In our previous articles, we talked about how to allocate ad dollars and what returns to expect on your ads.
Now we’ll switch the question that’s probably on your mind at this point: whether or not you’re maximising your returns based on what you’ve set up or how you’ve started spending!
To simplify this, we’ve broken it down into five steps. Follow these to improve ROAS or return on ad spend for your SME’s ad strategy!
Step 1.
Adjust your ad campaign strategy for key factors
To be exact, you want to make adjustments based on your industry and target audiences. These two points are critical in optimising campaigns.
Begin by researching your industry. Take a look at your industry and its key characteristics, especially in terms of ad patterns.
Follow up by defining your target audiences not just in terms of traits but also behaviours. This will give you a lot of input on what types of campaigns you should focus on.
Example: Dental practice vs. e-commerce campaigns
Let’s take an example. Say you have a service business. Let’s go with one that provides dental services, perhaps a dental practice.
You most likely want to focus on search ads for the discovery stage in this situation. That’s because push ads don’t work for businesses like these.
It’s easy to see why. Consumers don’t think “I should see the dentist” after randomly seeing a dental practice ad. They only search for dentists when they need them. That’s why search ads paired with retargeting through social media would be best.
Now what if you have a retail business instead? Say it’s an e-commerce fashion or clothes store.
In this case, the strategy shifts. You’re more likely to use social ads for the discovery stage, followed by YouTube and search ads for conversions.
Step 2.
Define your digital advertising goals
Okay, so this might have already been done as part of your campaign planning. In fact, anyone following our guides to digital marketing will have to go through this for setup!
That being said, it doesn’t hurt to review your goal definitions. At the very least, it can confirm that you’re on the right track with your aims. At most, it allows you to course-correct effectively.
Some people just find it easier to define what they want their ads to achieve after going through the other steps of the campaign. They might find it easier to figure out if they really prize awareness, conversion, or retention at this stage, for example.
There’s also the challenge of aligning ad goals with business types and customer journeys. All of that has to be considered and confirmed!
Example: Awareness vs. retention for an app company
This time, let’s use the example of a tech startup that’s just launched a new app. If you compare possible strategies for awareness vs. retention goals, you see the difference:
Goal 1 - Awareness | Goal 2 - Retention |
Aims to increase brand visibility and app downloads | Aims to encourage long-term app usage and customer loyalty |
Likely to focus on social media ads, wide targeting | Likely to rely on retargeting and re-engagement campaigns |
Step 3.
Consider your business type and profit model
Next, you should check if your ad strategy and goals match your business type and the way you actually make money.
Doing this helps you allocate resources more effectively. You’ll get a better sense of which channels and campaigns can potentially deliver the highest returns.
In other words, it helps you craft a campaign that actually serves your bottom line.
Example: One-off vs. retention-based businesses
Comparing a single-buy vs. retention-based business is a great way to illustrate how this tip works out.
Let’s start with the business that requires a one-off purchase or conversion. An e-commerce store with a focus on first-time or single purchases is a good example.
In this case, the goal would be more focused on maximising immediate returns or ROAS. The first purchase is everything, so the ad campaign should be run with that in mind.
Now let’s switch to a business that’s retention-based, like a subscription service. Businesses with high repeat purchase rates are further examples.
In this case, your ad strategy should be less about how to improve ROAS for the initial phase. You should be placing customer lifetime value or LTV higher than that in your metrics and assessments, accordingly.
Step 4.
Combine your goals with your business profit model
So now you know your goals and you’ve identified your business type and profit model. By putting them together, you can properly evaluate the efficacy of your strategy and spend.
This means going beyond surface-level analysis or eyeing metrics divorced from long-term business goals. The best way to understand is through examples, which we’ll share below.
Example: Service vs. e-commerce businesses
Let’s say we’re talking about two businesses that both benefit strongly from customer retention. However, let’s say one of them is a service business while the other is an e-commerce one.
The service business should likely focus on comparing customer acquisition cost to its ROAS. This is because an initial loss from its expenses can nonetheless lead to long-term profitability through retention.
As for the e-commerce business, it’s likely to compare first-time-purchase ROAS vs. recurring purchase ROAS. That’s because of the way it makes money. From those metrics, it can adjust its strategy based on customer retention rates and LTV.
Step 5.
Do attribution path analysis and budget allocation
Now we come to the final step: to conduct an attribution path analysis to understand the customer journey.
If you don’t know what the attribution path is, check out our guide to GA4’s attribution path. For now, let’s just say it’s a record of the journey your user takes from initial ad exposure to conversion.
Take a look at this and allocate funds based on channel and touchpoint performance. You should also optimise (and do it continuously!) based on data insights as they come in.
Example: E-commerce store optimising its ad spend
Let’s say an e-commerce store has ads on both Google and Meta. Now say it performs attribution path analysis and discovers this:
Google ads get a lot of the actual conversions.
Many of the users converting on Google ads are influenced to click on them by prior Meta ads, in turn.
A possible reallocation of the business’s ad spend might run like this:
It maintains the Meta ad budget since it fuels the converting Google ads.
It increases the Google Ads budget since it’s the actual touchpoint for conversions.
It allocates part of its budget to Google Ads retargeting to further drive conversions.
Let us help your business optimise its advertising spends
With these steps, you should find it a little easier to ensure that advertising spend is effectively aligned with business objectives and profitability. You should have your digital marketing ROAS sorted in no time!
Of course, it’s perfectly natural to still need added help if you’re new to digital advertising. If you think that you need professional assistance, reach out to us at ROMI.
We’ve managed hundreds of ad campaigns and can do the same for you, or build strategic ad frameworks based on your needs. Reach out to us for your digital marketing needs anytime and we’ll be happy to chat!
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