How to use ROAS to improve Google ads

Now, if you have spent a significant sum of money on PPC ads, it is important to know that getting clicks isn’t the big picture. There is no point on having an ad if it does not generate revenue. That is why conversion rates and ROAS (which we will be talking about shortly) are important metrics that help you know if your investment on ads is worth it. Broadly the best way to find out is to bring together the amount you spend with the amount of revenue generated.

DATA QUALITY

The dependability of conversion rates is as good as the type of data being generated. A 100% conversion rate is ideal, until you realize that the page had only one visitor. There needs to be a significant enough traffic size to get reliable data. There are also various variables that occur during conversions, randomness such as accidental conversions, arbitrary patterns of spikes or dips in conversations, etc. It happens. An effective way to get round this is to observe conversion rates over a broader timeframe. This is of course subjective as there is no particular “perfect” timeframe for all businesses, it could differ from weeks to months. A larger corporation like Amazon would only need a day to get dependable data. You need to get the data for your site and niche of business something which is very easy to understand so you can plan your conversion properly.

The ROAS is redundant on its own, but when it is considered along with other metrics it can point which direction the conversion process is going.

For example, let’s say you have set up an urban wear eCommerce store which and is running on the google shopping campaign. This market is quite competitive and is difficult to generate sales. You also design a shopping ad which then runs for a few weeks. Then the tests are run to measure if the ad is working, and this can be done in several ways through Google Shopping such as

• Product pages
• Bid simulators
• Dimension pages

After measuring, you notice that the ROAS is low, Because the conversion rate for a specific product is high. Don’t panic!  This could mean that you product pricing is off and that could implicate that your product is priced lower than the market or your keyword bidding strategy could be focusing too much on the wrong set of keywords that don’t match your price segment or worse still focus on the lower price segment niche. Be careful of these mistakes as they cost you a lot by bleeding your ad budget dry.

After this observation, the ROAS could only tell that the campaign isn’t effective. A high conversion rate can be a good thing but only if the spending isn’t too high.

A low ROAS doesn’t mean that you should pause these ads. There are a few tweaks to improve your ROAS.

• Inspecting the accuracy of ROAS: On the off chance that your ROAS isn't exact, you could wind up dropping an exceptionally competitive campaign for no reasons.
• Cutting down the cost of ads: Since ROAS have two metrics, revenue and cost of ads, it will be ideal to lower costs. This can be done by reducing time spent on Ad management. Try outsourcing the work.
• Increasing the revenue created by the ads: The second measurement in ROAS is income. if you have done all that you can to diminish the expense of your promotions, it's an ideal opportunity to search for approaches to improve the income created from your advertisements

Conclusion

ROAS (return on ad spend) is a competent advertising metric, but it can’t function alone. The main function of calculating ROAS is to provide a more detailed insight when compared with other metrics you are probably already tracking. Similarly, Conversion rate is also an important marketing metrics. Unlike everybody’s favorite metric (for god know what reason !!!) click-through rate, your website’s conversion rate actually tells you what percentage of your traffic is actually doing what you want them to do. Now isn’t that a more important metric???

Most consumers wouldn’t consider buying a $10 flip-flop online without reading the reviews and comparing prices. Regardless of this, many advertising managers and thus several companies are too dependent on the smaller part of the picture when making advertising decisions that could cost a lot of money. Long story short….. if you are new to google ads you are going to make a few mistakes in setting up your ads in the beginning trust me all of us veterans did  but the important part is to learn from your mistakes and keep going !!

That is all for today folks! if you liked this blog please post a comment on it and we would love to revert to you with answers to all your digital marketing and advertising questions. If you would like us to take a look at your Google Ads account, we offer a Free audit in which we give you a 25 point audit of your ad account for Absolutely Free !! with 500 USD in Free Credit if you decide to work with Prism to run your ads. And to sweeten the deal we won’t even charge you our management fees till the end of the month. So, what are you waiting for pick up the phone and call us on 04 3827862 / 0558500095 and we will get your Ads campaign running and your business humming with the O So Sweet Sound of Money!!