Every day, users are flooded with online ads and landing pages, hooking their attention and persuading them to purchase or subscribe. Like most people, you’d rather ignore than engage in these advertising schemes. Conversely, some might be convinced they get something good from the brand.
No matter how many, these online users are a goldmine to digital marketers. For them, every conversion indicates an effective campaign, often measured by calculating the Return on Ad Spend (ROAS). Professional marketers must measure the returns from ad expenses to optimise the advertising budget, whether in-house or working for an agency.
But what is ROAS? How do marketers calculate this online marketing metric? Why should businesses get their return on ad spend, and how can they improve their ROAS? Read below and look at the topic to find the answers.
The digital age has undoubtedly revolutionised how marketing is done. Because of its popularity and wide reach, businesses compete for an ad spot on online platforms, turning online marketing channels into major earners. That said, online ad spending is projected to reach USD$679.80 billion this year, according to an estimate by Statista.
Calculating ROAS involves identifying the total revenues attributed to marketing activities and dividing the total advertising expenditure within the period. It’s sometimes expressed in ratio form to highlight the comparison. For instance, industry estimates reveal that a ratio of 4:1 is a good ROAS ratio. This means a company earns four times its ad spending, or USD$4, for every dollar spent.
Every business owner and marketer hopes to optimise ad spend by generating the greatest impact at the lowest cost possible. Whatever your marketing goals, your advertising efforts should translate to company profits sooner or later.
ROAS is popularly used to assess the effectiveness of a general and specific marketing campaign. Marketers use it to make informed decisions, compare different ad efforts and platforms, or improve their strategy.
Achieving good ROAS takes time and effort. The tips above can help you align your marketing activities with your campaign goals, maximising your future campaigns by using the right words, targeting the audience with better precision, and appearing on the right platforms at the right time.
Contact us today for a free strategy call if you need help knowing where or how to start. At pointdot.com, there is always time to take the first step in transforming and scaling your enterprise.