Return on ad spend (ROAS) is a key metric for digital marketers to track in order to measure the profitability and efficiency of their advertising campaigns.
By focusing on optimizing ROAS, marketers can gain insights into which ad campaigns, audiences, formats, and channels are driving the best results.
In this article, we will explore a variety of strategies for boosting ROAS and maximizing the return on digital advertising budgets.
What Is Roas And How Is It Calculated?
ROAS refers to the ratio of revenue generated from an advertising campaign compared to the cost of running that campaign. It shows how much revenue is made for every dollar spent.
To calculate ROAS, divide the total revenue from an ad campaign by the total cost of that campaign:
ROAS = Total Revenue / Total Cost
For example, if a campaign cost $1000 total and generated $2000 in total revenue, the ROAS would be:
ROAS = $2000 / $1000 = 2
This means for every $1 spent, $2 was made in return, for a 100% return on investment.
ROAS is most commonly calculated at the campaign level but can also be analyzed at lower levels like the ad group, creative, audience, or even the individual conversion event level.
Tracking ROAS helps marketers identify which elements of a campaign are driving the strongest monetary returns.
ROAS Strategies for the Awareness Stage
The early stages of the marketing funnel focus on generating awareness and consideration among target audiences.
While direct conversions may be lower at this stage, strong awareness campaigns can help build an engaging brand and lay the foundations for future conversions. Some tactics for boosting ROAS during awareness phases include:
Optimization for Maximum Conversions
As audiences become familiar with a brand and its offerings, the goal shifts to driving measurable conversions like sales, downloads, or trial registrations. Fine-tuning campaigns for direct responses requires a more aggressive optimization approach:
A/B Test Headlines, Images and Copy
To truly maximize the performance of advertisements, marketers must continuously test variants and measure results. Minor tweaks to factors like headlines, images, and descriptive copy can significantly impact user behavior.
An A/B testing approach that proliferates creative iterations tailored for different audience segments or media channels is key.
Metrics like click-through rate and conversion rate expose the most persuasive messaging. Regular experimentation ensures ads evolve alongside consumer preferences.
Refine Targeting
Armed with performance analytics, refining target populations enhances efficiency. Concentrate budget impact by focusing on increasing investment towards proven high-value demographics.
Look-alike modeling also replicates top performers’ distinguishing qualities to expand reach. Continuous targeting reviews optimize spend allocation to the most receptive groups.
Optimize Ad Formats
Creative formats carrying specific strengths across disparate ad platforms necessitate unique design. While images and headline-centric ads may pop up on social media, value proposition-led clips perform better for search or comparison engines.
Testing diverse layouts, including text blocks, dynamic product feeds, and multimedia content, pin points which structures engender the desired consumer actions based on context. Customizing format selection can then bolster consistency.
Analyze Device/Times
Leveraging behavioral patterns rooted in user device preferences and time-shifted activity boosts qualified impressions.
By scheduling mobile-optimized promotions throughout commute windows or programming desktop creatives throughout the work day, disruption is minimized.
Maximizing Lifetime Customer Value
While driving initial conversions is important, experienced marketers know the true value lies in developing long-term customer relationships. Strategies for optimizing post-click user journeys and maximizing lifetime value (LTV) include:
Analyze Engagement
To ensure long-term customer retention and uncover upsell/cross-sell opportunities, marketers must analyze user engagement metrics in granular detail.
Tracking metrics such as repeat site visits provides important insights into a customer’s loyalty – those who return frequently are much more engaged with the brand and its products.
Equally valuable is analyzing the average time customers spend on the website or within the application.
Customers who consume higher amounts of content per session are demonstrating valuable engagement that marketers want to encourage. It is also important to track which specific pieces of content, such as blogs, videos, or white papersyt, prove the most popular.
Understanding favored content areas can help tailor future communications and provide a deeper understanding of customer interests.
Finally, enrollment levels in any loyalty programs that are offered also serve as a strong indicator of a customer’s commitment to the brand.
By comprehensively measuring key behaviors, marketers can develop rich profiles of both high and low-engagement users to segment accordingly.
Nurture with Tailored Content
Leveraging behavioral data to its fullest, marketers should serve individualized messages and content tailored specifically for each customer.
For prolific website visitors or customers with large order histories, sending targeted product recommendations for accessory items or related services based on their previous browsing and buying patterns can strengthen bonds.
Communicating discounts or promotions during major calendar events in the customer’s purchase categories also provides relevance.
Additionally, nurturing loyalty also means addressing individual customer needs with how-to guides and educational content sparked by past support questions or product discussions.
By understanding distinct preferences and dynamically delivering helpful experiences, sustained relationships can be cultivated over the long term.
Upsell and Cross-sell Effectively
With robust behavioral profiling of customers, marketers are well-positioned to upsell and cross-sell complementary offerings.
Featured sections displaying meticulously curated additional products, price bundles, or service packages tailored for the individual can uncover new revenue streams.
As customer needs, interests, and pain points are deeply understood, offering expanding solutions through personalized messaging catalyzes growth.
Highlighting how other clients leveraged synergistic products to achieve enhanced outcomes also promotes emulation among peers.
When introducing add-ons is done sensitively based on conveyed needs over stated wants, customer lifetime value can grow exponentially.
Run Retention Campaigns
To strengthen relationships with dormant users, periodic re-engagement campaigns are crucial. Nostalgic promotions around past purchase anniversaries reconnect on an emotional level.
Holiday or birthday discounts cater to sentiment, while targeted deals for niche interests keep past buyers in mind. Leveraging historical transaction details to deliver time-sensitive, personalized one-to-one retargeting messages revives otherwise idle users.
Introducing successive generations of customers to their family members awakens advocacy. Consistent nurturing sustains affinity where natural drift may occur.
Final Words
Marketers maximize return on ad spend by focusing strategies throughout the entire customer journey – from awareness and consideration to conversion optimization and long-term relationship development.
Remember, marketers who institutionalize a “test-and-learn” mentality, continually optimizing processes based on measurable KPIs like ROAS, see the greatest advertising ROI over the long haul.
