Everything You Need To Need To Know About Ads Return
Advertising executives are constantly looking for ways to make their advertising dollars more efficient.
Many digital advertising channels offer tremendous opportunities, but they also present the possibility for intense scrutiny. Advertisers must prove they are choosing the proper channels and tactics for the best return-on-ad spend (ROAS). They also need to continue optimizing and improving campaign performance over time.
Advertising professionals should strive to improve their ROAS performance. This article will discuss the three main components of increasing your ROAS performance and provide seven actionable strategies to make it happen.
What is ROAS?
Ad spending returns show how much revenue you can generate for every dollar spent. ROAS allows advertisers to monitor and compare the effectiveness of their advertising campaigns. It is an indicator of efficiency.
The ROAS calculation looks simple on the surface: Total revenue from an ad campaign divided by total campaign costs.
If you spend $5,000 on PPC ads and earn $15,000 from them, your ROAS would be 3:1.
How to improve your ROAS performance
Enhancing your ROAS means breaking down the equation into its components and creating efficiency at each step.
Online advertising revenue can be broken down into its components.
- Click online ads
- Conversions after clicking
- Revenue per conversion
Let’s assume that your cost per click averages $1.96. It takes 25 clicks to convert 4% of your traffic. Each conversion will cost you $49. To make your campaign profitable, you will need your average order value (the average amount customers spend on purchases) to exceed $49. You’d like it to be at minimum two to four times.
To improve your ROAS, it is essential to:
- Lower your cost per click
- Increase your post-click conversion rates
- Conversions can increase your revenue
Let’s begin by lowering your advertising costs.
Lower your cost per click
You can increase your cost per click (CPC) or get more clicks for the same ad spend by increasing your CPC.
Regardless of the outcome, as long as each click is relevant and quality remains constant, lowering your CPC will increase your ROAS.
These are proven strategies that will reduce your click cost.
1. Experiment with your bidding strategies
Inefficient bidding is a great way to waste your advertising dollars. You can spend your advertising dollars more efficiently by trying different bidding strategies.
Target the third position to reduce your CPC. The third position is still at the top of SERPs but costs less than the top spot. This means you get more clicks for your money.
Try bidding strategies to increase your CPC. It is possible to manually adjust your maximum bid using Manual or Enhance CPC. This will allow you to manage your ad cost without affecting conversions.
But CPC reduction is not the only thing. Automated Smart Bidding options such as Target CPA or Target ROAS, Maximize Conversions, Maximize ROAS or Maximize Conversion Value may be more expensive depending on your industry. Still, it could result in higher conversions and better ROAS.
It’s a brilliant idea to try different things. Do not assume that targeting low CPCs or high ROAS will yield the desired results.
2. Make sure you target the right audience
You can convert more by spending less when you target the people who are most likely to buy from you.
Although most advertisers are familiar enough with traditional targeting techniques, such as narrowing your audience by geography, job title, or device, very few advertisers take the time to create multiple audience personas and then target each segment.
How can segmenting your audience increase your ROAS?
The quality score is determined by ad relevance, expected click-through rate, and landing page experience. Your ROAS will improve by improving your Quality Score.
Retargeting is another option. People who have visited your site before are more likely to convert. You can increase your chances of conversion if you create compelling ads that target previous site visitors.
3. Use keywords with care
Targeting the right people is only one part of the equation. You also need to target the proper search. Not just because they fit your target audience profile doesn’t necessarily mean they are ready to buy. It is essential to reach them at the right moment.
Use Negative Keywords: Avoid unrelated impressions or clicks that could harm your Quality Score.
Avoid long-tail keywords that could lead to high-cost bidding battles.
A search for “pink size 9 women’s running shoes” will get you more results than someone looking for “women’s shoes”.
Create single-keyword ad groups to ensure that your ad copy is relevant to the user’s search. This increases relevance and results in higher click-through and conversion rates which, in turn, leads to higher revenue.
Increase your post-click conversion rate
A second key to increasing your ROAS is to increase the conversion rate of clicks into customers.
It all boils down to creating an optimized landing page experience.
4. Use landing page best practices
When driving conversions, a well-designed landing page should be a must.
The best landing pages should follow the following guidelines:
- Focused. Every landing page should be focused. It should not contain navigational or in-content links that could distract visitors from converting.
- Persuasive. Every landing page should have a clear, compelling copy that uses the principles of persuasion. The landing page should include an attractive incentive or offer that is hard to resist and social proof that convinces buyers it’s worthwhile.
- User-friendly. Every landing page should follow the same design principles and be responsive to any device. It should load as fast as possible, with a minimum of three seconds.
This old advice is not always the best. The average advertisement conversion rate ranges between 2% and 4% across most industries. Assuming that the average advertiser follows landing page best practices, 98% of ad spending is still wasted.
The key to a successful post-click experience is two additional pillars. Landing pages should be:
- Holistic. When designing advertising campaigns, take into consideration both the pre-click as well as post-click stages. Use message-match to create a coherent narrative throughout the ad campaign.
- Personalized. It’s challenging to present the right message to the right people at the right moment. But it is the key to advertising success. To personalize your post-click experience, you should at least use ad targeting information.
5. Provide a personalized journey
Advertisers have been forced to accept sub-4% conversion rates, low ROAS, and one-size fits all messaging. Messages can resonate with one audience to not work for another.
You need to provide a personal journey
- Use a 1:1 ratio ad-to-page to ensure that each of your highly personal ads leads to a highly relevant landing page.
- Create landing page copy that matches your ad and appeals to the needs and goals of your target audience segment.
This personal experience increases conversion rates and leads to a higher ROAS.
It’s not an easy task. You will need dedicated resources and a team to achieve 1:1 ad/page personalization at scale. This means that every prospect has a customized journey.
You can use softwares that uses AI and machine learning to create, personalize and optimize landing pages for each ad. This is the only way to deliver personalized advertising journeys on a large scale without spending too much.
6. Optimize your post-click experience
Post-click personalization aims to increase the probability of conversion for individual visitors. However, landing page optimization is designed to improve the conversion rate for all visitors.
Optimizing your pre-and post-click experiences is key to increasing conversions. This means that you must run a/b testing until you have found the best content and design–another resource-intensive activity.
Conversions can increase your revenue.
Ironically, the revenue component is perhaps the most overlooked part of the ROAS equation.
Advertisers tend to be obsessed with click-through and conversion rates but fail to consider broader business implications and whether they drive high-value sales.
7. Each customer brings you more revenue
Every business wants to make more money from every customer. However, there are practical ways to do this using your post-click experiences.
This could be a way to increase the average purchase value (AOV) by offering free shipping in return for minimum orders or bulk orders.
You can also sell bundles (“Do you want fries?”) or refer customers to high-cost services or products through a recommendation engine.
It is essential to track your AOV and tailor your ad campaigns to favour high-value products and services.
Don’t forget that your best customers are those you already have. According to EConsultancy, you are three to fourteen times more likely than a new customer to sell to your current customers. An alternative way to increase your ROAS is to increase the customer’s lifetime worth (LTV).
As an advertiser, you can use many marketing strategies to achieve this goal.
- Retargeting campaigns
- Email campaigns
- Loyalty and rewards programs
- Discounts and coupons
LTV can be boosted by simple business practices, which are sometimes out of your control as an advertiser. For example, providing exceptional customer service and quality products and services that keep loyal customers returning.
Increase the return on your advertising spend
It’s not a one-and-done activity to improve your ROAS. It requires constant testing and optimization at each stage of the advertising channel.
You can significantly improve your ROAS by creating targeted ads and offering personalized post-click experiences.