Have you ever thought to yourself, what is a good ROAS? You see other companies running successful ad campaigns, and you're wondering why your ads don't seem to result in revenue.
The average return on ad spend (ROAS) across all industries is $2.87:$1. That means the average marketer is seeing a $2.87 return on every $1 they invest in ads. If your ROAS is below this average, it's probably because of one of the following reasons:
a) you're not tracking every conversion from every ad
b) you're not able to differentiate between conversions and leads
Whether you're getting a good ROAS or not, there are a few steps you can take to improve your returns. In the article below, we'll explain how WhatConverts can help you calculate ROAS more accurately, and improve ROAS across all types of ads.
1. Common Mistakes in ROAS Calculations
2. Tips for Accurate ROAS Metrics
3. Tracking every single conversion action
4. Tracking quotable vs non-quotable leads
5. How to Improve ROAS
6. Testing different landing pages
7. Running phone call conversion ads
8. Focus on quotable leads instead of clicks
9. ROAS vs Conversion Rate
10. Average ROAS for Facebook and Google
Return on ad spend (ROAS) is the indicator that highlights the returns from each dollar spent on online marketing. ROAS is a broad term that determines ad level performance. Different platforms like TikTok, Instagram, Facebook, and Google have different ROAS. The higher the ROAS, the better.
ROAS is the cost attributed to an advertising campaign divided by the price of the ad. Suppose an ad generates $4,000 with an initial advertising budget of $1000. It generated a ROAS of 400% or a ratio of 4:1. An average of 2:1 is a good target.
Problems arise when you can’t track every lead that comes from Google Ads. Most businesses can track form-fills and web chats back to a Google Ads click, but what about phone calls? Of all the conversion actions, phone calls are one most businesses fail to track back to a digital marketing source.
Phone calls represent the most valuable type of lead; a potential customer, on the phone, speaking with a salesperson. Your most profitable ads are ads that deliver these types of leads. WhatConverts reporting helps you identify the ads that deliver phone call leads helps you run more effective campaigns.
However, you can’t see which ads drive phone calls if you don’t have call tracking.
WhatConverts shows every lead (phone calls, form-fills, webchats) in one dashboard, with marketing data attached. You can see which ads deliver leads and separate effective ads from ineffective ads. WhatConverts complete leads dashboard puts you one step closer to seeing a clear picture of ROAS.
Return on ad spend is a simple calculation. You need to know two numbers; the value of the leads you get from a specific ad campaign, and the cost of running the ad campaign. ROAS = lead value / ad costs. The final number refers to the return you can expect from every dollar you spend on ads.
Let’s say you run a Google Ads campaign that costs $200. You get 20 leads from this ad and each lead is worth $100 in potential sales. Your ROAS calculation would be $2000 / $200 = $10. For every dollar you spend on ads, you can expect to get $10 in return.
What if you spend $200 on Google Ads and can’t track every lead you get from the campaign?
Let’s say you see 5 form-fill leads worth $100 each come in from the Ad campaign. Geat! However, another 10 leads worth $100 each called your business after seeing the ad.
Without call tracking, you wouldn’t be able to tie those 10 leads back to the Google Ad. You would assume your ROAS is $500 / $200 = $2.50. If you include the call leads, however, the accurate ROAS calculation is $1,500 / $200 = $7.50.
Tracking every lead back to the marketing source — no matter how the lead contacts you — is the only way to ensure accurate ROAS.
For even more accuracy in ROAS calculations, you should identify your quotable leads. Your $200 Google Ads campaign may drive a lot of conversion actions, but are all those conversions resulting in quotable leads?
Let’s do the exercise one more time. You spend $200 on Google Ads and see 10 conversions come in. If you can’t see the individual leads behind these conversions, you might assume each conversion represents a $100 quotable lead. With this assumption, the ROAS math is $1000 / $200 = $10 ROAS
Google Ads and Google Analytics only show the total number of conversions from each Ad. A lead tracking tool like WhatConverts shows you the actual lead details behind every conversion. You can see if any conversions are solicitors, spammers, or otherwise non-quotable leads. In this case, you may discover that only 3 of the 10 leads are quotable, making your true ROAS $1.50.
(3 quotable leads x $100 = $300)
( $300 / $200 = $1.50)
Measuring accurate ROAS is only possible when you capture the full lead; not just the click or conversion action.
On average, advertisers get $2 in ROAS for every $1 they spend on Google Ads. If you're not hitting this number, you can try one of the following strategies.
Sometimes an ad gets a high click-through rate but doesn’t produce many leads. When this happens, it’s for one of two reasons; you’re not targeting the right customers, or your landing page needs improvement.
People who click on an ad and land on a webpage expect the page to deliver on the promise of the ad. This is known as “landing page message match.” If your landing page doesn’t match the message of your ad, people get thrown off and often fail to convert. This is one reason your ads may fail to produce a high ROAS.
Once you start tracking every type of conversion action, you might find phone call conversions deliver your most valuable leads. Customers who call you are more likely to be ready to buy. They generally tend to spend more money as well. According to Forrester, leads who initiate an inbound call convert 30% faster and spend 28% more than leads who come from other types of conversion actions.
After monitoring ROAS for a while, you may notice that some ads within your Google Ads campaigns deliver more high-value leads than others. Maybe your ROAS across all Google Ads is $10, but certain ads are delivering a ROAS of $20 or $30.
You can use WhatConverts to track individual leads back to the campaign, keyword and content of the ad. Each lead — along with the lead status and lead value — will be tied to the specific ad variation.
This is how WhatConverts identifies the ad variations that deliver high-value leads.
You may be asking, “why do I need to track ROAS to measure success when I can look at my conversion rate?” Conversion rate is a popular metric commonly used to measure the performance of an ad campaign.
The calculation for conversion rate is simple; the total number of clicks on your ad / total number of conversions. If your ad gets 100 clicks and 10 conversions, your conversion rate is 10%.
If you have a high conversion rate, you can assume your ad is targeting the right audience; people who are ready to buy your product/service. You can also be confident that your landing page is doing a good job of converting visitors to leads. The conversion rate only tells part of the story, however, and marketers can’t do their jobs well when they’re relying on incomplete data.
Your conversion rate — or the total number of conversions, for that matter — doesn’t tell you anything about lead qualification. Are you getting conversions from real people who are ready to buy, or are you getting conversions from solicitors trying to sell you something? Maybe you’re getting conversions from existing customers looking for support.
Those types of conversions aren’t real leads, and should not be included in your marketing reports. WhatConverts tracks individual lead data so you can separate bad leads from good leads. You can then generate reports that show which landing pages (or another marketing source) deliver qualified leads.
Conversions are not always leads, which is why it’s hard to tie conversions to revenue. If you can’t tie advertising to revenue, you can’t measure advertising effectiveness. WhatConverts solves this problem by tying conversions to individual lead details. When you track leads instead of simply tracking conversions, it’s much easier to see which ads deliver real customers.
According to a benchmark report from Sidecar, their research determined Google slightly tops Facebook paid advertising with a ROAS of 13.76, while Facebook's ROAS is 10.69.
While the method seems straightforward and easy to follow, it can become complicated when faced with the many variables of internet marketing. For example, a campaign might have a fixed ad spend, or a varying cost that triggers once a customer makes a click. In addition, marketing doesn't revolve around one platform; marketers want to sprinkle ads in different places for more success. Such variables frustrate the calculation of ROAS.
That said, at WhatConverts, our aim is to connect individual leads to their conversion rates. We optimize the marketing efforts to improve the chances of more conversion. We help you increase your profits for each dollar spent on social platforms and Google.
One of our marketing experts will give you a full presentation of how WhatConverts can help you grow your business.Schedule a Demo
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