Advertising is important. No matter what industry you’re in, advertising is probably a common component of an effective marketing strategy. The truth is, though, that if advertising isn’t effective, it can be more harmful to the company’s bottom line than helpful. To keep an eye on the effectiveness of ad campaigns on the company’s bottom line, organizations often look to one key factor: ROI.  

ROI, or Return on Investment, is one of the ways companies can look at how effective their investments are. This metric compares an investment’s cost with the returns it generates. In other words, it’s what you get back out of an investment. Companies often calculate various ROIs to understand how smart their spending and investing are.

We often look at ROAS—or Return On Ad Spend in marketing. This useful number looks at the returns that ads are observably generating and can help you understand how effective ads are, specifically to your bottom line. This can be extremely helpful as it can enable you to make data-informed decisions about how you allocate funding in the future.

How To Understand Ad Spend

Ad spend refers to the total amount of your advertising costs. This includes the creation of the ads, as well as placement and impressions. By closely monitoring your ad spend, you can track and understand what you’re spending to reach your target audience.

Calculating ROAS

ROAS allows you to see how your ad spending turns into tangible returns. It’s quite easy to calculate the return on ad spend. Simply divide the total ad revenue by the total ad spend—multiply the result by 100 to express it as a percentage.

Optimize Ad Performance

Knowing your return on ad spend is only half the battle. You must monitor and optimize your marketing efforts to ensure successful ad campaigns. Here are a few strategies to enhance your online advertising:

Define Clear Objectives

Establish specific goals for each advertising campaign. These don’t always have to be purely financial, like boosting sales—you may want ads that increase website traffic, generate leads, or build brand awareness, for example.

Whatever your objectives are, ensuring that they’re first well-established and transparent can go a long way toward optimizing return on ad spend, and helping you position yourself for success.

Target the Right Audience

There are a lot of markets out there. Make sure that you’re reaching the right audience in the right market. By determining your ideal target audience, you can prioritize your time, efforts and funding for the right ad campaigns.

For instance, a mobile marketing campaign can be a great way to reach millennial audiences. But, if you’re targeting a more mature customer base, Facebook ads might be your best bet.

Lean on Data

Data drives everything around us. Important information about our target customer base can paint us a picture of what drives our audience and trends affecting our business. Using all that information can be the difference between influential marketing and operating in the dark.

Of course, sourcing and analyzing all that data can be challenging, but there’s good news. There are tons of ways to not only gather that data, but analyze it too. Analytics tools can help you identify and establish key success metrics and track them over time.

Using these, you can improve your advertising campaigns by identifying patterns and improving marketing analytics.

Maintain Optimization

Once you’ve achieved a high ROAS, your optimization journey isn’t necessarily over yet. It will still be important to your momentum to make adjustments as you collect more and more data. Think about it this way—not only do markets and customer preferences change over time, but there’s always room for improvement. Over time, you’ll be able to build a clearer picture of how your efforts pay off and how effective your spending is in advertising.

Since the process of determining return on ad spend can be equally crucial and challenging, hiring a professional can be one of the best ways to optimize ad campaigns for ROI. At BloomAds, we have the know-how, tools, and experience to help you meet your marketing and advertising goals. Contact us today to get started building your new advertising strategy!