How To Calculate Your Ad Spend Return (ROAS)?

In the initial state, it is most essential for a business to run on ads to increase brand awareness. As a result  advertising cost becomes the most expensive one that they have to incur their revenue increment. According to sources, 46% of the most visited sites in e-commerce  are spending on an average $1000 on advertising monthly to gain a responsive and reletable online visibility.

However, after a hefty sum expenditure on ads, still it is unclear whether the advertisements are actually enhancing your sales or not. How does a company find the benchmarks and how it can set KPIs to track advertising efforts.  To question your queries Return on Ad Spend or ROAS is the perfect answer. To explore more on how to calculate ROAS in this blog we are discussing all the possible formulas.

What is ROAS?

Return on Ad spend or ROAS measures the cost generated from advertising relative to the ads spent amount. We can say it is a key metric for assessing your ad campaign effectiveness. The ratio of ROAS is counted as 4:1, which means that in every $1 spent on ads, one should generate $4 in revenue.

How to Calculate ROAS: A Simple Formula 

First you need to access the data that allows you to attribute sales to ads. You can use a number of models to gain these sights. 

The single touch attribution model  before its first or last conversion touch credits revenue.  After first-touch attribution, you can assume your customer can convert into a sale after the first advertisement. Last touch attribution does the opposite. It gives credit to the last advertisement the customer interacted with. Multi-touch attribution is considered the most accurate and useful model as it gives credit to all touchpoints. 

You also need to consider the ads cost for ROAS calculation. Partners and vendors need to give fees and commissions for the amount spent directly on the ad platform. If you don't include the additional costs, your Return on Ad Spend will be artificially higher. However, consistent reporting is very much essential. During your ad campaign optimization, ensure your increased ROAS should be established on the basis of your made changes.

Why Does ROAS Calculation Matter?

Every business should look into every ad campaign whether it is working or not. And here tracking is the most effective way to achieve success. Calculating ROAS help in identifying areas to decrease spending areas in advertising and the opportunities areas to double down.

There are a variety of Return on Ad Spend Methods available for optimization. You can run multiple campaigns parallelly to run ROAS calculations for each. The low performing campaigns can be dialled back and can shift more budget towards the higher performing campaigns. The ROAS measuring insights help in determining future marketing direction and improving efficiency with as spend.

Why should you consider Good ROAS?

A good ROAS is considered to be around 3:1 or 4:1, or if you count it in percentage then 300% or 400% return on advertisement investment. However, the ads which run on the Google platform may generate three or four times that Return on Ad Spend.

How to Use Teldrip to Improve Your ROAS?

Teldrip's AI-powered conversation intelligence platform lets you capture attribution data from phone conversations and combines it with your other tools to work well for advertising and marketing campaigns for gaining maximum Return on Ad Spend. 

Call tracking strategies at Teldrip empowers your marketing team with important conversational insights to personalise the customer journey. It even redirects the appealing ad copy to more customers. The insights are the call recording transcripts in a real sense. Teldrip's AI capabilities help marketers to identify real time trends. 

Teldrip's solution is used for tracking online and offline conversations in Google Ads with other common ad platforms. The marketing and sales team can provide true performance measurement through  better attribution enabled for every customer touchpoint and action in the call centre.

Different Ways to Improve ROAS

Get good ROAS with following strategies:

• Targeted Audience: Divide your audience on the basis of behaviours, demographics, and interest to ensure your ad is engaging and relevant to more audiences or not.

• Keyword Optimization: Optimise your ad campaign by thorough keyword research. Drive-out high-intent keywords to align your target audience's search queries.

• Creative Optimisation: Craft a compelling ad copy. Make its visuals to resonate with your audience, highlight the ad with unique selling points to drive better action.

• Landing Page Optimisation: Make sure your landing pages are well optimised for conversions, relevant content with clear call-to-action, and user-friendly design to maximise conversion chances.

• Bid Management: The strategies in bid management includes automated bidding, manual bidding and bid adjustments for ad expenditure optimization for gaining maximum ROI on each campaign.

• Ad Extensions: The ad extensions use callouts, sitelinks, and structured snippets to provide extra information to boost visibility and your ads effectiveness.

• A/B Testing: Test different advertisement elements consistently along with copy, headlines, visuals and CTAs, to check which one resonates best with your audience and optimise performance.

• Conversion Tracking: Implement tracking conversion to monitor and measure campaigns effectiveness. It will allow you to identify which campaigns, keywords,and  channels drive the most valuable conversions.

• Remarketing: Target to those users who have already interacted with your website. Check the users who have shown interest in your services or products through campaigns remarketing. It will help in increasing conversions and improve ROAS.

• Consistent Optimisation: Monitor and analyse campaigns on a regular basis to track performance metrics. Find Out the improvement areas and iterate on your strategies to optimise Return on Ad Spend over time.

Final Thought

The effective ad expenditure calculation can be a powerful catalyst in stepping up your business growth. It is all about understanding your numbers, taking informed decisions, empowering tools to maximise your return on investment.  Every penny you invest in your marketing efforts make significant business growth. Therefore make sure you are going to spend it wisely.

By helping to improve your ad campaigns and delivering marketing attribution for all media platforms, Teldrip will help you in calculating your return on spending more confidently and accurately.