Return On Ad Spend (ROAS) has been a buzz word phrase in digital marketing for decades now, but are you properly quantifying your returns? Marketing firms provide strategies, promises, jargon, and industry lingo with a mediocre marketing report. It’s typical. Where they fall short is a misunderstanding that marketing funnels are only a part of the larger picture. In today’s article, ALTAMIT will break down our approach to quantifying your ROAS correctly.

Understanding ROAS:

ROAS is a crucial metric that measures the financial success of a digital advertising campaign. Essentially, it answers the question: "How much revenue did we generate for every dollar spent on advertising?" ROAS is expressed as a ratio, typically with a 1:1 ratio indicating that for every dollar invested in advertising, X dollars are earned in return. The way many firms calculate these numbers are based on Google’s Ad platform and associating a “tag” to buttons like “add to cart”, “checkout”, or form submissions. While that can work to some degree of accuracy for an E-Commerce business, it doesn’t delve deep enough to give other types of business an accurate report of their spending. More on that later.

What Is ROAS Good For:

Up front ROAS can give marketing teams a quick way to identify which advertising channels, campaigns, or keywords are delivering the best results, such as Cost Per Mile (CPM) and Cost Per Click (CPC). This is what ALTAMIT considers the “compass” of a marketing campaign. A good way to see which direction to go in, but unlike a real compass, it doesn’t always point north to profit. Associating Cost Per Acquisition (CPA) to behavior on your website helps give the “compass” a better understanding of what types of individuals may have a better chance of “conversion” to your product or service. But again, we’re still not “quantified”, and you may be burning money for no reason.' 

How Do We Measure ROAS?

Ok, your marketing campaign is flighted, your ads are popping up on websites, your retargeting ads are following your leads around the web, you even have some YouTube bumper ads reminding everyone of you while they swipe through endless YouTube shorts. You have your CPC and CPM, everything looks like it’s working, the phone rings, form submissions came in, you’re gaining new business. Everything’s going great! But wait, is my reporting simply how many clicks vs what I spent? What percentage of my revenue is my marketing eating up? Time to quantify.

How Do We Quantify?

Next stop… CRM station! Your website and digital marketing are only going to give you the front half of the picture. You may have already integrated a Customer Relationship Manager (CRM) like HubSpot, etc., and if you didn’t… you need to. You can read more about how we can help by reading our article on CRMs And How They Can Benefit You. This is where we get the back nine of the data. This is where we track things like the origin of website visitors, the time it takes to close an average lead to a customer, automate follow ups, schedule email campaigns, and get the actual revenue coming into your business.

“Without a properly integrated CRM, you are only seeing the front half of the data. It’s just not sufficient for accurate reporting.”

- Kyle Stafirny, Owner & Lead Developer of ALTAMIT

Now We Can QROAS:

We’ve got your CPM and CPA, and now we have your CRM data. Let’s get to work reporting with accuracy. By using these two data sets in conjunction, we drill down into the specifics and get a much more reliable report. Let’s break down a month of each data set, we take your marketing spend and match that against your real revenue, giving us a clear dollar spent to dollar gained ratio. Now we’re matching apples to apples and not making assumptions that there are specifically defined links between your front end marketing funnel and your backend customer acquisition. But wait… there’s more important things to consider!

Why Is QROAS So Important?

Many customers don’t just buy or sign up for a product or service on the first website visit, it takes time. On top of that, we look at the origin of their first interaction with your business, when they became a customer, how long that took, and associate dollars from a previous month to a closed deal in the future. See the difference? You may have staff working out the details with a customer, there are lead times, you schedule work in advance, etc. The possibilities are endless, and a digital marketing team like ALTAMIT takes the time to report your actual ROAS.

Customizing Your QROAS Report:

Businesses deserve reporting that gives them the insight they are looking for, not just a simple CPC divided by dollars spent. You know your business better than anyone, that’s why you may want to know how your marketing spend in October and November relate to the holiday season. Let’s say spring clean ups are a big revenue steam for your landscaping company, let’s get your name out there in February and March and get those new emails and phone numbers in your CRM so we quantify their cost to acquire against your spring revenue. It’s up to you how you want to see your QROAS. We’re here to adapt to what makes sense for you.

In the end, digital marketing is much more than simply setting a monthly spend and crossing your fingers for customers. Many marketing firms don’t have the expertise to go beyond simple equations and typical reporting. You need to put in the work with the correct setup to have accurate data. We’re barely scratching the surface in this article, we didn’t even touch on website analytics like bounce rates and user behavior, we’ll save that for another article. Your marketing needs to integrate with your customer service, web development, product/service fulfillment, and any other department in the customer lifecycle to effectively prove and quantify your marketing returns. That’s where ALTAMIT comes in.

If you’re looking to launch an effective digital marketing campaign with quantifiable results, contact your local experts at ALTAMIT today. Visit ALTAMIT.net to chat live with an online specialist. Or call (888) 377-ALTA, that’s (888) 377-2582 to speak with a specialist now.