ROAS – what is it?
ROAS is an indicator that shows the effectiveness of marketing activities. It shows the return on advertising expenditure , therefore its determination and optimization should be a priority for every modern entrepreneur. This element can be considered one of the most important advertising indicators, as it allows you to verify the effectiveness of the campaign, detect possible errors and decide what steps to take to optimize the promotional strategy.
Although online marketing is an increasingly popular tool for increasing brand awareness, many entrepreneurs still wonder what ROAS is and how to use it. There are various situations when this element can be particularly useful. Examples include: the desire to measure the effectiveness of an advertising strategy, the intention to verify the effectiveness of a specific solution, or the estimation of a marketing budget.
However, many business owners often have country code +30, greece phone numbers trouble distinguishing between ROAS and ROI. What is the difference between these metrics and why is it important to know?
ROAS vs. ROI – what’s the difference?
Access to many marketing tools, constantly evolving analytical methods, and technological progress mean that many entrepreneurs still confuse ROAS and ROI. Although both of these elements allow you to measure the effectiveness of marketing activities, their results present data on different aspects.
While ROAS shows the effectiveness of an advertising campaign, taking into account the costs of its implementation, ROI only presents the degree of achievement of the assumed goals. The most important difference between these indicators, however, is the result of the analyses. ROI includes the return on investment, while ROAS measures the actual revenue generated by the marketing strategy.
It is therefore worth monitoring both of these factors on an ongoing basis, regardless of the type of advertising tools used or the duration of the campaign.
How to calculate ROAS and what is the appropriate score?
Now that you know what ROAS is, it’s worth taking a look at how to calculate it. It can be defined as the revenue generated by each monetary unit invested in an entire strategy or a specific marketing campaign. So, to get this ratio, simply divide the advertising revenue by the expenses related to its implementation.
A better understanding of this aspect will be provided by illustrating it with a specific example. If a company allocates PLN 2,000 for a campaign, and marketing activities generate PLN 20,000 in revenue, it means that the ROAS indicator will be equal to 10.
When measuring the effectiveness of an advertising strategy, however, all costs related to its implementation must be taken into account. It turns out that many entrepreneurs overlook several key issues when calculating ROAS, which in turn negatively affects future promotional activities.
What should be the optimal ROAS level? Unfortunately, there is no clear answer to this. The value of the coefficient depends on many aspects, such as the nature and purpose of the campaign, its duration, brand popularity or type of industry. It is also worth mentioning that a low ROAS will not always indicate low effectiveness of the marketing strategy. In the case of activities aimed at increasing brand awareness or building trust in its services, this indicator will not reach a high level, even though the effects will be satisfactory.
The best solution is an individual approach to the interpretation of the indicator, after taking into account its determinants.
ROAS optimization – what to pay special attention to?
You certainly want a high return on investment in marketing activities. It is no wonder that many of the activities carried out are aimed at optimizing the ROAS indicator. But what should you pay special attention to so that its value reaches a satisfactory level?
There are several proven methods that can be used to optimize your KPI quite easily and effectively. Here are the most important ones:
lowering the cost per click of advertising,
using negative keywords,
taking care of the original, engaging presentation of the offer,
website usability optimization,
speeding up page loading time,
website optimization for mobile devices,
remarketing,
content marketing,
conducting an SEO audit and eliminating possible errors.
Thanks to such methods, it will be possible to obtain a return on investment. However, it is important to remember that the best results are only provided by a holistic approach to optimizing the ROAS indicator, which is often difficult to achieve on your own. Fortunately, professional SEO agencies come to the rescue.
Specialists will not only conduct comprehensive research, but will also use techniques that will help your brand achieve satisfactory revenues. It is therefore worth scheduling a consultation with an expert and establishing all the details related to the marketing campaign.
