ROAS - the often underappreciated and underutilized metric in the marketing world is an incredibly powerful way to optimize what’s working for the growth of your eCommerce brand. The success of ad campaigns in the eCommerce context depends on several aspects. Metrics like the number of ad clicks, the quantum of post-click conversions, the revenue generated per conversion, and ROAS help you get a clear picture of what your ad spend is doing for you.
If ROAS is on the lower end, it indicates inefficiencies in the allocation of ad spending. While ad campaigns may bring higher traffic to your eCommerce site, the incoming traffic may not be relevant, resulting in low conversion rates. Ideally, you should tweak such campaigns which do not generate revenue to cut down on losses.
A higher ROAS, on the other hand, indicates not only the efficiency of the ad spend but also effectiveness in terms of increased conversion rates. When you are on a limited budget, it becomes all the more important to make every penny you spend on ad campaigns work for you, growing your eCommerce brand while retaining existing customers.
Let us look at 5 ways to maximize ROAS:
1. Aim for the right target audience
Usually, ad campaigns online, be it through Facebook or Google, optimize for traffic. This traffic may or may not be relevant. Getting the right traffic is everything for your eCommerce brand. Without the right targeting, you may still get high traffic to your eCommerce site but this would not lead to high conversion rates. Visitors may find the site not relevant and may quickly leave without making any purchases. This usually happens when your ad campaigns are generic and not customized to the target audience.
For example, you run a premium women’s clothing eCommerce brand, but your ad campaigns target women in general but not by behavior such as their income group, their frequency of online shopping, etc. This may lead to underwhelming responses and subpar results.
Thus, the target audience needs to be narrowed down to a granular level for ad campaigns to work profitably in your favor. Shoptimize’s Growth Platform gives both insights and recommendations in this regard, helping you with the segmentation of users and tracking what’s working and what’s not.
2. Experiment with various channels
Experimenting with various modes of digital marketing can give you a better idea of which channels are working for your eCommerce brand and which are not giving returns as expected. Such experimentation allows you to accurately understand what’s relevant to the target audience and how to deliver it.
For example, for Google Ads, you need to bid for keywords relevant to your eCommerce brand and products. However, on average 76% of the budget is squandered by Google Ads accounts due to poor and incorrect targeting of keywords. By tracking which keywords are working for your eCommerce brand and which aren’t, you can tailor-make your ad campaigns so that they speak to your target audience. Here, a negative list of keywords should also be maintained, otherwise, Google Ads would also be shown for irrelevant searches that do not bring the right traffic.
Similarly, you should also figure out which devices are working for you. If ROAS is maximum on the desktop compared to mobile devices, you should increase ad spending on the desktop. This tweaking and optimizing over time can be ably supported by Growth Platform recommendations and will fine-tune your ad campaigns and lead to maximizing ROAS.
3. Double down on campaigns with better returns
Usually, channels such as Facebook would try to maximize the ad spending on their platforms. However, these may not work optimally for you. You will have to analyze across the board which channels work the most, and what’s working specifically in them, and invest in those specific aspects for better returns and conversions.
For example, you may notice that your ad spends are more on Facebook and Google but you get better returns from email campaigns and WhatsApp communication, which are significantly less expensive. In such cases, you can roll back and spend less on the former and double down on the latter.
Shoptimize’s Growth Platform gives insights and recommendations on aspects such as which ad campaigns are leaking funds, which geographies and user segments need to be targeted, and so on. Within ad campaigns, insights and recommendations are given to specific ad sets and specific ads. This allows you to craft personalized ads for the target audience in their preferred communication channel.
4. Strategize based on attribution models
Attribution models provide valuable insights into customers’ touchpoints before they make a purchase. Touchpoints that lead to most engagements can be capitalized for optimal ad spending. Ad campaigns can be crafted to reach customers at the right time with the right context leading to conversions.
Sometimes, organic growth factors get neglected in the frenzy of ad spending. Social media posts and referral programs can generate engagement and better conversions. The ultimate goal of increasing and retaining customers gets propelled through organic growth as well. Attribution models help you track these factors since conversions rarely occur through a single, direct, or linear ad click.
Shoptimize’s Growth Platform helps you track ad spends and conversions through various attribution models. This way you can find channels where you do not have to spend as much as you generally would, and get better ROAS.
5. Optimize the website (performance)
While ad campaigns can get the right customers to your eCommerce brand, the website itself can make or break their experience. For example, confusing customer flows, high page load times, inadequate product descriptions, and lack of payment options may drive away from the hard-won right audience and leave you with low conversion rates and bleak ROAS.
Tools such as Google Lighthouse give a good analysis of your eCommerce site. They highlight where SEO needs to be optimized, show the time taken for the first buy, and accessibility issues.
Shoptimize’s Growth Platform in addition to this gives you insights such as popular product categories and products, time spent on product pages, and trends in average order values (AOV). These can be used to create product bundles, and offer discounts and free shipping after a certain threshold value, which can increase the revenue generated per each conversion and thereby increase the ROAS.
Shoptimize’s Growth Platform, helps you connect the dots from various sources and see the impact on your eCommerce brand comprehensively. From finding the right target audience through user segmentation by age, gender, location, and other factors to giving insights on the performance of ad campaigns and eCommerce sites, Growth Platform is a single unified interface to track them all. It helps you to realize and unlock the true potential of ad campaigns and maximize ROAS.
ROAS is in turn a key metric to get your overall Customer Acquisition Cost (CAC) optimized. Above mentioned ways will give you a holistic picture of your target audience and their preferred means of communication.
Over time, you can reduce your CAC even further and focus on enhancing the product line and customer experience. This will boost up your Customer Lifetime Value (CLV) and help you gear up towards sustained growth and building strong brand loyalty.