What is ROAS?

ROAS stands for Return On Ad Spend in the world of advertising. It is a method of calculating the amount of revenue generated from a specific ad or campaign. ROAS is considered an important key performance indicator in advertising. It is based on ROI (Return On Investment principle), however, ROI is a different tool to measure the returns (net profit) on your investment.

Meanwhile, ROAS is a tool to measure the amount of revenue earned for every rupee spent rather than focusing on the profit gained.

One can use ROAS to determine revenue for an entire marketing strategy or to measure the revenue of a particular campaign. Thus, it is more beneficial to determine a short-term strategy.

How to Calculate the ROAS?

A simple formula is used to determine the return on ad spend.

ROAS = Revenue Attributed to the Ads / Cost of Ads

For example, if you spend let’s say 1000 on an advertisement and receive 3000, in return your ROAS will be 3. ROAS can be used as a metric to determine short-term strategy but can be also used for long-term profits. If the agency can determine the number of users who generate the majority of the revenue and how the users are likely to become profitable in the coming days, then the agency can start campaign optimization in advance to bring long-term and a high ROAS by tweaking costs or creatives.

7 Techniques to Increase ROAS for your Brand 

To improve ROAS for your brand, one needs to focus on the various components that generate revenue for your brand. The next step is to break down those components to understand them better and make them more efficient.

The following are the different ways you can use to improve and increase ROAS for your brand:

Interactive Advertising

If you want a campaign to be successful and your brand to generate revenue, the potential customer needs to feel that your brand is trustworthy. For making sure that the following happens, the advertisement needs to be interactive. It needs to understand the needs of the customers and therefore provide a suitable solution to that need. The more interactive your ad creative is, the better results it will generate.

Making your Website Mobile-Friendly

It is extremely crucial to make sure that your website is mobile-friendly because, in today’s time, most users are using smartphones to order products online. And if your website is not optimised for mobile use, it can create an obstacle to your revenue generation. It is important to focus on speed optimization, user location for personalised content and having a smooth process for checkout features.

Lowering your Cost Per Click (CPC)

An advertiser has to pay the website a certain cost based on the number of clicks by visitors online. Lowering your cost per click to achieve the same number of clicks with less ad spend or earning more clicks with the same ad spend will be one of the best ways to improve your ROAS. Different methods can be used to lower your cost per click:

  • Effective Bidding Strategy
    Your ad spend can be more productive if you use the correct bidding strategy. You can aim for the third spot on a search engine page result instead of the first two spots.By aiming for a third spot you will earn more clicks for less spending and you will still get a position on SERP (Search engine results page).There is also an option of manually adjusting your maximum bid with manual or enhanced CPC without having an impact on conversions.
  • Geographical Targeting
    Geographical targeting depends on tapping the right geographical audience where your brand can ship the product.
    Because if there is a geographical gap between you and your customers, you will be paying for clicks by visitors that won’t have the option to buy your products. Hence you must target the right customers based on their location.
  • Demographic Segmentation
    Knowing your target audience is really important so that you can convey your brand message accordingly. Age, Gender, and income level are the demographic factors to keep in mind before your brand campaign.For example, if you are promoting a Men’s fashion brand and your brand has funky t-shirts to sell then you must focus on the male age group from 18 to 35 max.
  • Keyword Research and Placement
    Keyword research is the most crucial and basic parameter for determining the success of your brand. By researching the most relevant keywords to your brand and placing them accordingly in your content, you’ll reach the right target audience while boosting sales.Using long-tail specific keywords, placing them in the meta title & description, URL links, H1 & H2, and competitor keyword analysis are some of the ways to improve your search engine ranking.

Conversion of Clicks into Customers

You will have a successful ROAS if you can convert clicks into customers. Many online visitors do the action of adding products to their cart on the website but fail to complete the checkout process. To convert those clicks into actual purchases, you need to have an optimised post-click landing page experience.

For this to happen one needs to follow certain steps as mentioned below:-

  • Optimising your landing page: Your page should be optimised enough that when a visitor visits your website till the time he/she does a transaction there should not be any glitches or issues.
  • The landing page should be focused on one conversion goal as well as a call to action from visitors. The landing page should be intent-focused and not have distractive messages. It should be persuasive and should be attractive enough for a final transaction.
  • The landing page has to be user-friendly. If you do proper demographic and geographical factors research, your content will seem more personalised which is the best thing you can do for your website. Speed optimization, how to use information, direct understanding of how to add a product to the cart and wishlist, proper product images and product description are important elements in making your landing page user-friendly.

Growth in Revenue Per Conversion

Increasing revenue per conversion is something every advertiser would want and it can be achieved by increasing the average order value. The average amount that customers spend when they make a purchase from your eCommerce business is known as the average order value.

One can increase average order value (AOV) in the following ways:-

  • Offer free shipping to customers when they make a minimum purchase.
  • Sell complementary products to your customers to increase your AOV.
  • Sell the most expensive products by labelling them as a better value.
  • Sell your products in bulk/combo packs. For example, if they are looking for a cup make sure they purchase the entire cutlery.
  • Customer loyalty programs are highly effective for customer retention.
  • Offering free gift cards.
  • Offering free shipping bulk orders.

Increasing Customer Lifetime Value (CLV)

If you want to increase your ROAS it is important to maintain your customer base and try to make sure that they keep coming back to your brand.

That can be achieved through the following ways:-

  • Retargeting campaigns
  • Coupons and discounts
  • Some special offers and rewards for existing loyal customers
  • Email campaigns

Focus on Seasonal Offers

If your ad campaign was created during a specific period and is continuing to exist, an ideal solution would be to make certain changes and tweak the campaign according to the current scenario or season. Placing your ads on your website in a way that is relevant to current occasions can help generate more revenue.

Final Note

ROAS on your brand is extremely important for determining the success of your brand. It is a crucial aspect of advertising that can be achieved through the above-mentioned techniques, all of these have been formulated and implemented by professionals. You can get in touch with Digimaze and get performance marketing services to increase your brand’s ROAS.