As global digitization accelerates, organizations realize the impending need to invest in digital advertising.
In 2018, the total national ad spend exceeded $125 billion – and it is predicted to continue to rise YOY:
With rising expenditure comes increased scrutiny.
With cutthroat competition, not every ad campaign can drive conversions and offer adequate ROI.
So, how do you know if the money you’re investing is generating revenue or not?
This is where ROAS comes in.
ROAS, or return on ad spend, is a metric for online advertisers, enabling them to track the money they make.
By calculating ROAS, you will know how many dollars you earn for each dollar spent. Additionally, it will determine which ad strategies and techniques work well so that you can apply those to your other ad campaigns.
ROI, or return on investment, is a business-centric metric used to evaluate the effectiveness of your marketing efforts as a whole.
It helps you understand how ads are contributing to your overall business finances and profit.
On the other hand, ROAS assesses the performance of specific campaigns, ad groups, or keywords.
As it focuses on individual advertising campaigns, ROAS is an ad-centric metric. It measures the gross revenue generated based on each dollar spent on ads. This way, you can learn which of your paid ad campaigns are useful and which ones you need to stop pouring money into.
To calculate ROAS for Pay-Per-Click (PPC) ads, you need to know the total PPC revenue generated by your ad strategy and the total cost of managing your ad strategy.
This includes revenue you earn from all different sources, such as product purchases and lead conversions.
Similarly, your cost includes all the expenses you incur when running your ads, such as Cost-Per-Click (CPC), management fees, software upgrades, and partner/vendor costs. Additionally, if you have purchased clicks and impressions, they will add to your expenses.
Now that you have these two figures, you just have to plug them into the ROAS formula.
There are two formulas you can use:
Divide the revenue you made from your ad campaign with the amount you spent to run your ad.
So, for example, you spend $200 on a PPC campaign and make $400 in return. Adding these values to the formula will give you a ROAS of $2. This means you’re making $2 for every $1 you spend.
However, calculating ROAS through this formula only gives you a general overview. It doesn’t tell you the overall profitability of your campaign.
So, for example, you spend $200 and make $400. But your vendor fees also cost $50. Then, the ROAS you calculate will not accurately depict the return you get.
For this reason, it’s better to use the second formula.
If you subtract your cost from the revenue before dividing the result by the cost, it will give you an adequate ROAS.
This formula doesn’t require you to evaluate any new values since it only needs the total revenue and cost. And plugging values in this formula will help you determine your marketing budgets effectively.
ROAS is a metric that needs to be tracked regularly. Ideally, you should track your ROAS throughout the ad campaign instead of at one particular time.
Although there are many indicators you can utilize to assess the success of your marketing campaigns, the end goal of your business is to earn more money.
This means tracking conversions and sales isn’t enough on its own; you need to fit them within your ROAS tracking mechanism.
But first, you need to calculate your revenue. And you can do it by following the two steps below.
The first step is to track your conversions. And you can easily do that on online advertising platforms like Google Ads, Facebook, Twitter, and Bing Ads.
All you need to do is use these platforms to set up an ad campaign and conversion tracking. If you’re using Google Ads, you can even track phone call conversions.
This way, you will know which clicks on your PPC ads led to which purchases. In addition, you will stay updated on your conversion rates and purchases that result from ad clicks.
The next step is to connect your online advertising platform to customer relationship management (CRM) software.
By doing this, you can tie all your marketing data to a new lead. Hence, when a lead converts into a customer, you’ll know exactly which marketing efforts led to the sale.
So, by tracking your conversions and sales, you get access to your revenue data. Simultaneously, the advertising software you use will detail your ad spend.
Now, all you need to do is plug the values in any of the two ROAS formulas, and you’ll know whether your money is being spent right or not.
ROAS enables you to gather valuable insights – based on which you can make informed marketing decisions.
Since the final goal of advertising is to make money, calculating ROAS should be a priority. Even though conversion rate and click-through rates are essential, they don’t guide you regarding changes to your advertising model.
In addition, knowing your ROAS can help you do the following:
Using other metrics alone will not give you complete insights, so you will not make informed marketing decisions.
Think about click data – it tells you the best click-through rate (CTR) and the lowest cost-per-click (CPC). So based on this data, you might think you can evaluate which of your campaigns are successful. But that’s not possible because CTR and CPC don’t tell you the quality of clicks and the traffic you’re getting.
Similarly, conversion data helps you track conversions and point out areas of weakness in your strategy. But it will not determine the quality of traffic and leads you are receiving.
However, ROAS ties all these metrics together by providing you with actual numbers you’re earning and spending on each channel.
Additionally, various factors result in a lower CPC or conversion rate, but that doesn’t mean your campaign is unsuccessful. In fact, such campaigns can still have high profitability. But if you don’t calculate ROAS, you won’t know that.
And then you will make decisions that will cost more than you gain.
A good ROAS target depends on many factors, including your industry, average CPC, and profit margins. This means a satisfactory ROAS varies from business to business.
In addition, a good ROAS differs from campaign to campaign. For instance, campaigns that aim to raise awareness, grow subscriptions and build a following generally have a low ROAS.
But if you want to drive a greater number of conversions and sales, you should expect a higher ROAS.
Still, no general rule can determine how high your ROAS should be. But, most businesses do aim for an overall 4:1 ratio.
Getting $4 for every $1 spent gives you enough money to keep your business afloat or even make a profit.
Here is a breakdown of different ROAS targets you should be aiming for at different phases of your business:
Most businesses think if they make a sale that amounts as much as they spent on marketing, they will break even.
But that’s not true because when you factor in all your variable and fixed costs, you are likely making a loss.
So, making $1 for each dollar you spend on your PPC ad campaign is not enough.
Let’s say you spend $100 on marketing and make a $200 sale. It means you are earning $2 for every dollar you spend.
But, 2x ROAS is still low because fixed costs are generally high, resulting in a deficit.
As long as you get some consistent sales, you can break even with a 3x ROAS.
For example, you spend $50 on marketing, which results in a $150 sale. So, now, you have an added $100, which you can use to cover additional ad-running costs.
4:1 ROAS is where you start making a profit, which is why most businesses aim for at least a 4x ROAS.
When each dollar spent gives you $4 in return, you have enough money to make a profit. But ultimately, that depends on your business model and costs.
So, if you have very high variable and fixed costs, it may not result in a profit. But that is often not the case.
With a 5x ROAS, you can start using your marketing practices to grow your business.
At this stage, you’re making enough profit that you can afford to invest more in your marketing and customize various goal-specific ad campaigns.
In the end, the ideal ROAS for your business depends on your ROAS targets, business expenses, and marketing goals.
Also, if you have different PPC campaigns running simultaneously, set separate ROAS targets for each. Then, calculate their ROAS individually to see if they are bringing in enough cash.
But if your ROAS is still low, look into all other metrics and practices to identify the reasons behind it. Then, when you know which strategies are working, you can implement those across other campaigns.
Not being able to meet your ROAS target can be frustrating. But a low ROAS doesn’t always mean that your campaign is a complete failure.
Sometimes, you can make small changes to your current campaign to increase ROAS.
Some tweaks you can make are:
Placing an ad at the right location is key to attracting quality traffic. So if you have a low ROAS, consider changing the location of your ads.
For example, try placing them on e-commerce sites or social networking sites. Additionally, you can change the layout for your ad, such as converting a banner ad with a pop-up.
Your ad copy should gauge the user’s attention, resulting in the maximum number of ad clicks.
Similarly, your ad copy should be optimized for SEO so that your ad can show up organically in search results.
A helpful tip to follow is to use specific, long-tail keywords that are relevant to your brand.
For more detail, please visit our post outlining and weighing the difference between SEO and PPC.
Targeting 56.16% of all web traffic that comes through mobile phones can boost your ROAS.
If your advertising campaign is limited to desktops and isn’t generating high revenue, you should consider running mobile ads.
Use your ROAS to eliminate campaigns that are performing extremely poorly. Instead, use that money and effort on campaigns that show growth potential.
At the same time, try not to get carried away with spending on ad campaigns. So, place a cap on your budget for PPC campaigns because lots of click-throughs are only beneficial if your budget supports them.
Return on ad spend (ROAS) is a valuable metric that businesses of all sizes can use. And it helps you allocate adequate budgets for numerous ad campaigns.
Globally, 31% of all online users click on ads, which means investing in online advertising has a good chance of increasing leads. But to make the most of your marketing efforts, you need to strategize accordingly.
By regularly tracking your ROAS, you will make informed, data-driven decisions that will eventually boost your revenue.
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Most marketers love Google Ads.
We're no exception.
But we totally understand that businesses in certain industries sometimes have a deep resentment of Google Ads and their restrictive policies.
Google's policies for advertising are generally intuitive and straightforward, but for certain regulated and sensitive categories, the standards are much higher and less clear. Pharmaceutical companies, gambling websites, political campaigns, and other industries often struggle to get their ads approved consistently.
In fact, if you don't know what you're getting into, trying to advertise as a business in one of these categories can be a recipe for disaster.
How are you supposed to use Google Ads effectively if you belong to one of these regulated or sensitive categories?
Sensitive and regulated categories in PPC advertising face a number of challenges, including:
· Stricter guidelines. Most PPC advertisers are familiar and comfortable with basic Google Ads guidelines. But if you belong to a regulated or sensitive category, you'll have far more guidelines and more nuanced guidelines to deal with.
· Higher scrutiny. Google pays much closer attention to ads in regulated and sensitive categories, meaning you face closer scrutiny when your ads start circulating. Reports will be investigated quicker and much more strictly, and even minor violations can work against you.
· More ad disapprovals. Similarly, ads are much more likely to get disapproved in these categories. You'll face an uphill battle as you try to get your ads circulating.
· The risk of suspensions. Businesses in these categories also face the risk of frequent, ongoing suspensions. This trend is also worsening; in fact, in 2023, Google Ads suspended more than 12.7 million advertiser accounts – doubling their actions over the previous year.
This makes it much more difficult to advertise effectively and secure a positive return on investment (ROI). Additionally, failing to adhere to Google’s advertising policies can hurt your company's reputation and compromise your long-term potential for success.
The most important thing you can do to improve your results in a regulated or sensitive category is to plan for a sustainable, long-term strategy. Every year, thousands of business owners in these categories attempt to fool Google, find clever ways around its policies, and devise techniques that allow them to cheat the system.
These approaches can usually work temporarily. You can cheat your way into the listings and generate some traffic to your landing page.
But inevitably, these techniques fail, and they can ultimately get you blacklisted.
You're much better off taking the slow, steady approach, following the rules even if it means compromising your advertising effectiveness in the short term. Think about the long-term consequences and possibilities of each decision you make.
There is some good news here.
Google isn’t shy about publishing its advertising policies.
If you're willing to do the reading and research, you can thoroughly understand what Google expects from regulated and sensitive categories like yours – and you can easily adhere to the guidelines.
Well, maybe not “easily,” but reliably.
Generally, Google splits content into two types:
· Restricted content. Restricted content is sensitive content that is subject to more regulations. You must precisely comply with requirements for copy, images, website content, and more if you want to remain in circulation.
· Prohibited content. Prohibited content is totally disallowed. You cannot include it without facing significant consequences.
Unfortunately, we can't give you a big list of all the rules you need to follow, as the rules are different for various industries. Some of the most popular industries and categories that face steeper restrictions include:
· Pharmaceuticals and healthcare products
· Weapons and explosives
· Financial services (including cryptocurrencies)
· Gambling/games of chance
· Alcohol, tobacco, and similar products
· Political ads
· Adult content and services
While there are certainly commonalities between regulations across these categories, each category has its own unique blend of restrictions and rules to learn. For example, pharmaceutical businesses require formal certification from Google and are only allowed in some countries. In the financial services industry, you'll likely need a specific license, and you'll need to provide adequate disclosures for your products and services.
The more intimately you know these rules and regulations and how they apply to your industry, the more likely you'll be able to advertise successfully. Don't advertise until you're sure you understand all applicable Google Ads policies.
One other important note here: you need to stay updated.
Google isn't stagnant, and its advertising policies are constantly in flux. Accordingly, you need to stay abreast of recent changes and update your ad approaches in line with them.
The easiest way to do this is to subscribe to Google Ads policy updates, but you should also regularly engage in Google Ads forums. If you're lucky enough to have a representative, maintain open and transparent communication with them and stay in touch regularly; they can be a massive benefit for businesses in regulated and sensitive categories.
The more research you do, the better. You need to thoroughly understand your advertising landscape before you try to thread this needle.
· Google Ads policies. Obviously, read and understand Google Ads policies as they relate to your industry. We mostly covered this in the previous section, but it's part of the research you need to do.
· Licensing and certification requirements. Even if it's not specifically required by Google, it's a good idea to get any appropriate licenses or certifications. It's a mark of authority and trustworthiness that might save you if any of your ads are reviewed for potential policy violations.
· Laws and regulations. Similarly, violating any laws and regulations in the country where you're advertising could be grounds for ad removal or account suspension, even if those violations aren't specifically listed in Google Ads policies. Always ensure legal compliance before advertising with Google.
· Competitor advertising. It's also a good idea to research your competitors. It's very likely that businesses similar to yours, in the same category, are already advertising successfully. Look at what they're doing. How are they phrasing things? Which disclosures are they including? Do you notice anything missing? You can learn a lot simply by studying previously successful ads.
· Market research. The success of your Google Ads largely depends on your ability to successfully target and appeal to your demographics. If you're properly informative and persuasive, with relevant messaging to the people you're reaching, you're much less likely to face reports, removals, and suspensions. Accordingly, you need to do a deep dive into market research so you better understand your target demographics and can appeal to them with relevant content. If you don't have buyer personas, develop them. If you don't know what your target audience is struggling with or what they want to, pause your ads until you figure it out. There are no shortcuts here, so do a deep dive into your market research if you want a reasonable chance to succeed.
When creating and preparing new ads, make sure everything is compliant, including your copy, your images, and any of your website content.
Remember that the rules and restrictions vary by industry, but these are some general rules that can help you get started:
· Stick to the facts. Don't exaggerate. Don't embellish. Certainly don't lie. It's important to stick to the facts as closely as possible, even if it makes your ad a bit stoic or “boring.” Purely factual advertising rarely gets removed.
· Avoid prohibited or sensitive terms. Review prohibited and sensitive terms that apply to your industry, and avoid those terms like the plague. Consider creating a list of alternatives that you can rely on instead.
· Be transparent. Be absolutely transparent with your target audience, even if you're forced to reveal things that weaken the appeal of your products and services. Offer disclosures when required, and potentially when not required if they can boost your credibility.
· Adopt a serious, professional tone. Don't play with fire. Your best course of action is to adopt a serious, professional tone across your ads. It's much less likely to be reported, and it will seem more authoritative and trustworthy.
· Eliminate sensationalism. In line with this, eliminate all forms of sensationalism. Graphic or revealing content, exaggerated claims, and other techniques designed to evoke strong emotions are probably going to work against you.
· Focus on using images for context. If you're going to include images, make sure they provide meaningful context. Advertisers sometimes select images based on how easily they grab attention or how exciting they are, but this is a surefire way to fail if you belong to a sensitive or restricted category.
· Include warnings if necessary. If there are any warnings that are relevant to your products and services, include them. More information is typically better in matters like these.
· Leverage the power of AB testing. The more relevant and effective your ads are, the more likely they are to succeed. Leverage the power of AB testing to learn more about what your audience wants to see and how to give it to them.
Don't forget about your landing pages.
These are important to Google as well.
If your landing pages deviate from Google Ads guidelines, or if they contradict what's in your ads, it could work against you.
These are some tips to get you started:
· Keep it relevant. Always make sure your landing page is completely relevant and in line with whatever is included in your ad. If users click your ad and find something unexpected, unpleasant, or otherwise jarring, Google might take action.
· Issue disclaimers and warnings. This is an opportunity to double down on disclaimers, warnings, and important disclosures. Err on the side of caution and make these prominent to show that you're in full compliance with both Google Ads policies and laws in your area.
· Make your business information accessible. Make your business information transparent and accessible. Offer your brand name and business location information, and give visitors some way to contact you, preferably via phone and email. It's a sign of trustworthiness and it can proactively resolve potential disputes.
· Be straightforward and transparent. Everything on your landing page needs to be straightforward and transparent. Follow the same rules you did for your ads, and avoid exaggerations and sensationalism.
· Double check Google Ads requirements. Always double-check Google Ads requirements when constructing your landing page. You should fulfill or comply with each item on your landing page to be safe.
You've already done significant market research, so make sure you apply it correctly. Target your audience very specifically so that your messages are only shown to people for whom they are relevant. If someone outside the scope of your target demographics sees your ads, they'll be much more likely to issue reports – and your ads will be much more likely to be removed. It's especially important to target people in the right geographic area.
There are some Black Hat techniques designed to circumvent Google Ads rules and regulations, or otherwise give you an unfair advantage in a sensitive or restricted category. These techniques typically violate Google policies and are largely considered unethical by the advertising community.
One of the most prominent examples is cloaking. Using one of several techniques, cloaking can allow you to advertise to audiences with content different from what you showed Google for approval. It's obvious why this is potentially beneficial, but it's also obvious why this is unethical.
As you might imagine, these techniques can work temporarily. They can give you a significant short-term advantage, allowing you a better strategic position and potentially more ad opportunities. However, if you use them, you could get your account suspended, or even permanently blacklisted. Even if you evade that, you could ruin your company's reputation and jeopardize your long-term results.
Do not follow these strategies. If a PPC agency recommends any such strategies to you, fire them.
They simply aren't worth it.
Navigating the world of Google Ads isn't easy.
In fact, it's stressful and incredibly difficult if your business happens to belong to one of these sensitive or restricted categories.
The good news is it's much easier to be successful when you work with a PPC advertising agency that has experience creating and managing ads for a business like yours. We're deeply acquainted with all the rules and restrictions you need to worry about, and we know how to make target demographics like yours convert.
If you’re ready to get started with a free consultation, contact us today!
When you want to use paid search marketing platforms, Google Ads often leads the list. Because of its versatility, simplicity, and popularity, it’s obvious why it’s a popular choice. But when you drop all of your PPC advertising money into one marketing strategy, you could lose some leads.
That’s why some businesses explore paid advertising marketing outside of Google, with many turning to Linkedin Ads.
Google Ads and Linkedin Ads are highly efficient ways to market your products and services to businesses and consumers. But each marketing channel has its advantages and disadvantages. Whatever you choose, make sure you discuss the matter with your web development company.
Below is a closer look at each option.
We think it’s reasonable to conclude that Google reaches a vast audience worldwide – its ad reach is a stunning 4 billion people. Google search handles about 70% of desktop searches, and many companies report that they get about 90% of their organic traffic from the search engines. Also, up to 95% of the mobile search market comes from Google.
People use Google’s search a lot, and having the ability to target search terms with specific search ads is a massive benefit of Adwords. People tend to search for very specific things in Google, so if you can customize your Google advertising for your targeted audience, you’ll receive plenty of leads.
So, we can assume that most people’s targeted audience uses Google to some degree. That’s a massive advantage for companies when they want to target an audience.
However, businesses that want to narrow down their search may have issues getting their Google ads settings right with both Google Ads. And if you blunder when segmenting your audiences, your digital ad campaign could suffer.
LinkedIn features a narrower audience – 500 million users – namely businesses and business professionals. But this more limited audience makes it the perfect place for effective B2B marketing. LinkedIn lets marketers serve online ads to decision-makers and vital audience members in several ways.
Summary: For B2B firms that want to reach decision-makers, Linkedin is a terrific advertising platforms. If your B2C company intends to increase its reach, Google Ads could be the best fit.
When you target your audience with Google Ads, you have a few options: location, affinity, technology, buyer behavior, demographics, and interactions with your app or website.
No matter how much you know about your buyer, you may struggle to avoid clicks from worthless leads that cost too much.
In some cases on Google, people may not even know what they’re looking for. You can try to advertise to your desired targeted audience on Google Ads, but it can be challenging to get to the precise people who will most likely buy what you sell.
When people sign up for LinkedIn, they usually provide many details, such as their occupation, title/job title, experience, industry, education, interests, and more. All of this information can be leveraged for great advantage when you start your marketing campaigns.
Also, LinkedIn users can join many groups, start conversations, and obtain followers. The data is priceless when you want to target a specific audience and market to them. LinkedIn also has a Matched Audience that helps advertisers match their email marketing lists and website visitors with users on LinkedIn.
Many marketing experts think that LinkedIn Ads offer more value. LinkedIn has refined targeting, and you can make your product known to them so that you can tell them about something they didn’t know existed.
Summary: For B2B and B2C companies looking for a broad audience, Google Ads has enough targeting features. But for B2B firms that want to target specific groups, LinkedIn Ads has about 100 segmentation methods for micro targeting.
When you want lead generation, Google Ads has a broader reach and is the most effective. First, you can bring in a lot of prospects to your site without breaking the bank. The audience you’re after on Google visits the search giant with the idea to find the best product or service. This makes generating leads easier.
Getting leads from LinkedIn can be more challenging. Users of the platform may sign in to read industry news or talk to group members. No matter how perfect your ad is, viewers may not be in the mood to buy anything.
That said, Linkedin has a way to target ad leads through in-site messaging, which can generate plenty of leads.
When it comes down to dollars and cents, LinkedIn Ads usually are more pricey than Google Ads. As in Google, you can select cost-per-click or cost-per-impression.
LinkedIn also features a cost-per-send for InMail advertising. Typically, you’ll pay about $5 for each click, $6 for 1,000 impressions, and .80 for each send.
With Google Ads, the average CPC is $1. But to leverage that low cost, you need to work on your audience segmentation. If you don’t your ROI may be below what you want.
Summary: Advertising budgets for each platform depends on several factors. On average, Google Ads cost less than LinkedIn Ads. If your B2B company has a tight budget, you may want to focus on a limited variety of LinkedIn ads instead of a broad range of Google Ads.
So should you advertise with Google Ads vs LinkedIn Ads? Yes!
What we mean is, it depends. The correct choice depends on your budget, product or service offered, marketing goals, and target audience. You should not assume that when you need a digital marketing campaign, Google Analytics Adwords is the only choice.
It’s critical to evaluate the market, understand who your buyer is, and make a data-driven decision about the best marketing platform to reach your well-defined goals. One type of company might do better with Google Ads, and another may find LinkedIn Ads preferable.
The great news is you don’t need to choose between the two platforms. Many businesses use both, as well as Facebook, Instagram, and others. If you have the budget, it may pay off to diversify your paid search advertising to get the best ROI.
