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Return on Ad Spend (ROAS): Why It’s the Most Important PPC Stat

Why ROAS is the most important metric in PPC Ads for Facebook Ads and Google Ads - Marketing Agency Newmarket, Aurora, Barrie, Keswick, Uxbridge

At Rosewood we believe in a well-rounded marketing strategy. 99% of businesses need a website, and a combination of organic and paid marketing to drive traffic to it. Finding the right balance of each is different per business and depends on your marketing campaign goals.

If you run an online store, this blog is for you.  We’re going to dive into ROAS, what it is, how to calculate it, how to set your benchmarks and what you should be aiming for.

What is ROAS?

Return on Ad Spend (ROAS) is the value of the sales generated via clicks through your ads. Your return on investment, but in this case specifically your return on ad spend. In order to get an accurate ROAS metric, you’ll need to have Conversion Tracking setup & enabled on your website via Google Ads Tags or the Facebook Pixel.

The Golden ROAS Rule

The golden rule in ROAS metrics is that for every $1 you spend; you want to make $2.  This is an ROAS of 2.

How to Calculate Your ROAS?

Most platforms have an ROAS calculation built into them (Facebook Ads Manager and Google Ads). You can enable it but customizing your columns in the Ads Manager settings.  To calculate manually, you take the value of the sales and divide it by the cost of the ads campaign.

ROAS = Sales / Spend

  • Example:

    • Website Sales of $100
    • Ad Spend of $20
    • Calculate: 100/20
    • ROAS = 5

Article Key Summary

  • ROAS (Return on Ad Spend) is like ROI but specific to ads.
  • Calculate ROAS = Sales / Spend
  • Golden Rule: ROAS of 2 or more
  • As long as your ROAS is positive, you want to keep spending money on your ads.
  • If your ROAS is negative, reduce your spend and tweak your campaign until it’s positive.

If you have an online store, ROAS is the primary metric we recommend you track.  Other metrics can be deceiving, such as Cost Per Click. This cost per click might be very high, but if it is translating into multi-item high-ticket sales and the ROAS is high – then it’s worth it.

For more information on Google Ads and Facebook/Instagram Ads, please reach out for a complimentary consultation. We love helping small businesses succeed!

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Entrepreneurs in Residence

What Does Being An Entrepreneur Mean To You?

Being an entrepreneur means taking an idea and turning it into a reality. As a result, it gives an individual the freedom to express their creativity and explore beyond average boundaries.

Join Us!

We invite you to join us on Thursday, November 14th from 7:00 pm – 9:00 pm in the Aurora Public Library Living Room where four local entrepreneurs will share their stories and inspire others to take on the journey of becoming a self made entrepreneur. 

The Journey of Rosewood

The founder of Rosewood, Deanna Simone, will be sharing her journey as an entrepreneur and why Rosewood chooses to focus solely on serving entrepreneurs and small businesses. Deanna gets to know your business inside and out and finds the best ways to market it. Owning your own business is personal, and she believes in becoming a team to work together toward mutual success. She has made it Rosewood’s mission to provide online marketing strategies that reflect your business goals. Rosewood prides ourselves on honesty and transparency, translating technical concepts into terms that business owners can understand and appreciate.

Meet the Other Entrepreneurs in Residence Speakers

The speakers of the November 14th event will bring great background knowledge and experience that you can benefit from for your own business. Kimberley Smith is the Marketing Consultant, Instagram and Facebook Designer and Owner of Young at Heart Painting. Kimberley believes in “providing creative solutions to help improve the lives of others.” Another speaker of the event is Emily Chung, Licensed Technician and Owner of AutoNiche. Emily lives by the motto, “mental grit for the entrepreneurial journey.” Finally, Carl Milroy will be speaking at the event. Carl is the President and Managing Partner of Red Thread Brewing Co. Carl believes simply, “It’s what connects us.” 

Why Is It Important To Share Experiences and Learn From Each Others Mistakes?

It is important to share our experiences to not only learn from each other’s mistakes, but to understand that every entrepreneur will experience failure before success and to not feel discouraged in times of failure. Sharing experiences is a great way for entrepreneurs to bounce ideas off each other. It is also a great way to find some tools and skills that may work for you. Passing on knowledge from experienced entrepreneurs to those who are just starting out can be a great way to find yourself a mentor or even become a mentor for someone who is new to entrepreneurship.

 

This is a great opportunity to meet with new visionaries who share your same drive to succeed. There will be a Q&A with attendees after the speaking. We also have a Smartboard available for your use and refreshments for you to enjoy.

Click here to register for the Entrepreneurs in Residence event! 

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Are You Accurately Tracking Your Marketing Efforts and ROI?

Are you accurately measuring your marketing ROI?

Whether you’re working with Rosewood or another marketing agency, you should read this blog from beginning to end.  We’re probably one of the only marketing agencies that will say this but, marketing is not something you should just keep dumping money into. Are you doing your part to measure your marketing ROI?

Most small businesses are running marketing strategies in some capacity.

  • Google Ads or BING Ads (Search Engine Marketing SEM),
  • Social Media Ads (Facebook Ads, Instagram Ads, LinkedIn Ads),
  • Organic Search Engine Optimization (SEO),
  • Video Marketing,
  • Backlinking campaigns,
  • PR Campaigns,
  • Radio,
  • Newspaper,
  • Periodicals,
  • Seminars,
  • Workshops,
  • etc.

No matter which one, you NEED to be tracking your ROI.

Online marketing makes it easy to measure TRAFFIC, but not necessarily CONVERSIONS.

Unless you are selling products via an online store, you can lose track of what happens from when someone visits your website or sees your ad, to if/when they actually convert into a customer.

The Solution? Get Back to Basics

This is where the onus is on you, the business owner.  We absolutely recommend that you have a client onboarding process in place that requires new clients to specify how they found you, or what made them ultimately convert. It’s as simple as asking them how they found you or having a short online survey that’s sent after initial contact or the first meeting.

Scenarios:

More than likely, it is a combination of marketing mediums:

  • Maybe their colleague mentioned you to them, they started doing some research about you, and then a few days/weeks later they see an ad and that’s what convinces them to call/visit you.
    • ROI came from Referrals x Google Ads (SEM)

 

  • Maybe they simply needed a quick solution, Googled you and saw your convincing Google Ad. They then went on your website and it established trust with them to reach out to you.
    • ROI came from Google Ads (SEM) x Website Content

 

  • Maybe it was solely a referral from a friend they trusted because of your excellent work.
    • ROI came from Referrals, Customer Retention & Nurturing

 

  • Perhaps they Googled a specific question, which your most recent article answered and showed up organically on the front page in Google Search Results.
    • ROI came from Organic SEO

Are You Using These Results to Improve Your Marketing Efforts and ROI?

Depending on what these results show, you should be tweaking your Marketing Campaigns to reflect them.

If your business is 90% referral based, think about how you can:

  • Improve your customer’s experience so they continue to refer you
  • Instate a referral program that rewards clients for their referrals
  • Create a Customer Retention and Nurturing campaign that keeps you top of mind and educates your existing clients on other services you provide. They may not need them but may know someone who does

In the coming weeks we’ll expand on the different marketing mediums that are available to small/medium businesses with Rosewood as your marketing partner. The great thing about us is that our plans are flexible. We meet with business owners quarterly to adjust their marketing strategy and make sure it reflects the data results and projections.

For more info & #inspo you can follow us on Facebook, Instagram and LinkedIn. And don’t forget to sign up for our monthly newsletter as well!

Deanna

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