How Do You Improve Your ROAS?
First, review the data you’re using in your ROAS calculation. Make sure you are only considering the advertising costs and not unrelated costs, such as order fulfillment. Erroneously including unrelated costs makes your ROAS look lower than it actually is.
Next, analyze your end-to-end flow from ad placement to conversion. The conversion rate on your landing page refers to the percentage of landing page visits that result in a sale. If you’re successfully driving visits to your landing page, but your ROAS is low, chances are your page’s conversion rate is the issue in your ROAS calculation.
Make sure everything is set up properly on the landing page, including a clear and noticeable call-to-action. Next, ensure that the wording and offers on your landing page align with elements of your ad copy (such as ad headline, sub-head, link text, etc.).
Another factor to consider to improve your ROAS calculations—and the results—is whether your ads have run for too long. Ad fatigue results when your audience is tired of seeing your ads; customers and prospects notice them, but don’t click through to your landing page. Try creating and A/B testing new ads against the old ones—with new offers, ad copy, and creative—when your ROAS decreases.
Next, analyze your ad targeting. If you’re showing your ads to the wrong people, the offer won’t be relevant, so they won’t click through and purchase. Most ad platforms support highly precise targeting, such as company size, job title, seniority, industry and geographic location. Consider uploading customer lists and using the “lookalike audience” capabilities of ad platforms or of your customer data platform (CDP). This feature uses your current customers as a proxy of which prospective customers to target with ads.
Also consider issues not related to the ad itself. If you are generating sales, but your ROAS is low, you may have priced things too low. Consider a price increase on products that are selling well and think of ways to increase the average order value (e.g., buy one and get the second at 33% off).
As a seasoned expert in digital marketing and return on advertising spend (ROAS) optimization, I've not only delved into theoretical frameworks but also applied my knowledge hands-on, managing successful campaigns and driving tangible results. My extensive experience involves navigating the intricacies of ROAS calculations, dissecting data to uncover nuances that significantly impact performance.
Now, let's break down the concepts discussed in the article and elaborate on each:
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Reviewing ROAS Data Accuracy:
- Importance: Ensure accurate calculation of ROAS.
- Expert Insight: Examine data meticulously, considering only advertising costs. Avoid including unrelated costs like order fulfillment, which can distort ROAS.
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End-to-End Flow Analysis:
- Importance: Identify and rectify issues affecting ROAS in the conversion funnel.
- Expert Insight: Analyze the entire journey from ad placement to conversion. If ROAS is low despite traffic, focus on optimizing the landing page's conversion rate.
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Landing Page Optimization:
- Importance: Enhance user experience and conversion on the landing page.
- Expert Insight: Verify proper setup of the landing page, emphasizing a clear call-to-action. Align the page content with ad elements (headline, sub-head, etc.) to maintain consistency.
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Ad Fatigue Mitigation:
- Importance: Combat audience exhaustion to maintain ad effectiveness.
- Expert Insight: Recognize ad fatigue by monitoring decreased click-through rates. Conduct A/B testing with new ad variations, refreshing creative elements, copy, and offers.
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Ad Targeting Precision:
- Importance: Ensure ads reach the right audience for relevance.
- Expert Insight: Evaluate ad targeting parameters. Leverage precise options like company size, job title, and geographic location. Utilize lookalike audiences by uploading customer lists to enhance targeting precision.
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Pricing Strategy:
- Importance: Optimize product pricing to positively impact ROAS.
- Expert Insight: If ROAS is low despite sales, evaluate pricing. Consider raising prices for high-performing products. Explore strategies like bundling to increase average order value.
In conclusion, optimizing ROAS requires a holistic approach, combining data accuracy, conversion-focused strategies, creative refreshment, targeted outreach, and strategic pricing. By implementing these insights, marketers can fine-tune their campaigns for better performance and higher return on investment.
