We love acronyms. But just in case you're feeling a bit puzzled, we've thrown in a handy glossary at the end.
WTF* is ROAS?
Return On Ad Spend (ROAS) is like the financial compass of the marketing world. It's the metric that reveals the magic happening behind your campaigns. For every pound you invest, ROAS calculates how much you make back. Essentially, it shows you the return of your advertising efforts.
ROAS plays a vital role in assessing the effectiveness of your marketing strategy, whether you're looking at the big picture or scrutinising the results of specific campaigns or individual ads. It's the tool that helps you make informed decisions and optimise your advertising investments.
WTF is ROI?
Return On Investment (ROI) helps assess the effectiveness and profitability of marketing campaigns, advertising efforts and other investments. It allows businesses to make informed decisions about where to allocate resources and prioritise investments based on their potential returns.
WTH* is the difference?
In essence, ROAS specialises in evaluating the success of campaigns in revenue generation, while ROI offers a broader perspective by assessing the profitability of various investments, including marketing initiatives within a business.
How to calculate - or is that TMI*?
ROAS: For example, if you invest £100 in an ad and it generates £500, your ROAS would be 5:1 or 500%.
ROI: The formula for calculating ROI is: net profit divided by the cost of investment, multiplied by 100. For example, if you spend £1,000 on marketing and yield £2,000 in profit, your ROI would be 100% ((£2,000 - £1,000) / £1,000 x 100 = 100).
Are your ROAS and ROI A-OK*?
The ideal ROAS can vary drastically depending on a few factors, such as the industry, your business objectives and the advertising platforms used. What would be considered a good ROAS for one business may not be for another. Having said that, there are some general guidelines to assess.
- Break-even ROAS (1:1): Achieving a ROAS of 1:1 means you've covered advertising costs, serving as the minimum benchmark
- Profitable ROAS (>1:1): Most businesses aim for ROAS greater than 1 to ensure they're not merely breaking even but generating profits. For example, a 2:1 ROAS means earning £2 for every £1 spent.
- Industry Benchmark: It is essential to research industry benchmarks and understand the competitive landscape to gauge where your ROAS should be and how it is measuring up.
- Goals and Objectives: Your specific business goals determine where your ROAS and ROI should be. For example, if you're focused on short-term profitability, you may aim for a higher ROAS and ROI.
- Advertising Platform: Different advertising platforms (e.g., Google Ads, Facebook Ads) may have different typical ROAS benchmarks. It's essential to understand platform-specific expectations.
- Ad Type: The type of ads you run can also affect your ROAS goals. For instance, brand awareness campaigns might have a lower ROAS target compared to direct response campaigns.
- Customer Acquisition Cost (CAC): Consider your customer acquisition cost. If your CAC is relatively low, you might be more flexible with your ROAS targets.
- Seasonality: Businesses in seasonal industries may have fluctuating ROAS expectations throughout the year.
Some of Our GR8* Results
Lagoon Pools are a swimming pool manufacturer and installer specialising in high-quality crafted pools. They approached us with the goal of enhancing their digital presence, boosting inquiry rates and securing an additional three pool installations annually. After implementing our meticulously designed digital strategy within just six months, the results have been impressive.
They have achieved an impressive Return on Ad Spend (ROAS) of 7:1, surpassing the industry benchmark by a significant margin—300% higher than the construction sector's average benchmark of 2.25:1. Moreover, this exceptional ROAS is also 75% above the Google advertising benchmark, underscoring the outstanding success of our collaboration.
Getting FOMO*? How Fingo works to improve your ROAS and ROI
Enhancing your ROAS and ROI involves a harmonious blend of strategic, analytical and tactical endeavours. Here's a closer look at the steps we take at Fingo to elevate these crucial metrics:
Expert strategy design: Here at Fingo, we pride ourselves on being a performance-led agency. Our Client Success Department collaborates closely with you to develop a business-led digital strategy. We bring commercial expertise to the table and aim to be your trusted partners.
When it comes to improving ROAS and ROI they are ongoing processes that require vigilance, adaptability and a commitment to data-driven decision-making. At Fingo we start with your commercial goal as our single point of truth and design a strategy around this, making adjustments as needed to achieve your financial objectives effectively. At Fingo, our mission is to serve as your dedicated partners on your journey through the intricate landscapes of ROAS and ROI. We recognise that success in the ever-evolving world of marketing is not a one-size-fits-all endeavour. Each business, each campaign and each objective is unique, requiring a tailored approach to achieve meaningful outcomes.
As your trusted guides, we not only bring our expertise to the table but a commitment to understanding your specific goals and aspirations. We appreciate that what constitutes success for one business may differ significantly for another. That's why we place a strong emphasis on collaboration, working closely with you to create a roadmap that aligns with your vision and objectives.
Continual, Human, Campaign Optimisation: In the dynamic world of marketing, stagnation is the enemy. Fingo is dedicated to the constant vigilance of your campaigns. We understand that machines can only do so much, which is why we relentlessly monitor and fine-tune your strategies, adjusting creatives, keywords and targeting based on real-time data and performance metrics.
Precise Data Analysis and Tracking: We take data analysis and tracking seriously. At Fingo, we deploy robust tracking and analytics systems to meticulously gauge the performance of your marketing campaigns and investments. Our toolkit includes sophisticated tools such as Google Analytics and CRM systems.
Strategic Audience Targeting: We go beyond broad strokes. Fingo specialises in audience targeting to ensure that your campaigns are precision-guided towards the most pertinent and valuable customer segments. Our tailored messaging resonates with these specific audiences, igniting higher engagement and conversion rates.
A/B Testing for Precision: We don't rely on guesswork. Fingo conducts A/B testing to experiment with various campaign elements, including ad creatives, headlines, calls to action and landing pages. These experiments yield invaluable insights that empower us to collaboratively refine your strategies and tactics.
Conversion Rate Optimisation(CRO): At Fingo we offer expert advice on optimising your website and landing pages to amplify conversion rates. With a user-friendly and persuasive online presence, you can squeeze more conversions from your existing traffic, elevating both your ROAS and ROI.
Cost Management: In the world of advertising, efficiency is paramount. At Fingo we delve into the depths of your advertising costs, hunting for opportunities to eliminate waste. By removing underperforming keywords or channels that don't contribute to your objectives, we pave the way for substantial ROAS and ROI improvements.
To find out more about working with Fingo to achieve your ROAS and ROI goal email us today at email@example.com
The Over 40s Glossary
*OMG = Oh My Goodness
*ASAP = As Soon As Possible
*TIA = Thanks In Advanced
*WTF = What The Fingo
*WTH = What the Heck
*TMI = Too Much Information
*A-OK = Completely right or acceptable
*GR8 = Great
*FOMO= Fear Of Missing Out
*TTYL = Talk To You Later