How to increase ROAS

Return on Ad Spend (ROAS) is an essential marketing metric that is used to measure the amount of revenue generated per dollar invested in an advertising campaign. By analyzing ROAS, marketers can understand how well their advertising programs are performing and make better decisions on how to invest their budget. 

Optimizing ROAS is important for running advertising programs at scale. Gartner’s 2023 CMO Spend and Strategy survey found that 75% of CMOs are currently facing increased pressure to “do more with less” marketing budget. To deliver results without breaking the bank, it’s critical to make your advertising programs as efficient as possible. 

Campaigns with a low ROAS cost your business in two ways:

1. Ad budget wasted on campaigns that drive low revenue
2. The opportunity cost of incremental revenues you could be generating with that wasted budget, had you invested it in more efficient campaigns

How to increase ROAS

The good news is that there are several tactics you can use to increase the efficiency of your advertising programs, thereby increasing ROAS. These tactics can be grouped into two categories: improving the user experience and improving campaign targeting. 

Increase ROAS by improving the user experience

Consumers are exposed to more advertisements today than ever before–by far. Market research firm Yankelovich has reported that today’s consumers see an average of 10,000 ads per day, with only a third of those being relevant to their interests. 

In such a crowded market, investing in optimizing your ad copy and creative is critical for capturing your target customers’ limited attention. Widely leveraged social media advertising platforms, such as Google and Facebook, allow you to A/B test ad variants and identify which variants generate more clicks. By investing time in testing and optimizing your ads, you can allocate budget to your most effective ad sets and increase ROAS. 

Capturing your target customers’ attention with effective creative is a great start, but for most businesses, clicks do not equal revenue. To increase the return generated by ad campaigns, you can also focus on improving the post-click user experience. Two key ways that you can improve the post-click experience are:

1. Increase load speed - Recent Google research found that the chance of a user bouncing increases by 32% when page load time increases from 1 to 3 seconds; and by 90% when page load time increases from 1 to 5 seconds. Investing in shaving seconds, or even milliseconds, off of your page load speed can reduce bounce rate and increase the likelihood that your target customers will make a purchase. 
2. Personalize the landing page experience - McKinsey & Co. reported that 71% of customers expect personalization, and 76% of customers actually get frustrated when their experiences with brands aren’t personalized. Align your landing pages to the copy and creative in your advertising campaign to create a consistent customer experience, and leverage customer data to tailor the landing page experience to the user where possible. 

Increase ROAS by improving campaign targeting

It doesn’t matter how great your user experience is if your ad campaigns are targeting the wrong consumers. Serving ads to consumers that aren’t interested–or worse yet, customers that have already purchased–will result in wasted ad budget and low ROAS. 

Create audience segments of your active customers, and use them as suppression lists on any acquisition campaigns you are running. This will ensure that you’re not wasting ad spend on active customers, and allocating more budget to prospective customers. 

If you’re interested in learning how you can set up suppression audiences across channels such as Facebook, Google, TikTok in just a few clicks with WasteNot, you can see more here. 

You can also increase ROAS by ensuring that you’re leveraging the right channel for each campaign type. While highly-visual, low CPC channels such as display may be best for brand awareness campaigns, highly-targeted channels such as Google Search Ads may be best for direct-conversion campaigns. With more than half of consumers interacting with brands across three to five channels before making a purchase, according to McKinsey, it’s important to consider a multi-channel approach to your ad strategy, and use the right channel(s) for each campaign. 

Key takeaways

• Return on Ad Spend (ROAS) is an essential marketing metric that is used to measure the amount of revenue generated per dollar invested in an advertising campaign
• Increasing ROAS is important for being able to scale advertising programs. Campaigns with low ROAS result not only in wasted budget, but also the opportunity cost of incremental revenue that could be generated had budget been invested it in more efficient campaigns
• You can increase ROAS by investing in improving your target audience’s user experience throughout the buying journey. Test and learn to improve your ad copy and creative, and invest in optimizing the post-click experience. 
• You can also increase ROAS by improving your campaign targeting. Ensure you’re utilizing the best channels for each campaign type, and leverage suppression lists to avoid wasting ad budget on active customers. 

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