Return on ad spend (ROAS) is a key performance indicator that carries a lot of weight in e-commerce campaigns, but can be more difficult to measure in service/lead-based campaigns.
ROAS is equivalent to the amount of revenue earned for each dollar spent on a campaign. One of the most common ROAS benchmarks used is the 4:1 ratio—meaning that at least a $4 revenue needs to be made for every $1 spent on an ad campaign.
When it comes to service and lead-based campaigns, it’s recommended to use metrics like cost-per-action (CPA) or cost-per-lead (CPL). You calculate these metrics by dividing your ad spend by the number of qualified leads you acquire from a specific channel. Alternatively, marketers can determine an estimated conversion value and set that as revenue.
In order to maximize paid ad efforts, marketers need to look more closely at conversion-based tactics to effectively boost their ROAS.
Successful paid ads are essentially messages sent using the right format, at the right time, and to the right audience. Another important element here is the platform because platforms can make all the difference.
As an example, different social media platforms have their own cultures, communities, and dominant demographics. This is why there are different marketing best practices for Facebook, LinkedIn, TikTok, and so on. This translates not only through how ads are formatted visually but also through their message. Ideally, brands should also adjust how they represent themselves depending on the platform. Because of the underlying culture within each social media platform, where an ad appears carries its own implications.
It is always best for marketers to be intentional in choosing platforms and the ad format to match. The centre of it all is creating an engaging and seamless customer experience.
Selecting the right keywords for a campaign will help it match with the right people. Long-tail keywords that are more specific can indicate that a potential customer is closer to purchasing. This type of keywords are at least three words long and can be used not just in paid ads but also in content marketing. An example of this is “red women’s purse.”
Selecting the right negative keywords are equally important for paid ads. Negative keywords help to refine the traffic coming into a business’s website. Negative keywords determine when an ad shouldn’t be shown. In relation to the above example, if the brand does not sell backpacks, one of the negative keywords can be “red women’s backpack.”
Targeting the right audience is a perennial best practice for paid ads, more specifically with display/social ads. At the bare minimum, paid ads should be directed towards specific demographics that align with the customer personas of the business.
It is also recommended for marketers to segment their audience and create tailored messaging for each segment. Paid ad campaigns should then align with the needs, wants, traits, interests, and shopping behaviours of the targeted segment.
Paying attention to high-intent visitors is a crucial part of conversion rate optimization for a better return on ad spend.
Retargeting is a strategy in online advertising where ads are served to people who have previously visited the business’s website or social media profile. Retargeting with ads entices interested visitors to complete an action like making a purchase, filling out a form, or signing up.
Once a customer clicks on an ad, an optimized landing page has the best chance of encouraging them to take a desired action. In this regard, optimized landing pages will help boost revenue and return on ad spend.
Landing pages should have a loading speed of three seconds or less and present the potential customer with the information they need for them to take action. Using clear and compelling copy is a must. The narrative of the landing page must also be simple and linear, presenting a clear call to action. For this reason, single-page websites are ideal as landing pages. They keep customers focused on just the information they need and what action to take. The customer journey then becomes uncluttered and seamless.
In terms of accessibility, landing pages need to be mobile responsive. The text and colour scheme should be effective for viewing even on smaller devices.
Another element businesses can add to their landing pages to increase conversion is social proof. Social proof on landing pages can be customer reviews, ratings, or testimonials. Social proof helps to establish trust with potential customers.
By encouraging customers to buy higher-tiered products or related items, marketers will be able to increase revenue. This in turn boosts the return on ad spend (ROAS.)
Marketers can use specific strategies to increase the cart value of shoppers that are already attracted to the business’s website. A few examples include: