Summary
What is Return on Ad Spend (ROAS) and how do you calculate it?
Use first-party data to create engaged look-a-like audiences
Audit your keyword targeting and exclusions
Testing new creative formats and copy
Try out different creative formats
Test different copy with A/B testing
When faced with decreasing returns on ad spend (ROAS) in your digital marketing campaigns, it can be difficult to pinpoint the best way to make an impact, and improve performance.
From refining your audience targeting and adding new creative into the mix, to optimising landing pages with conversion in mind, there are some key areas to focus your attention on to raise your ROAS.
In this guide, we will take you through some practical strategies that can improve your return on ad spend and help you to use your ad spend more efficiently and effectively.
What is Return on Ad Spend (ROAS)?
Return on ad spend, or ROAS, is a key performance indicator that helps you to understand how much money you generate for every pound you spend on advertising.
To calculate your ROAS, take your overall revenue generated from ads and divide it by your overall ad spend.
For example, if your ad budget is £1,000 a month, and your ads generate £5,000 a month, your ROAS is 500%, or 5:1.
As a rule, you want to aim for a ROAS of 1 or above, as this means you are making a profit, or return, on your ads.
Refine your targeting
The first area that you can look to optimise is your targeting. The key to improving your ROAS is to ensure that your ads are showing to your target audience.
Use first-party data to create engaged lookalike audiences
Your existing customers might hold the key to finding new customers! Utilising your first-party data to create lookalike audiences is a great way to target people with similar profiles and purchasing habits to your existing customers.
Through targeting lookalike audiences, you are more likely to find engaged consumers with high intent, leading to increased ROAS and more efficient use of budget.
Audit your keyword targeting and exclusions
Targeting specific, relevant keywords will ensure your ads reach a highly engaged audience who are more likely to convert.
Analyse the performance of exact match keywords and phrases against broach match ones to help you understand what terms are giving you a higher or lower CPA (cost per acquisition). This will help you to refine your strategy and increase your ROAS by targeting those with higher purchase intent.
Refining your negative keywords is as important when it comes to improving your ROAS. Be sure to exclude terms that haven’t converted in your current targeting, or ones that are irrelevant to your product or service.
Testing new creative formats and copy
Another way to increase ROAS is to add more creatives into your campaigns and test out new platforms or placements.
Try out different creative formats
Expanding your creative formats can help to unlock new ad placements across different platforms like paid social or display advertising.
Diversifying your creative ad suite by adding new formats, messaging or sizes into the mix can help decrease the frequency of audiences seeing the same ad. This can help combat ad fatigue and ultimately increase your ROAS.
Test different copy with A/B testing
Trying out different messaging in your ad copy can help you understand what resonates with your audience and what generates more engagement on your ads.
Testing different headline copy and call to action (CTA) wording can help you create a bank of ad copy that you can continually refine and test to optimise your ads with conversion in mind.
Take a full-funnel approach
Are your ads only focused on brand awareness or bottom of the funnel (BoFu) conversions with strong CTAs? Ensuring that you have ads that are tailored to each stage of the funnel can help
Build brand awareness with lookalike audiences and refine your targeting by analysing the performance of your existing data
Utilise retargeting audiences for people who have recently visited your site to capture them in their consideration phase.
Optimise your landing pages to increase conversions
While your ads may be effective in generating interest and achieving high click-through rates, the landing page your ads are leading to are pivotal in closing the deal and finalising the conversion
Ensure that the landing pages prioritise user experience, with fast loading speeds and a mix of different content, from copy to images and videos, that help illustrate your unique selling point (USP). Aligning your ad copy with landing page copy will help potential customers understand your offering and increase conversions.
Focusing on creating landing pages that convert will lead to a seamless consumer journey and a clear path to purchase from ad click to check out.
Final Thoughts
To tackle dropping return on ad spend, the key is to take a practical and pragmatic approach to turn the tide.
Analysing your existing ad copy, creative, targeting and landing pages can help you to test new formats and refine your strategy, leading to improved ROAS, generating more revenue without investing more budget.
