If you're serious about getting the most from your advertising budget, tracking and optimising your ROAS (Return on Ad Spend) is critical. ROAS is one of the most important metrics in digital advertising, as it shows you how much revenue you're generating for every dollar spent. At PDG Advertising, we’ve helped countless businesses improve their ROAS, ensuring their ad spend works harder and delivers greater value.
In this post, we’ll cover:
How to calculate ROAS and what a "good" ROAS looks like
Proven tactics for improving ROAS through better targeting, bidding, and optimisation
Real-life examples of businesses that have increased their ROAS using these strategies
Let's dive in!
What Is ROAS and Why It Matters
ROAS (Return on Ad Spend) is a key metric used to measure the efficiency of your digital ad campaigns. Simply put, ROAS tells you how much revenue you’re making for every dollar you spend on ads.
How to Calculate ROAS
Calculating your ROAS is straightforward. Here’s the formula:
For example, if you spend £1,000 on Google Ads and generate £5,000 in revenue, your ROAS would be 5:1. This means you’re earning £5 for every £1 you spend on advertising.
The higher your ROAS, the better your ads are performing.
What Is a "Good" ROAS?
A "good" ROAS depends on several factors, including your industry, profit margins, and business model. However, many marketers aim for a ROAS of at least 3:1, meaning they want to make £3 for every £1 spent. For some industries, like e-commerce with slim profit margins, a lower ROAS may still be profitable. On the other hand, high-ticket industries may expect ROAS figures much higher, such as 10:1 or more.
It’s essential to understand your break-even ROAS—this is the point where you’re not losing or making money. Once you know this, you can set realistic goals to improve your ROAS and drive higher profits.
Proven Tactics for Improving ROAS
Now that you understand what ROAS is and how to calculate it, let’s explore actionable strategies to improve your ROAS and maximise your ad spend.
1. Focus on High-Performing Keywords and Audiences
Keyword targeting and audience segmentation are the foundation of any effective campaign. To improve ROAS, it’s essential to focus your ad spend on the keywords and audiences that deliver the highest returns.
Tactics:
Identify high-performing keywords: Use Google Ads data to find keywords with high conversion rates and a good cost-per-click (CPC). Focus your budget on these keywords.
Audience segmentation: Create custom audiences based on behaviour, demographics, and interests. Target users who are most likely to convert and exclude low-value audiences to save budget.
Leverage remarketing: Show ads to users who’ve previously interacted with your brand, as they’re more likely to convert. Remarketing campaigns often generate a higher ROAS than cold outreach.
2. Optimise Your Ad Copy and Creative
Your ad copy and creative play a massive role in persuading potential customers to take action. Poorly crafted ads can lead to wasted ad spend and a lower ROAS, even if your targeting is spot-on.
Tactics:
A/B test ad copy: Test different headlines, descriptions, and calls to action (CTAs) to find the winning combination that resonates with your audience.
Tailor your message: Personalise your ad copy based on audience segments. For instance, first-time visitors might respond to discounts, while returning customers may prefer free shipping or exclusive deals.
Use compelling visuals: Eye-catching imagery or videos can boost engagement rates, particularly on social platforms like Facebook and Instagram.
3. Optimise Your Landing Pages for Conversions
Driving traffic to your site is only half the battle. If your landing pages aren’t optimised for conversions, your ROAS will suffer. By improving user experience and making it easier for visitors to convert, you can increase the value of each ad click.
Tactics:
Ensure fast page load times: A slow-loading page leads to higher bounce rates, resulting in lost sales. Optimise your landing pages to load quickly, especially on mobile devices.
Match ad messaging to landing page content: Ensure the messaging in your ad is consistent with what visitors find on your landing page. This alignment builds trust and encourages conversions.
Use clear CTAs: Make sure your call-to-action buttons are prominent and easy to find, leading users toward conversion goals like purchases, sign-ups, or form submissions.
4. Prioritise Manual Bidding for Better Control
While automated bidding strategies can save time, manual bidding gives you more direct control over how much you're willing to spend for each click, impression, or conversion. With manual bidding, you can adjust your bids based on real-time data, giving you the flexibility to react to campaign performance and make more informed decisions that can boost your ROAS.
Why Manual Bidding Is Better for ROAS:
Greater Control: Unlike automated bidding, manual bidding allows you to adjust bids on specific keywords, ad groups, or placements. You have the flexibility to bid higher on high-performing keywords and lower on those that don’t drive conversions.
Informed Decision Making: With manual bidding, you can use your own data and intuition to guide decisions, rather than relying on algorithms that may not fully understand your business goals or margins.
Tailored to Your Goals: Whether your goal is to drive traffic, generate leads, or increase sales, manual bidding allows you to align your bidding strategy with your exact business objectives, helping you maximise returns.
Tactics:
Set Custom Bids for High-Performing Keywords: Use manual bidding to set higher bids on the keywords that consistently drive conversions or high-value sales. This ensures you capture more qualified traffic for your top-performing search terms.
Adjust Bids Based on Device, Location, and Time of Day: Manual bidding lets you fine-tune your strategy by setting custom bids based on when and where your ads perform best. For example, if mobile users convert more frequently, you can bid higher for mobile traffic during peak conversion hours.
Monitor Campaign Performance and React Quickly: Manual bidding allows you to make immediate adjustments to your bids based on current campaign performance, giving you the agility to react to market trends or competitor activity.
By maintaining full control over your bids, manual bidding empowers you to optimise your ROAS and ensure you're investing your ad budget where it makes the biggest impact.
5. Analyse and Optimise Campaign Performance Regularly
The digital advertising landscape is constantly evolving, and so are your campaign metrics. Regular analysis and optimisation are key to improving ROAS.
Tactics:
Track conversion data: Regularly review your conversion data to identify high-performing campaigns, ad groups, and keywords. Reallocate your budget to what’s working.
Pause underperforming campaigns: Don’t waste money on campaigns with a low ROAS. Instead, pause them and focus on those delivering better returns.
Refine audience targeting: Use Google Analytics and Ads data to refine your audience targeting, focusing more on users who are most likely to convert.
Real-Life Examples: How We Helped Businesses Boost ROAS
At PDG Advertising, we’ve seen firsthand how optimising ROAS can transform businesses. Here are two examples of clients we’ve helped improve their return on ad spend:
Example 1: E-commerce Brand Increases ROAS by 60%
An e-commerce client was struggling with a low ROAS of 1.5 on their Google Ads campaigns. After an in-depth audit, we implemented a strategy focusing on:
Shifting ad spend to high-converting keywords
Enhancing their ad copy with personalised offers
Implementing a remarketing campaign for past website visitors
Within three months, the client’s ROAS jumped to 2.4, and their revenue increased by 30%.
Example 2: Therapy Clinic Lowers CPA and Boosts ROAS
A Therapy Clinc wanted to reduce their cost per acquisition (CPA) while increasing their ROAS. By implementing automated bidding strategies and optimising their landing pages for lead generation, we helped them:
Reduce their CPA by 70%
Increase their ROAS from 0.3 to 1.8
The client saw higher returns without increasing their ad spend.
Final Thoughts: Start Optimising Your ROAS Today
Optimising your ROAS is essential for maximising the impact of your advertising budget. By tracking the right metrics and continuously improving your ad strategy, you can achieve higher revenue, lower costs, and greater profitability.
At PDG Advertising, we specialise in helping businesses just like yours improve their ROAS and get the most out of their digital advertising efforts. Ready to see how we can help you? Contact us today for a free consultation!
Ready to maximise your ad spend? Let’s chat.
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