top of page

It’s Time to Rethink ROAS: A Deeper Dive

Complex Multichannel ad buys, cookieless targeting, AI driven bids and unpredictable consumer behaviour are making it increasingly difficult for marketers to navigate their strategies. The result? Higher CPMs, greater scrutiny of media budgets, and more complexity in measuring results. Amidst this turbulence, there's a silver lining: a strategic reevaluation of Return on Ad Spend (ROAS) can streamline both planning and measurement, leading to more effective campaigns.


ROAS  -  A Deeper Dive

The Pitfalls of Rigid Benchmarks

A high ROAS might suggest a campaign is delivering exceptional returns on every dollar spent. However, if this same campaign is failing to meet critical brand awareness or engagement goals, the high ROAS could be masking underlying issues. For example, an e-commerce campaign might achieve a stellar ROAS by targeting a narrow audience that is already familiar with the brand. While this drives immediate sales, it doesn't expand the customer base or build long-term brand equity. In contrast, a broader campaign aimed at reaching new audiences might show a lower ROAS in the short term but could be more beneficial for the brand’s growth and sustainability in the long run.

Context Matters: Evaluating the Bigger Picture

To truly understand the value of a campaign, it’s essential to consider the broader context in which ROAS is calculated. Different campaigns have different objectives, and a one-size-fits-all approach to ROAS can be detrimental. For instance, a campaign focused on driving immediate conversions will naturally have a different ROAS compared to one aimed at building brand awareness or generating leads for future sales.

Marketers need to align ROAS benchmarks with the specific goals of their campaigns. A high ROAS is not inherently good if it comes at the cost of long-term strategic objectives. Conversely, a lower ROAS might be perfectly acceptable if it means achieving a critical milestone, such as entering a new market or launching a new product line.


Emphasising Specific Outcomes

Instead of adhering to generic ROAS benchmarks, marketers should focus on the specific outcomes their campaigns are designed to achieve. This requires a more nuanced approach:

  1. Define Clear Objectives: Before launching a campaign, establish what success looks like beyond just the ROAS figure. Are you aiming to boost short-term sales, increase brand visibility, or drive website traffic? Each of these goals will influence how you interpret ROAS.

  2. Segment Your Analysis: Break down ROAS by different segments to understand how various parts of your campaign are performing. For example, evaluate ROAS for different audience groups, geographical locations, or marketing channels. This can reveal valuable insights that a single, aggregated ROAS figure might obscure.

  3. Combine Metrics: Use ROAS in conjunction with other key performance indicators (KPIs) to get a fuller picture of campaign performance. Metrics such as customer lifetime value (CLTV), engagement rates, and conversion rates can provide additional context that enhances your understanding of ROAS.

  4. Adjust and Optimise: Regularly review and adjust your campaigns based on a holistic view of performance. If a campaign is underperforming in terms of ROAS but excelling in other areas, consider how you can tweak your strategy to better balance immediate returns with long-term goals.


Power in Pairs: ROAS and Other KPIs

ROAS should not be viewed in isolation. Pairing it with other key performance indicators (KPIs) can provide a more comprehensive picture of campaign performance. For example, combining ROAS with customer lifetime value (CLTV) or engagement metrics can reveal deeper insights into how well a campaign is performing. This multifaceted approach helps marketers understand not just the immediate financial return, but also the long-term impact on brand health and customer relationships.

At JACK RYAN, we believe that a deeper understanding of ROAS that expands beyond and elevates above traditional metrics, but its true value lies in a nuanced interpretation that considers the broader context and specific objectives of each campaign. By moving beyond rigid benchmarks and focusing on a comprehensive evaluation of performance, marketers can make more informed decisions that drive both short-term success and long-term growth.

Commentaires


bottom of page