As marketers, we all know that staying competitive means improving performance while keeping the budget as lean and efficient as possible. In other words, we need to increase return on ad spend (ROAS).

What is ROAS?

ROAS, or return on ad spend, is a metric used to measure how much money a campaign has earned for an advertiser. The formula for measuring ROAS is relatively simple on the surface: divide total revenue by total advertising costs to reach the ratio.

For example, spending $10,000 on a campaign and earning $30,000 in revenue means a ROAS ratio of 3:1.

But what is a good ROAS ratio? And how can you increase ROAS when ads are underperforming? 

Before we get into increasing ROAS, let's take a few considerations into account:

• Every Channel is Different: Each advertising channel delivers a different ROAS ratio. For example, some sources say 4:1 is a good ROAS ratio for Facebook, while others tout 2:1 as a typical result on Google Ads. 

• Every Business is Different, Too: Return on ad spend varies between businesses, depending on a long list of factors like growth goals, industry, audience size and more.

• ROAS is Not ROI: Return on ad spend can be viewed as a sub-metric of return on investment (ROI) if the marketing mix includes organic or above-the-line activity. ROAS complements other below-the-line metrics like cost per click (CPC) and average order value (AOV).

• ROAS is Multi-Layered: ROAS ratios are based on last-touch attribution. Measuring returns at the channel and campaign levels helps a marketer understand the bigger picture and optimize the budget to increase ROAS.

How to Increase ROAS
This tactic can help with:
-Low click-through rate (CTR)
-High bounce rates
-Low landing page conversions

If your marketing metrics are indicating that your audience is seeing your ad but not engaging, it could mean that the message isn’t resonating with them. Here’s how you can use data to increase ad relevance and improve ROAS:

1. A/B Test
2. Align Messaging
3. Review Audience Segmentation
4. Reduce Advertising Spend
5. Target the Right Keywords
6. Mix up Your Bidding Strategy
7. Improve Ad Targeting
8. Use Your Martech Stack More Efficiently
9. Build a Robust Marketing Dashboard
10. Consider the User Journey

Cubik is a web-based solution for augmenting your Media Planning and eCommerce initiatives powered by Artificial Intelligence that brands and agencies use to track, measure and optimize marketing campaigns. 

All your marketing metrics flow into one user-friendly dashboard, plus you have the power of flexible reporting and automations that calculate ROAS ratios.

Learn more about Cubik or contact us to schedule a consultation.