What is a Good ROAS (Return On Ad Spend)?

What is a good ROAS return on ad spend? There are a lot of ways to advertise products and services online, including paid advertising. As a business, you have a number of options, and these all require you to have an ad spend budget. These types of advertising are generally in the form of Pay Per Click and paid social media campaigns. To work out whether or not these paid efforts are worthwhile, you need to have a good ROAS. However, what is a good ROAS and how is it calculated?

What is ROAS?

ROAS – also known as Return on Ad Spend – is a way to gauge how much your business earns for every pound it spends on digital advertising. It looks at how effective your digital advertising efforts are, by comparing how much you have spent and how much you have earned. With a better ROAS, you will earn more from your ad spend. It’s similar to Return on Investment (ROI), and in this case the investment is the money spent on digital advertising.

You might assume that calculating ROAS is a complicated task, but this couldn’t be further from the truth. It’s calculated by dividing your revenue by your ad spend, and 4:1 or 400% is a good figure to aim for. The higher the ROAS, the better.

What Considerations Are There for a Good ROAS?

When you are aiming for good ROAS, there are a few things to consider. Industry, profit margin and cost per click should all be taken into account. If you have a high profit margin, you can afford to have a lower ROAS. Similarly, if your Cost Per Click is low, you can afford to have a lower ROAS as you can drive more volume without spending a fortune.

How to Achieve a Better ROAS?

Achieving a better ROAS relies on you optimising PPC and paid social campaigns effectively. Without an optimised strategy, you are unlikely to see the return on ad spend that you are hoping for. You can improve your ROAS by lowering the cost of your ads, whilst keeping your revenue to the same or boosting it.

It’s also important to use the right keywords for your business. Your chosen keyword needs to be targeted, in order to attract visitors who are looking for the exact product you are advertising. If you are reaching those who aren’t interested in what you are offering, you are unlikely to see any return on your ad spend.

You should also remember that someone clicking on the ad is only the first step, they then need to be converted into a paying customer. This relies on you having an optimised landing page that’s engaging, informative and relevant.

Speak to Our Team

At Profici, we provide a whole host of PPC and paid social media services. We use our expertise and experience to ensure our clients are getting the most out of their budget. To find out more about how we can improve your ROAS, get in touch with our talented team or give us a call on 0151 319 8550.