Return On Ad Spend (ROAS) will certainly occupy your mind if you’re doing online marketing in NZ. Little surprise there. ROAS is the marketing metric that measures how much your business earns in revenue for every dollar spent on marketing or advertising. Your investment in your marketing needs to pay off, and so ROAS will be constantly in your thoughts as you monitor the success of your digital campaigns.

However, your thinking about ROAS might be clouded with some negativity if your return isn’t as high as you’d like. But all is not lost if this is the case, and it is possible for your Return On Ad Spend to reach the levels you want it to; it’s been suggested that a ROAS of 4 to 1 or higher represents a successful campaign. (Digital marketing agencies like this one can explain how that particular calculation is made.)

Here are three things to look at if your ROAS isn’t where you need it to be right now:

1. Ensure it is accurate. Your Return On Ad Spend might actually be better than it appears. It could simply be a case that you’re doing your sums wrong. If you are, there’s every chance that a really effective campaign might be cancelled for no good reason. That marketing agency we spoke of earlier will be better placed to calculate all the factors for you and give you a more accurate picture.
2. Lower the cost of your ads. An obvious step, and a simple one. Reducing the cost of your ads will push up your ROAS at the same time. Much of this cost reduction can be achieved through minimising wasted ad spend, a common culprit when considering a less than desirable ROAS. For example, it’s been said that the average Google Ads account wastes up to 76% of its budget on the wrong keywords. Meanwhile, an improved Google Quality Score will lead to a higher ad ranking, which can greatly improve revenue and reduce wasted ad spend.
3. Improve the revenue generated by your ads. If reducing ad costs still doesn’t get your ROAS to the target you’ve set, look at how you can improve the revenue of your ads. It will be a good idea to consider ROAS in context with other metrics such as Click-Through Rate (CTR) or Cost Per Click (CPC) to see where your ads are going wrong. For example, if an ad has a high CTR and a low ROAS, then your landing pages might need to be revisited. It could simply be a case of reworking the language on both the ad and the landing page to make them better mirror each other. Even something as basic as rethinking your keywords could be the spark you need to improve ROAS.

Yet again, digital marketing agencies are better able to diagnose and resolve the intricacies that cause a lower than desirable Return On Ad Spend. So instead of looking for an in house solution, reach out to those who are occupied by ROAS just as much as you are.

Clare Louise