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How to use ROAS to improve Google ads

How to use ROAS to improve Google ads

The Introduction:

So you finally caught the bug.. you set up your ecommerce store and you want to sell online. That’s awesome… but just setting up an ecommerce store is not enough you need to promote your ecommerce store to your potential audience and convince them to come to your site and look around and if they like what they see they would come across and buy and you could make some serious Money !!

Table Of Contents

  1. Introduction to Google Ads
  2. How to increase conversion rates and ROAS with Google Ads?
    a. What is conversion rate?
    b. Types of conversion rates
  3. Data Quality and its effect on conversion
  4. How to get optimal conversion rates from your Google Ads?
  5. How to use conversion rates to Calculate ROAS?
  6. What Numbers Should Be Considered when Calculating an Accurate ROAS?
  7. How to improve ROAS?
  8. Conclusion

But there are millions of websites out there doing the same thing and not generating any sales at all so what are the things that you could be doing different?

You need to Advertise your store to customers who are already looking out for your products or services. These are the people who already have a need and are actively searching for products like your so if you did not know how to advertise to them let us show you how….

You need to show case your products and pricing with review rating and most importantly tell your customers how to find you and communicate with you in the simplest easiest way..

The answer is Google.. a Brand you are already familiar with.
Google rules the product search space where 95 % of all the search traffic in the world is from google.
Google also rules the voice search space where 80 % of all the voice searches are done via the google platform either directly or indirectly.
Google also rules the video search space where customers search for product review and features on YouTube which is the largest video driven community on the planet.

So Yes! Google is the best friend or worst enemy of your business depending on whether you are actually advertising on them or not So if you would like to advertise on Google, make sure you know what you are doing, OR Work with a leading Google Advertising Agency in UAE for PPC marketing services in Dubai or you could end up losing a lot of money that you didn’t have in the first place… so let’s just dive into it…

What are Google ads and how you can make it work for you?

Introduction to Google Ads

Introduction to Google Ads
In layman's terms. Google Ads is comprised of all advertisement networks, which are search network, display network, and YouTube. Google earn revenue based on the clicks that a company’s ads are generating. So, every click on an ad, is money earned by Google.

Types of Google Ads
So, what are the types of google ads and which one should you use? Every advertisement campaign will have a specific objective. You will be asked to choose the campaign type, and its goal. The goal depends on the desired customer response these are known as conversions which we will elaborate soon. Some of them being sales, leads, website traffic, product awareness etc. Google ads campaigns include:

  • Search Network campaign
    Search Network campaign Sample
  • Display Network campaign
    Display Network campaign Sample
  • Shopping campaign
    Google Shopping Ads campaign Sample
  • Video campaign
    Video Ads campaign Samples
  • App campaign
    Google App Ads campaign Samples

How to increase conversion rates and ROAS with 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.

What is conversion rate

Now let us talk about Conversion rates. This is quite an abundant word in Digital marketing services. It is a concept important to everyone who runs a business website or even an ecommerce website. A Conversion rate is fundamentally the percentage of visitors on a webpage who reciprocate by giving the desired response. Which means you make them do what you want them to do.

A simple example for this is:
Let’s say a website in a month has had 1000 visitors and 40 of them bought a product off it during that time.
Statistically this can be shown as 40/1000 = 4%
So, as a formula is can be expressed as
Conversion rate = (conversions / total visitors) * 100%
But if you don’t want to do the math, most online advertising platforms like Google ads and Facebook ads show you the analytics of your conversion rates.

Types of conversion rates
The beauty of conversion rates is the fact that they can be whatever you would like them to be. Such as understanding which pages are better at converting traffic, Individual ad conversion or even a keyword conversion rate. Incontrovertibly, these are only some of the many possibilities that conversion rates can be. Regardless of which type it is, a good conversion rate for the site is one higher than what you had before. It is Purely relative and subjective.

Some of the causes of a good conversion rate are
Brand reputation: if the company have a pre-existing brand reputation the conversion rate will be higher.
Price- Affordable items sell faster than expensive ones.
Sales intricacy – Simple products show higher conversion rates than complex services that require a longer time to deliver.
Degree of commitment – Usually, it’s easier to have viewers have a read through articles than asking them to subscribe to a newsletter or updates.

Data Quality and its effect on conversion

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.

How to get optimal conversion rates from your Google Ads?

OPTIMAL CONVERSION RATE.
Optimal Conversion Rate Samples
Anyone who wants to get the most out of their traffic needs to know what to do with the conversion rate data in order improve it. Which means it does not necessarily require you to increase the traffic size. This is also called Conversion rate Optimization (CRO). This is extremely critical as, if you are not optimizing your conversation rates, you are wasting money.

Prism Digital offers a free audit of your Google Ads account to see if your Google Ads are actually performing to the max potential
Please fill in this form if you would like us to audit your site and Google Account.

How to use conversion rates to Calculate ROAS?

Using conversion rates for ROAS
One other reason why Conversion rates are important is because they are useful in calculating ROAS, also known as Return on ad spend. This metric helps understand the amount of revenue that conversations actions are generating.
ROAS measures the amount of revenue that your business earns for each dollar it is spending on advertising. This concept is very similar to another term that you might be familiar with known as return on spending, except that in this case it’s the investments on digital advertising and tracking returns. In a nutshell ROAS measures the effectiveness of your ads. So, higher ROAS is good.

What Numbers Should Be Considered when Calculating an Accurate ROAS?

ROAS is one of the most over thought of words in the Digital Marketing Lexicon.  You might think that this is really complicated process, but don’t worry it is actually quite simple. All you need to know to get an ROAS is how much you are spending and earning at a level. That can then be plugged into the formula Conversion Value/Cost = ROAS, simple right? The ideal or positive ROAS values is 4:1 or higher. However, there are some cases where a lower ROAS might not be a bad thing. Just because your campaign got a lower ROAS does not mean that your campaign has failed or is failing.
For example, if you are using an ad which has a relatively low click rate like banners, but are much more effective for brand awareness, the ROAS may be lower.
Of for example if your landing pages take 0.1 seconds more to load you conversion rate could be lowered by over 8% that is massive !! so remember to get down to the bottom of whatever is causing the lower ROAS.

How to improve ROAS?

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
    Product pages Samples
  • Bid simulators
    Bid simulators Sample Pages
  • Dimension pages
    Dimension pages Samples

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!!

Lovetto Nazareth

About The Author : Lovetto Nazareth

Lovetto Nazareth is a digital marketing consultant and agency owner of Prism Digital. He has been in the advertising and digital marketing business for the last 2 decades and has managed thousands of campaigns and generated millions of dollars of new leads. He is an avid adventure sports enthusiast and a singer-songwriter. Follow him on social media on @Lovetto Nazareth