Marketing activities are pivotal for any eCommerce business in any industry. However, your marketing activities, ads, campaigns, and strategies are useless if there are no metrics to analyze, monitor, and examine them.
So, if you advertise online to drive more leads and increase sales, you will surely want to calculate your profit and revenue versus your ads’ costs.
To know perfectly whether or not you are on the right track and whether or not your budget is being allocated in the right place, and to know how your ads are performing, then you should know everything about ROAS.
ROAS is considered the most important marketing metric you should use to evaluate your advertising performance.
What is ROAS in eCommerce?
ROAS is an abbreviation for Return on Ad Spend. ROAS is an essential KPI and a marketing metric for online eCommerce businesses. It equals the amount of revenue earned for every dollar spent on a campaign.
This means that it measures the performance and efficiency of your marketing campaigns. Hence, it focuses on the profit achieved for each advertising expense.
Summing it up, ROAS is a key metric used to measure and determine strategic success in eCommerce.
ROAS should NOT only be monitored and measured but also maximized. Calculating ROAS helps you determine which ad campaigns and strategies work well and which ones need revisiting.
Learn How to calculate return on ad spend (ROAS) in eCommerce
What are the benefits of analyzing eCommerce ROAS?
Your ROAS is crucial for your eCommerce business revenue and your ad results, directly affecting your sales. Here are some proven benefits for analyzing and monitoring your ROAS.
- ROAS will help you evaluate your performance and analyze the financial return of your ad campaigns.
- It will provide accurate analytical data about your ad spend increases, campaign budget changes, and more.
- It will give you valuable information about your highest-performing ad campaigns and ad groups.
- ROAS helps your eCommerce business to make precise marketing decisions based on the analytics and data it provides so your future budget is allocated to the right channels, the right way.
- It helps you to know the effectiveness and efficiency of individual campaigns based on their performance. Hence, you can test different elements in different ad campaigns to know which text/visual and idea work best for your audience.
- Keep in mind that ROAS is the most important metric for marketers.
15 Strategies to Increase Your eCommerce ROAS
Increasing the ROAS in your eCommerce business means enhancing your ad campaign performance and maximizing your profits and your revenue. If your revenue increases, but your ad spend stays the same, then your ROAS will grow. You need to work on a solid plan to increase your ROAS. Here are some strategies that you can follow:
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Create a good branded PPC Campaign
Targeting your business’ name in your PPC campaign can help you get better results from your ad campaigns. -
Know your business’ negative words!
Preventing your ads from appearing in irrelevant searches with those negative words can be extremely helpful to boost your ROAS. -
Choose the right keywords.
Targeting for your audience and industry. -
Optimize your eCommerce website landing page
Optimize your landing page to convert your visitors into shoppers and purchasers. Once your audience clicks on your ad and goes to your website, it has to be super user-friendly and fast to attract your shoppers. -
Make sure you are using geo-targeting
If your eCommerce business ships to a certain location, then it is crucial to make sure you are targeting the right people in the right places. This can improve your ROAS by avoiding wrong targeting for people who might click on your ad and leave your site without buying. -
Do your competitive analysis
You need to know what your competitors are doing, how their ads perform, the keywords they are using, and the promotions they offer. -
Reduce your cart abandonment rate.
Use eCommerce conversion rate optimization to make sure you are not losing any potential purchasers. -
Offer seasonal promotions
Tailor your ads to promote holidays and certain events offers and discounts. You can also design and decorate your website according to the event or occasion taking place. This will surely lead to conversion, improving your ROAS. -
Use Product Listing ads
These ads are shown when a search is done with highly relevant keywords. It has been proven by research that revenue from PLAs has grown by 52% year over year. The increase has resulted in an improvement of sales by 164% and improved ROAS by 23%. -
Target the right audience
Make sure you are targeting the right audience with the right demographics and psychographics. Revisit your audience segmentation every now and then. -
Reduce your ad spending
Creating the right ads is not about spending more money on them. Absolutely not! If your budget is not optimized correctly, this can lead to low ROAS. Optimize your budget correctly and try with low budgets to see what works effectively for your eCommerce business. -
Increase your customer lifetime value (CLV)
Your current customers will cost significantly less than acquiring new ones. Moreover, The probability of selling to your existing customers is 60 – 70%, while the probability of selling to potential ones is 5-20%. Hence, to increase your ROAS, you need to increase your customer lifetime value through loyalty programs, retargeting campaigns, email marketing, and upselling. -
It is not only about your advertising strategies
Some ROAS problems might be unrelated to your advertising strategies. Some issues might be related to the products themselves or the shopping process. Think about how you can make your products more attractive or what offers can be so appealing to your audience.
Should you change your pricing strategy? Is your call-to-action (CTA) and copywriting creative enough? If it’s not clear enough or not appealing enough, that could result in a drop in conversions and negatively impact ROAS. -
Use cross-channel ad optimization
Engage your shoppers via as many relevant touch points and on many marketing platforms as you can. Omni channel marketing is all about "personalization," which means that all your brand's messages should depend on your customers' needs and the channel they prefer to communicate through. -
Personalize every single ad
90% of consumers say that they get annoyed by ads that are not personally relevant to them. 80% are more likely to make a purchase when they get a personalized experience.
Discover the Difference between ROI and ROAS
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