Companies in the e-commerce space face greater competition than ever, therefore it’s crucial that you make the most of your advertising dollars.
Return on investment (ROI), cost per click (CPC), average order value (AOV), and return on advertising spend (ROAS) are among the most often used e-commerce metrics by businesses .
While most top advertising agencies have a firm grasp on basic metric calculation and tracking, many have a hard time defining ROAS or differentiating it from ROI.
What is ROAS?
Return on ad spend (ROAS) is a metric for evaluating the efficacy of your advertising initiatives. It is the amount of money made for every dollar spent on ads.
How to improve your ROAS?
Remember, ROAS is calculated by dividing the total income generated by your advertisements by the cost of those ads. If revenue grows while ad expenditure stays the same, your ROAS will rise.
Poor ad campaign performance may be attributed to a variety of factors, including bad audience targeting, a low click-through rate (i.e., poor creativity), or a low conversion rate.
Conversion Optimization is the key:
While we are not designers, we are quite knowledgeable about conversions. Investing in conversion optimization benefits your whole site traffic, not just your ad campaigns, which is why we suggest beginning there.
How can you boost your ROAS? It’s simple: by conversion rate optimization (CRO). CRO may be used to:
- Reduce friction and increase the number of individuals who click on your advertising who become paying customers.
- Optimize your landing pages and product pages to provide a smooth shopping experience that will entice customers to purchase more (increase average order value).
- Reduce cart abandonment, which means more consumers will complete a transaction on your site.
There are several contact points between advertising and payment. CRO may (and should) be used to smooth down the conversion path at any (or all) possible pain spots.
By minimizing friction from the user route, you can provide your clients with a more smooth purchasing experience. We’ve seen ecommerce websites quadruple their ROAS after using an optimization strategy.
It’s not unusual for top advertising agencies to work with a client that is willing to abandon pay-per-click advertising entirely. We commonly hear from ecommerce firms that PPC advertising is either unsuitable for their needs or a waste of time and money.
Here’s the thing: when we apply good conversion rate optimization techniques to landing pages and the checkout process, and that same organisation gives PPC another chance, they’re always shocked by the impact CRO has on the efficiency of their campaigns.
By assessing your current ROAS and then integrating conversion rate optimization concepts, you’ll be well on your way to enhancing your company’s ROAS for future advertising and digital marketing initiatives.
Reach360 is one of the top advertising agencies in India that specializes in developing dependable advertising marketing strategies that helps you achieve maximum returns on lower ad budgets. Being one of the top advertising agencies in India, our team consists of a panel of experts that help you grow your business.