Digital analytics changes the way businesses understand campaign performance. It allows marketers to personalize, prioritize and optimize.
Where they previously collected long-term data and painstakingly monitored programs over time, they now have access to quantitative data in real-time.
However, the principles of a successful campaign remain the same. ROAS (Return on Advertising Spend) remains a primary KPI for many businesses.
But fixating on this figure alone, especially over short time spans, might be having the opposite effect. It’s much better to understand where ROAS fits in digital marketing programs, and what it contributes to those programs.
Then it can be a foundation for improvement.
ROAS as a journey
When taking a customer on a journey from not knowing who you are to being a recurring and referring customer, you need to consider the many steps involved in the customer acquisition journey. That will likely extend to subsequent customer relationships and up-sell opportunities.
The tried and tested funnel in sales doesn’t change just because you’re using digital platforms, even if the rigid funnel is now blurred for many organizations. Opportunities and prospects enter the funnel at different levels and stages. They can bounce around like flies in a bottle, absorbing content and being guided by your digital marketing cues, value and suggestions, along the path to acquisition.
But marketers need different targets and measures for each stage of the digital funnel. Customers develop awareness of your brand through impressions and views. If the message appeals to them, they will spend time researching and considering before making their decision.
Most crucially, taking this structured, data-led, performance-led approach means you understand what’s working for them. You can start to understand where they are on their journey, whether or not they are starting to leave your digital sales funnel, how you might attract them back, and so on.
By knowing what’s working, what’s happening, and knowing where and when, marketers can become increasingly confident about the quality and relevance of the experience they’re creating.
Any digital media plan needs to answer all aspects of the digital funnel, from prospect to satisfied return customer.
Why do businesses love ROAS?
ROAS is a valuable metric for determining a value exchange, dollar for dollar. It can drive both the top and the bottom line, and everyone in an organization needs to understand what that means. The days of the expert data savant in an ivory tower are gone.
It’s also an indicator of where the budget should be spent. If marketers can predict a return and understand the multiple return based on invested dollars, they know what spend can be justified. Marketing becomes an investment (not a cost).
And as a result, marketers can make the best-possible case for that budget. (The alternative is guessing, which no longer passes muster.)
Conversions are a logical goal for many businesses, in the form of sales, enquiries, sign-ups, last clicks or something else. ROAS is particularly important for e-commerce businesses that rely on investment to generate their income and profitability.
With access to digital analytics and insights, made as simple as possible without dumbing down the data, ROAS is easy to measure and report. At that point, the wider business can also then appreciate the precise value being delivered.
What does a successful campaign look like to you?
Think about your last digital campaign. During the planning, you most likely set objectives you wanted to meet. They gave you a way to measure success.
You may have determined you wanted to drive a certain number of sales or website visits, hold user attention, grow your platform audiences, or build a brand.
The answer to “What does a successful campaign look like?” must start with, “It depends on what you set out to achieve.”
Taken in isolation, ROAS tells you one part of that success story. Understanding whether a customer is a new one or an existing one, and overlaying the lifetime value of that customer, gives you a significantly different view and indicators of return on investment.
Other key measures of value are understanding the customer journey. What brings them to you, do they stay and convert at your destination? Do they continue their journey to learn more, or do they bounce? Do they repeat buy, do they only engage around discounted offers, do they refer you? You must have a complete view of the targets and results you need to reach for a fully optimized digital sales funnel.
There are many metrics you should also consider in combination:
- Amount of organic referred traffic v. paid traffic to website, understanding each source, and which platform is driving traffic
- If paid, cost of impression/video view
- If paid, cost of engagement and % of engagements
- If paid, cost of click throughs % click-through rates to website
- If paid, cost of lead (converting from a lower-cost email acquisition may provide a lower cost of acquisition overall)
- Total sales – organic v. paid
- ROAS – Return on Advertising Spend
- Total campaign return (invested dollars/lifetime value)
- Website health on mobile and desktop – how fast it loads, how many people stay on site, the number of pages viewed (and which pages) before taking a final value action (sales/leads/registration/email sign-ups, etc.)
Insights are valuable when you look at your entire search, organic, earned and paid digital and website experience, across social media, and more.
If you are driving traffic to your website but not converting enough, it could be that your website is difficult to navigate, or the content leaves visitors cold. Your value proposition might be unclear, or there could be a technical issue with the checkout process.
All of these represent intelligence of real value. They help you understand where you can focus next to improve results. With data leading the inputs, and with all other variables accounted for, the conclusions suddenly become crystal clear. Looking at where customers get stuck or where they convert on your website allows you to focus on what to improve and test improvements for next. But you won’t know for sure unless you spend time looking at other metrics in addition to your ROAS.
Digital marketing means that the relationship between customer and brand has never been closer.
The job of your digital marketing strategy is to create these human experiences.
Which means doing better, not just more.