When you are running an ad campaign, your main objective will be to earn more. In case you are not getting profit from these ads, it means they are not effective. How do you come to know whether your add is generating revenue or not? There are several metrics that you can use to measure your ad success and its effectiveness. ROAS is one of the accurate ways to determine if your ads are really worth the investment. When you need to identify which ad campaigns are worth then you can use ROAS.
ROAS stands for Return On Ad Spend. The users use this metric to determine the revenue what they receive against the amount they spend on an advertisement. It helps to find how effective your online advertising campaigns are. You can also find if your advertising budget is being utilized effectively.
How To Calculate ROAS?
In order to calculate the ROAS of your ad campaign, you first have to track its conversions and sales details. In case, you are already using the ROAS of Google Ads campaigns then you can collect this detail on Ad group page of the main dashboard. Now, you will plug the gathered data into the ROAS formula as given below:
(Revenue – Cost)/ Cost
Before proceeding to calculate this, consider the campaign that you want to evaluate. Then, you will take the total revenue from that ad campaign and subtract the cost of running ad. Thus, you will get your campaign revenue which you divide by your ad spend. As a result, the return on ad spend will display. Comparatively, this metric to measure the return on ad spend is easier and simpler.
What Is A Need To Measure ROAS?
The measurement on ROAS contributes to your ad campaign improvement. It helps to know which particular ad campaign is contributing to the bottom line of your brand. Without this, you may be using your guess at what ad generating revenue more than your cost.
How To Use ROAS Metric
- On talking about the use of return on ad spend, the metric provides an excellent insight into distinct sections of digital marketing such as marketing direction, strategy, and budget.
- If you notice a particular campaign has a higher ROAS than others then you can find the reasons behind it and use the same strategy on other non-profitable campaigns.
- ROAS makes you easy to identify better methods in order to allocate your budget.
- If you find your other campaign has low ROAS, then you can use the budget from this campaign to another one that is successful.
- On the basis of return on ad spend measurement, you would stay cautious to run similar campaigns as well as do away with them altogether.
- If you are running a business with a small budget, then ROAS helps you obtain more out of your budget and make you able to spend wisely.
Last but not least, when you become able to measure your ad campaign return on ad spend then you will make strategic changes in its outcome and to improve more.
Tips To Improve ROAS
Add Negative Keywords
This is one of the easy ways to lower the unnecessary spend in improving the ROAS. Add negative keywords to prevent your ad to show up. By using the negative keywords, you can improve the relevancy of your ads traffic. As a result, it will impact the return on ad spend.
Opt For Online Channels & Campaigns
Your online ad campaign reaches to the billions of the consumer only if you choose the suitable platform. More you target the market and audience, the more chances of having improvement in your business.
Improve The Quality Score
Focus on improving the quality score of your ads. It will result in lowering the cost per click and improve the ad ranking. The quality score of your ad helps Google to determine your ad ranking. And, a big part of quality assurance relies on your ad relevance.
Adjust Bids Based On Device
With Google ads, set distinct bids for desktop computers, tablets and mobile devices. The desktop is the default and you can set it between 90% to 900%. Adjust the bids down especially for mobile. A mobile click is not as valuable as desktop clicks. So, you can keep it between 20% to 50%.
Optimize Landing Page
When you know your return on ad spend then you can optimize the landing pages. Getting search engines to improve the conversion is a good thing. Now, if you want to convert them then make your landing page to optimize for conversions.
Finally, you know everything about ROAS and you are ready to implement this in your ad campaign to increase the profit. Still, if you are struggling to improve your campaign return on ad spend then feel free to contact WireTree. We are the leading digital marketing services company in Toronto. We have a team of professionals with years of experience and well versed with the new technologies to improve online business or ad campaign revenue.