Articles in The 'ROAS' Tag

August 3 2018

Are you fully maximizing your chance to reach and engage your target audience(s) online? Paid Social Media ads in Facebook, Instagram, LinkedIn, YouTube, and more, are a great way to achieve this. These platforms allow brands to deliver hyper-targeted ads to qualified viewers and drive more effective traffic to their websites.

Posted in: Social Media

May 5 2010

Knowing the Value of a Conversion

Do you know the value of a conversion? It may seem like a basic question, but there are many factors to consider.

For example, ecommerce advertisers may determine the actual value of a conversion as the purchase price of an item. If a person buys a \$100 widget from your site, then the value is \$100. But in the real world we know there are other expenses incurred including overhead, shipping, etc.

If you are participating in online advertising, a way to calculate a value of a conversion is to look at Return on Ad Spend (ROAS). ROAS is simply dollars sold divided by dollars spent.  It means how many dollars you are getting back for every dollar you spend. Going back to our widget example, if an advertiser spent \$20 for advertising on that widget, the ROAS would be 5. 100/20 = 5.  For every dollar you spend, you are getting \$5.

Return on Investment (ROI) is another way to calculate a conversion’s value. The formula for ROI is (Revenue — Spend) divided by spend. This is a way to determine what percentage of spend you are getting back as profit. If you spent \$20 on advertising a widget that sold for \$100, to calculate ROI take (\$100-\$20)/20 * 100 = 400%.  ROI should be as high above 100% as possible. Also, remember to take the lifetime value of a customer into account when examining the value of a conversion.

Regardless of how you measure your success, the important thing is that you are taking steps to track and improve results. Making sound decisions on what efforts are working and not working will surely help to boost your bottom line.

November 12 2008

Be Flexible and Get Creative to Increase Conversions

As we all know, the economy isn’t as strong as we would like. The challenges are stiff, but companies who take advantage of the flexibility of online adverting can still reap big rewards.  Most people start their search for goods and services online, and companies advertising budgets are still rising in the main search engines.  Google reported a 28% increase in online ad revenue in the third quarter, while Microsoft announced an increase of 15%, and Yahoo came in with a modest 1.2% boost.

Given these figures, its obvious advertisers recognize that search is a strong channel to attract and retain customers given a troubled economy.  But spending money online is not enough.  People are shopping more aggressively and will take the extra time to do their competitive analysis before they make a buying decision.  Because of this customer behavior, it is very important to increase your conversion rates.  More consumers shopping multiple offers can mean more traffic to your site, but also more clicks on your ads. If these clicks do not turn into conversions, then your return on ad spend (ROAS) is weakened.

Take advantage of the flexibility that online advertising allows and get creative with your message.  It would be very expensive to create 5 different TV commercials or 5 separate radio spots to communicate your message to potential customers.  However, the cost to accomplish this with a search marketing campaign is minimal compared to traditional marketing channels.  You have the ability to change ad copy every day, or every hour.  You have the flexibility to rotate different messages in your Pay-per-Click (PPC) campaigns to test which works best.  You can get creative with special offers on Tuesdays and Thursdays, 15% off for example, then turn around and create a new offer on Sunday (free shipping on all orders over \$50).  Online ad spending is up but that doesn’t ensure customer acquisition or retention.  You must convert that traffic for the campaign to be a success.  Be flexible, get creative and increase the chances that your message is the one that convinces a searcher that they should buy from you!