ROAS will change your life.
ROAS stands for Return on Ad Spend.
Essentially, ROAS tells you how many dollars you get back for every dollar that you’ve spent on ads.
For example, if you spent $1,000 on an advertisement and you know that it resulted in $6,000 in sales, you have a ROAS of 6.
Scale that sucker.
More than any other metric, ROAS will tell you the health and quality of your advertising campaign.
When ROAS is high, it’s exciting because it can feel like you are printing money. When it’s low, it can serve as a warning and prevent you from wasting money.
We’ve seen it happen too often, when business owners don’t really know if their marketing is working or not and they just keep pumping in money because they feel like they need to “do something.”
If you are spending money on advertising (or you’re paying someone else to do it on your behalf), you need to be tracking ROAS.
What is a good ROAS on Facebook?
If you hit a ROAS of one, you’re breaking even, and that can be a very good thing. It means that it didn’t cost you anything to acquire that customer!
Anything above one is gravy.
We always set a ROAS goal of two for our campaigns, but it’s not uncommon for us to see ROAS of six or seven.
A lot is going to depend on your industry and your level of competition.
How Can I Improve ROAS?
The short answer is: make better ads.
Your ads should be:
- Clear. A confused mind says no. Make your message as simple as possible. Ruthlessly cut out anything that doesn’t need to be there.
- Relevant to your audience. Enter the conversation that’s already happening in their mind.
- Original. Unexpected. Remember, your ad is interrupting your audience from what they want to be doing. Don’t just spew information, get out of the box.
- Targeted. Spend time refining your audiences so you don’t waste money showing your ads to people who will never buy from you.
- Tracked. You won’t know your ROAS unless you’ve set up your plumbing to track sales.
All of these qualities should apply to your landing pages or product pages as well. Think of them as an extension of your ad.
Do I Need to Track Any Other Metrics?
If your business is very simple… like you only sell one thing… and it’s an impulse buy… and there is literally nothing else anyone could buy from you…
… you could get away with just tracking ROAS. But that’s honestly not a very effective business model.
It’s easy to get carried away with metrics, and we like to keep it as simple as we can.
When we onboard a new client, we typically create a growth scorecard for them.
The scorecard is a great tool because it:
- Let’s you see where there are breakdowns across the entire customer journey (all eight stages)
- Keeps goals and targets front of mind and encourages forward momentum
- Provides objective accountability
- Generates healthy conversations around metrics that really matter – vanity metrics not allowed!
Do you want to know where your marketing and advertising dollars are going? Check out our 90-Day "Scale or Bail Campaign".
About the Author
Matt Brannon
Matt graduated from Baylor University in 2003 and married his college sweetheart Ginny. They moved to Austin and Matt began working for Governor Rick Perry, first as an Advance Man and then later as the Governor’s Executive Aide. In 2007, Matt and Ginny moved to Los Angeles where Matt worked in public relations for an independent film (and Toronto Film Fest winner), “Bella”. His primary role was implementing grassroots efforts on a new online network called “Facebook”. After the promotion of Bella came to an end, Matt worked various jobs in entertainment and also spent 5 years working at Cedars-Sinai hospital. in 2013, Matt and Ginny moved back to their home state of Texas and joined the team at Gravity Digital. Matt’s distinctive value for his clients is his ability to bring out-of-the-box ideas and solve problems creatively.
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