :
ROAS = total conversion value/advertising costs
ROAS is equal to the total conversion amount divided by advertising costs.
- Conversion value = amount of revenue from the given conversion.
- Advertising cost = the amount you spend on an ad
What is ROI & ROAS? – The Difference
ROI is the ratio between the net profit and the net investment.
ROI= (Net profit /Net investment ) X 100
ROAS = total conversion value/advertising costs.
ROI is the measurement of the performance of an investment of how much revenue is generated. ROAS specifically measures how much your business earns from the money spent on the ads.
ROI is all about profit and accounts for all other spending whereas ROAS is only related to ad spending.
ROAS is the about the effectiveness of the ad campaign whereas ROI is about the profitability of the ad campaign and many other investments.
ROI is a more comprehensive insight into overall profits to determine whether the investment is worth it.
How to increase your ROAS?
ROAS is a product of your online ad clicks, post-click conversion, and revenue per conversion. To improve your ROAS we suggest you lower your cost per click, improve your post-click conversion rate and increase your revenue per conversion. Try out the below strategies for better ROAS.
How to increase your ROAS by lowering the cost per click?
1. Aim for less
When you aim for the first position the Cost per click is higher. Imagine aiming for the third position in the SERPs, your ad still will be at the top but it costs less than the first. It means you earn more clicks with less spending.
2. Right audience = High ROAS
Identifying and spending wisely on you right audience for your business is another way to increase your ROAS. Take your time to create audience personas and then design the ads specifically targeted to each segment of the audience.
3. Right Keywords with the Right Audience
Targeting the right people with the right keywords at the right time makes it easier to increase your ROAS. If someone fits perfectly in your audience profile does not mean they will convert as your customer. It is important to reach your audience at the right time for the right keyword.
How to increase your ROAS by increasing your post-click conversion?
1. Best landing page for better conversion :
Conversion is easy when you have the best landing page for your business website. Your landing page should have a conversion goal with a call to action button. And also it should adhere to a user-friendly design that fits all devices with a quick response time of fewer than three seconds.
2. Customized customer journey:
One-size-fits-all is not prominent anymore. We suggest you to customize the customer journey to resonate your business with every unique customer. It generates more conversion that results in more ROAS.
3. Optimization of your website:
By running an a/b test, optimize your web pages to find the best design, content, and almost everything and increase your conversion and ROAS.
How to increase your revenue per conversion?
1. Generate more revenue through customer satisfaction:
By Providing excellent customer service and better quality products, you can keep your one-time customer as a lifetime customer. Retargeting and email campaigns, reward, and royalty programs help to keep your customers for your lifetime.
Viral Mafia is a Growth Hacking Agency in Kochi that helps businesses to optimize their marketing and advertising campaigns. We are user-friendly and versatile for all your ROAS calculation needs. We make you free and allow you to concentrate on other strategic improvements for your business.