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What happened when the historic COVID-19 pandemic forced businesses to shut down their stores? They discovered a whole new world of possibilities with the world wide web. Amidst the many industries that saw an economic slowdown during this period, the eCommerce industry boomed exponentially. Many businesses established their own direct to consumer (D2C) websites and are now catering to a broader audience base than before. However, this also meant spending high on online advertising to get new customers and even retain old ones. While the ad spends have increased significantly, marking 32% growth in 2022 and 40% in 2023, there has been a substantial increase in ROAS (return on ad spends) as well.
But what is ROAS? How can D2C brands increase return on ad spends amidst stiff online competition to scale, increase conversions and reduce customer acquisition costs? In this blog, we’ll touchbase on these important aspects.
Let’s get started.
- What is Return On Ad Spends (ROAS)?
- How To Calculate ROAS?
- How To Increase ROAS And Get More From Ad Spends in 2023? 1. Optimise Your Ad Cost
- 2. Optimise Your Landing Pages
- 3. Focus On Increasing Customer Lifetime Value
- 4. Observe Your Competitor’s Strategies
- 5. Choose The Highest Converting Ad Platforms
What is Return On Ad Spends (ROAS)?
ROAS, short for return-on-ad-spends, is a means to measure the performance of a paid media campaign. Ideally, ROAS is an excellent technique to measure how efficiently you’re spending your money on a specific channel and whether or not you’re gaining any returns on it. It allows you to track and compare the effectiveness of your ad campaigns such as whether or not you’re,
Besides these, measuring ROAS data is also helpful because, unlike other marketing techniques, it tracks conversion rather than just counting clicks.
How To Calculate ROAS?
The formula to calculate ROAS is fairly simple – divide the total revenue earned by the total amount spent on advertising.
Return-on-ad-spends (ROAS) = Total revenue earned / Total amount spent on advertising
To give you an example, if you’ve spent INR 20,000/- on a paid campaign and you earned a revenue of INR 60,000/-, your ROAS ratio would be 3:1 This means, for every rupee you spent on the advertising campaign, you earned a revenue of INR 3/-.
Conceptually this seems like a doable thing. But is it so? How to maximise your ROAS in 2023? Let’s take a look.
How To Increase ROAS And Get More From Ad Spends in 2023?
Google Quality Score
Click-through rate (CTR)
A user’s landing page experience
Ad design
Ad copy, especially the headline
Placement of the ad
Call to action (CTA) buttons
Your unique value offer(s)
- Personalise –
Personalise your landing pages in a way that not only matches a prospect’s pre-and post-click experience but also appeals to their needs and goals. Doing this will surely increase your return on ad spends.
- Pay Attention To Page Speed –
Speed is a very critical factor with respect to a good user experience. If your landing page’s load speed is low, the chances of bounce rate increase exponentially. Your website’s ideal load speed must be 2 seconds or less to ensure high engagement and hence, resulting ROAS.
- Customize Your Checkout Experience –
Besides the above-mentioned two factors, focus on offering a seamless checkout and payment experience. To give you an example, boAt offers a smooth checkout flow powered by GoKwik. Quick login and address pre-fill features along with easy discount discoverability and preferred payment options allow buyers to complete their entire purchase within a matter of seconds.
Use Cookies and Meta pixels to track the visitors that left your site without converting into paying customers. Use retargeting methods to win them back
Run rewards and loyalty programs to encourage customers to make more desired actions
Opt for upselling and cross-selling. Give your customers bundled products, complimentary gifts, free shipping, or temporary upgrades to encourage more orders. This will help increase average order value, overall revenue and high ROAS
Building consumer relationships
Brand and product discoverability,
Building buying interest
Maximising return on advertising
- Google Quality Score
- Click-through rate (CTR)
- A user’s landing page experience
- Ad design
- Ad copy, especially the headline
- Placement of the ad
- Call to action (CTA) buttons
- Your unique value offer(s)
- Use Cookies and Meta pixels to track the visitors that left your site without converting into paying customers. Use retargeting methods to win them back
- Run rewards and loyalty programs to encourage customers to make more desired actions
- Opt for upselling and cross-selling. Give your customers bundled products, complimentary gifts, free shipping, or temporary upgrades to encourage more orders. This will help increase average order value, overall revenue and high ROAS
- Building consumer relationships
- Brand and product discoverability,
- Building buying interest
- Maximising return on advertising
Conclusion
ROAS, or return on ad spend, is a very tricky game. While the components involved may seem simple, following the nitty gritty can help your brand bag success. Rigorously following these 5 tips can significantly help to increase your D2C brand’s ROAS, increase conversions and decrease customer acquisition costs exponentially.
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