When you first dive into the world of business analytics, you get hit pretty quickly with a virtual blizzard of acronyms: KPI, ROI, ETL, and others still. Here at Foottraffik, we tend to stick with the ones that actually deliver valuable insights and actionable data. And one of the most important ones—by far—is ROAS, or Return on Ad Spend. It’s a measure of how much you earn in revenue compared with what you spend on advertising. And because ROAS focuses squarely on individual ad campaigns, it’s the clearest and most intuitive way to determine which of your ad campaigns is working best for you.
We’ve touched on ROAS before, and how it contributes to the culture of transparency and inclusivity we work hard to foster here. Today, we want to take the conversation further: Once you’ve determined your ROAS, how do you improve it?
But first, let’s be crystal-clear on the concept.
3 Ways to Improve Your ROAS: Basic Terms and Expectations
At its core, ROAS is the revenue attributable to a specific campaign or channel, divided by the amount spent on that campaign or channel. If you made $100,000 on your $5,000 display ads campaign, your ROAS is $20 for every dollar spent. Because ROAS is typically expressed as a ratio, you’d call that ROAS “20:1.”
What sort of ROAS should you aim for? The answer varies greatly depending on the industry, the channel, and numerous other variables. That said, many businesses aim for a 4:1 ROAS. That said, it’s difficult to push certain platforms to that level. According to one estimate, the average ROAS for Google Ads is roughly 2:1.
That’s not necessarily a negative. After all, earning twice what you spend isn’t a bad way to make a living. But it leads us to the main thrust of this article: If you’re disappointed in your ROAS, how can you improve it?
3 Ways to Improve Your ROAS: Specific Tips and Tricks
As we’ve written before, the process of creating truly effective ad campaigns is one of continual adjustment and experimentation. Here are a few of the variables we tinker with when we’re pushing our clients’ campaigns to perform at peak efficiency and effectiveness.
Try Different Ad Placements
Digitals ads can appear nearly anywhere in the online space: Media and e-commerce sites, newsfeeds, videos, and elsewhere. Experimenting with banner ads vs. display ads, pop-ups or videos will give you valuable insights as to what connects with potential customers.
Ads placed in newsfeeds often convert better than other placements, for instance. And video ads can be placed pre-roll or mid-roll, and there are upsides and downsides to both approaches. And—given that we’re in the dispensary marketing business—we’re big on mobile-only ads, seeing that’s how a majority of cannabis consumers do their shopping.
Know Your Audience
That’s a perfect segue into the importance of understanding your audience and their browsing and buying patterns. As you’re no doubt aware, we’re huge on hyperlocal marketing, the practice of using location-based targeting to narrow in on consumers in discrete locations to increase the odds of converting. We’re not the only ones: Google offers a program called Local Campaigns to achieve much the same result. And though social media platforms typically restrict cannabis marketing, it is totally possible (and advisable) to use their robust audience targeting capabilities to make sure you’re focusing on the most appropriate segment of social users.
Mix and Match Keywords
Keywords are in many regards the heart of the matter in digital marketing, and your choice of keywords has an outsize effect on overall ad effectiveness. While it’s understandable that you’d be drawn to bid on the most popular and generic keywords, that can actually be a losing strategy. As the cannabis market becomes tighter and more competitive, we’re seeing a trend towards greater specificity. By choosing less-used keywords (and bundling them into longer strings), a thrifty but well-designed campaign can outperform better-funded but less nimble ones.
Need help choosing the best keywords? There are plenty of standalone tools, and Google has its own free offering: The Keyword Planner that’s built right into Google Ads. Just as importantly, you can select negative keywords which will automatically exclude your ad being shown with an incompatible entry, thus saving your money.
3 Ways to Improve Your ROAS: In Conclusion
As we hope we’ve made clear, ROAS is a hugely useful and important metric to keep in mind, and it’s one of the benchmarks we lean on most heavily on a day-to-day basis. But it’s equally important to view ROAS on a continuum. Even when ads are performing well, there are always opportunities to tweak and improve the results. So perhaps it’s best to see ROAS ratios as waypoints on a map as you chart a course towards greater success.
And if your map looks a little cloudy at the moment, let us help. We use all the cutting-edge tools and approaches we just described (and a great deal more of them) to help dispensaries achieve powerful, real-world results. Want to get the conversation rolling? All you need to do is ask.