How to Create a Marketing Strategy to Increase ROAS

For most, including paid media in your marketing stack is a bit of a no-brainer. Media campaigns help you attract new audiences and keep your brand top-of-mind, increasing your brand awareness, conversions, and revenue over time.

While deciding to make paid media a part of your marketing might be easy, developing a strategy that makes the most of your spend and delivers a worthwhile return takes a little more time and brainstorming. 

Fortunately, there are tried-and-true best practices that will help you to get rolling with an effective campaign. Let’s go through them step-by-step.

How to Balance ROAS and Other KPI Goals

ROAS (or return on ad spend) is a fantastic metric to help you keep a pulse on the health of your campaign. While metrics like CPC (cost per click) and CTR (click through rate) can speak to the quality of your ads, KPIs like ROAS speak directly to the overall effectiveness and performance of your total efforts. But before you set a hard and fast ROAS goal, let’s take a moment to explore what this particular metric tells us about campaign performance.

ROAS measures revenue earned for each dollar spent. If you spend $1 and make back $10, you’ll have made a 10x ROAS. In theory, a great campaign will always see a high ROAS, right? Not necessarily! It’s important to keep in mind that, at the end of the day, ROAS is simply a ratio and must be considered alongside metrics like total revenue and conversions to be accurately understood.

While at first glance, a 5x ROAS may feel superior to a 2x ROAS, a closer look will tell us more. In the first scenario, you invested $10 and saw $50 in return. But in the second scenario, you invested $50 and saw $100 in return. In this hypothetical, your 5x ROAS only made you $40 while your 2x ROAS made you $50. Assuming you’re able to make either investment comfortably, a 2x ROAS in this instance would be your better result. This is especially important to keep in mind as your business grows and your campaigns scale. As your campaign investments grow over time, you’ll likely see your ROAS decrease. If your conversions and revenue grow in response, this is a healthy ROAS adjustment.

Developing a strategy solely focused on maintaining a specific ROAS goal could eventually impede your ability to ultimately make more sales and revenue. We’ll spend the rest of this article exploring how you can develop a marketing strategy specifically for a strong ROAS, but keep in mind that a truly successful campaign will be best supported by a holistic and balanced approach to KPI goals.

How to Develop a Strategy to Increase ROAS

Developing a successful media campaign strategy from scratch can feel like an overwhelming process. It can be helpful to break the most critical elements down into three key buckets: the who, what, and where. This means defining who it is you’re targeting, what you’re showing them, and where they’re seeing it. Let’s dive deeper by first taking a closer look at the who.

Step 1: Define Who You’re Targeting

When we talk about who it is you’re targeting in your campaigns, the answer initially is pretty straightforward. We’re talking about your site traffic! But if we spend a little more time here, we can build a solid foundation for a high performing campaign. A common mistake when setting up your first media campaign is neglecting to break down your traffic by behaviors and existing brand familiarity. Doing so allows us to create valuable audience segments that open the door to more effective experiences.

As an example, let’s take a look at a user who has yet to view a specific product on your site and compare them to a repeat customer who has left a new product behind in their cart. Although your ultimate goal for each user is for them to convert, an effective media campaign needs to nurture each visitor step-by-step. You’ll need different messaging and imagery to resonate with each of these users (more on this when we get to our what), and that requires that you place them in different segments.

Take a few minutes to think through your customer journey and each of the different audiences a user may be part of on their path to conversion. From there, you can turn them into segments to use in your campaign (find instructions on how to do this in AdRoll here). The specific audiences you target will be unique to your business and customer journey, but you can generally think of the following:

• Potential new visitors - these are users you’re trying to bring to your site for the first time.

• Low intent visitors - users who visited your site but didn’t view a specific product.

• Product viewed - users who viewed a product.

• Cart abandoners - users who added something to or viewed their cart.

• Converted customers - users who have purchased from you.
  

Beginning to think of your target audience not just as a single group, but rather as individuals who move through the different stages of your marketing funnel, makes the next steps toward building an effective campaign that much simpler. Once we know who we’re targeting, we can start to consider what it is we’re showing them

2. Tailor Your Ad Sets to Your Audiences

In the same way it can be tempting to target all site traffic as a single group, many make the mistake of using the same ad set across each of the audiences we’ve now defined. But remember, you’ve segmented these audiences for a reason. They’re each at a different stage of your customer journey and need your campaign to help guide them to the next. The purpose of an ad is to communicate a message, so let’s take a few moments to explore what message will be most impactful to each of our identified audiences.

Potential new visitors: When prospecting potential first-time visitors, it’s crucial to keep in mind that they haven’t yet been introduced to your brand and won’t be familiar with what you offer. And you don’t know a lot about them yet, either! 

For this audience, avoid images or messages that zero in on specific products or elements of your brand. Instead, focus on ads that let your brand and product range shine. Think of it like an elevator pitch that will encourage the user to visit your site and learn the specifics. If you have the resources, video ads are a great placement to test with this audience. Video, by nature, is a fantastic educational tool that allows you to comfortably fit more information than a static banner.

By focusing this ad set on your business at a high-level, you’ve created a brand introduction that will encourage these users to visit and learn more.

Low intent visitors: Much like your potential new visitors, your low intent visitors haven’t explored your site enough yet to have a solid understanding of your offering. Keep your ads high-level here as well, but maybe try testing different value props. What is the next element of your brand that you’d like to introduce these users to?

Product viewed/cart abandoners: Unlike a user who hasn’t visited your site yet, someone who has viewed your products or added something to their cart is familiar with your brand and what you offer. Better yet, you know a few things about them and their interests as well! 

Dynamic ads are a great way to re-engage these audiences - they will show the user the product(s) they left behind. Some platforms, like AdRoll, even use AI to fill the additional product spots with recommendations based on their behavior.

One of our favorite tips is to test product category-specific static ads to show to visitors who viewed one of your priority product groups. For example, stylized ads showcasing your core product collection. This can be a nice stepping stone between ads focussed on the entirety of your brand and dynamic ads focussed on specific products.

Converted customers: When we think of keeping the lights on with your existing customers, we typically think of channels like email. But you can also keep in touch with these users through a well thought out media campaign! After giving them time to cool off after their purchase, don’t shy away from following up with new products, additional resources, education, or relevant accessories. The key here: Don’t follow up just for the sake of following up. Think more deeply around what additional info you can provide that will enrich and round out their experience. That’s where you build brand loyalty.

Remember–these are general best practices to help you get started. Over time, you’ll fine tune your ad strategy as you learn what message is most impactful with your audience throughout their journey. Need to start small? Try running your branded ad set for your new visitors/low intent audience and a dynamic ad set for your product viewed/cart abandoner audience. You can expand as you go!

3. Choose Relevant Channels

You’ve defined who your targeted audiences are, you’ve started to brainstorm what ads you want to show them, now it’s time to just hit apply all across your channels, right? While there should be a level of consistency in your campaigns across channels, it’s important to keep in mind that where your ads are shown can have an impact on performance.

Consumers seek out different information from different channels, and your campaign may have to account for that. 

For example, the same tagline may not be as enticing in a search ad where your visitor is more actively seeking out info than in a social media ad where a consumer is likely engaging in a more passive behavior. The key here? Don’t overthink it! You don’t need to develop hyper-personalized ad strategies for each of your channels. Rather, be willing to test different messages in different channels and assess their performance individually. You’ll refine this over time.

4. Determine Your Budget

Building a robust media campaign strategy is the first step, but how do you determine the budget allocated toward these efforts? Keeping in mind that ROAS is a ratio based on your spend, setting an optimal budget is key in achieving your ROAS goal. 

To get started, try using a ROAS Calculator. This calculator takes into account data like your industry, monthly visitor count, and order averages, as well as the most up-to-date industry benchmark data to calculate what you should invest in digital advertising to make the maximum impact on your growth. Bookmark this calculator to refer back to as your business, audience, and campaigns grow. Budgets should not be static and this calculator will help you maintain success as your efforts evolve.

Do I have to spend the exact amount the calculator recommends?

Not at all, your budget and other goals should play a role as well. If you want to spend less than what the calculator recommends, limit the number of audiences you target within your campaign. 

For example, focus only on cart abandoners until you’re able to grow your efforts. The ROAS calculator will make a recommendation based on your total monthly site traffic, spending less than recommended across the same audience size will likely stretch your budget too thin and prevent a healthy ROAS. If you’d like to spend more than what the calculator recommends, try allocating the additional amount towards your brand awareness campaigns and upper-funnel efforts. This will help bring more traffic to your site over time and prevent you from over-targeting your existing audience with too much media budget, thereby negatively impacting your ROAS.

Put It All Together

Now that you’ve identified your who, what, and where as well as your optimal budget, you’re ready to set up your media campaign. Do you need to quickly and effective launch a campaign?  Consider launching an AdRoll Recipe - plug-and-play campaigns that will have you up and running quickly with an effective strategy. Ready to get rolling?

Last updated on August 4th, 2023.