What's ROI and ROAS?
ROI is your return on investment for all of your marketing efforts. Every dollar you put into marketing, you should get that amount plus one dollar back – that’s your breakeven point. If you make more, that’s a positive ROI, if you make less, that’s a negative ROI. If your ROI is negative, you need to rethink your marketing efforts. Is your money being spent on investing in marketing or are you setting out for conversions, just not making them? In addition to ROI, you also need to consider ROAS.
ROAS, Return on Ad Spend, is not focused on all of your marketing strategies, but specifically on your return on advertising expenditure. What is the gross revenue that you’re making on your ad campaign (running ads on Google, Facebook, etc.)?
The ROAS metrics allow us to determine what the best platform is to advertise on and what marketing strategy will work best. For Google, the ROAS metrics would show us which keywords would be best to use to optimize your business’ quantity and quality of traffic on the search engine – Search Engine Optimization (SEO).
Forget ROI, What's a Good ROAS?
There is no right answer. The marketing team will dissect and analyze the information you’re coming in with and will determine from there what a good ROAS is. Do you have leading metrics, or does the marketing team have to run them?
Leading ROI and ROAS Metrics
A leading metric is anything that is “top of funnel”! Think brand awareness; your newsletter subscribers, blog posts, running ads to get followers, website and landing pages. Do you need users to put items in their shopping cart and retarget them that way? Anything to get them interested in the brand itself.
Data Accessibility for Your Marketing Team
There are marketing agencies who will hold your data as their property. If you don’t have access to the data collected then collecting data is a bit of an investment period. Collecting the data will later turn into conversions.
If the marketing team has the data from you, then it’s possible to know what strategy would be best to start with. A fair conversion rate would be 1:3, for every dollar you spend earning three dollars back would be optimal. However, this is dependent on your business cycle. If you’re a new business, the return on investment might not be so high.
Why Choose Siva?
At Siva, the information we collect for your marketing belongs to you. Agencies hold the ROAS data because they know that it’s the most important aspect of creating a solid marketing strategy. If you go to a new agency without the ad spend data, you’re starting the investment period all over again. If you have already spent 20,000 dollars, for example, and you can’t have access to the data from the previous agency, the information that you gained from that is useless to your marketing campaign with the new agency.
It is important for us to have the data collected so that we can track ourselves and ensure that we are successfully executing the best strategy suited to your business. Your money is used for the advertisements, so you will always have access to it.