RETURN ON ADVERTISING SPEND
“Half the money I spend on advertising is wasted; the trouble is I don't know which half.”
John Wanamaker (1838-1922)
Have you ever wondered how you can prove that your advertising spend is converting into customers? It was as true as it has been for the past 100 years but it doesn't have to be! A century old problem that is only starting to be fixed in the past 5 years. With the birthing of new marketing and advertising platforms (like this Hubspot portal that we are using) marketing teams can now track the digital customer journey from awareness - consideration and through to purchase. Imagine being able to know which exact advert converted your customer!
ROAS (return on ad spend) is a marketing metric that measures how much your business earns in revenue for every dollar spent on marketing or advertising.
Getting a Return on Advertising Spend - at Disruptive we believe in results - it is what makes us a Chartered Marketing Firm! Now more than ever its important to focus your attention to ROAS and learn more about your money making machine! ROAS (return on ad spend) is one of the most important metrics that a business can measure. How much your business earns in revenue for every dollar spent on advertising is crucial to knowing what to keep and what to turn off. While ROAS is similar to ROI (return on investment), ROAS looks specifically at the cost of an ad or campaign and how much it generated in return.
Say What Now?
If your ROAS is 3:1, that means you are making $3 in revenue for every $1 you spend on advertising. ROAS effectiveness is all about numbers — ROI, CTR, response rates, conversions, and CPA all top the list when it comes to determining whether a campaign is successful. The equation to calculate ROAS is pretty simple!
The equation for ROAS is: Revenue generated | divided by the media spend. There is no single ‘good’ ROAS, a good ROAS can vary by campaign, industry, or even marketing goals. There are even some cases where a lower ROAS might not be a bad thing. However, in general, a ROAS of 4:1 or higher indicates a successful campaign. Keep in mind that the accuracy of ROAS is highly dependent on getting accurate numbers for cost and total revenue generated. If you have a low ROAS, your first step should be to make sure you are attributing revenue correctly.
Need some help to calculate yours?
As a Chartered Marketing Firm we undertake an audit process before we begin recommending any proposals or solutions and we are Regional Business Partners for our programs. Your business may be eligible for a funded voucher for the process. We would love to help you, this is a great way to get your plan in shape and a good time to do it with the ever changing environment! Book a meeting with us and we will walk you through the process of developing the right metrics for your team. Remember, if you are not talking to your customers, your competition is.
What is your plan for scaling your business?
