How to Calculate ROAS or an Idiot’s Guide to Calculate ROI

If you ask you digital agency to calculate the ROI on the campaign they are running, most probably you will get a cold stare from the servicing person.

Agencies typically do not like to measure the ROI on the campaigns they run. This is because most digital campaigns make an ROI of 15%, which if you take your cost of goods into consideration is a huge loss making activity.

So, how do you ensure that you get a healthy ROAS on your ad spend?

  1. Eliminate the Weakest Part of the Inventory –To start with, narrow down your verticals to the most profitable. Look at your inventory of services or products and identify the 20% that gives you 80% of profits.

It is that 20% that you need to be advertising for.

2. Eliminate Digital Channels that Don’t Work – Although, you might have noticed that everyone is on social media these days, social media is not a great channel to get an ROI from. This is simply because Social Media is a party and you can’t sell wares during a party. If you try to do that you are considered a jerk. So, its better to stick with proven digital marketing channels like Google.

3. Eliminate Keywords that Don’t Work – You might have noticed that we are in the elimination business here. The digital universe is immense. It’s almost like an ocean and if you want to fish for your customers, you will have to learn to eliminate everything that does not work. When start eliminating inventory that does not work, placements that don’t want and even keywords that don’t work, you will start seeing the outline of a 700% ROI campaign emerging.

If you are startup, you need to be even more careful when evaluating your business plan and creating an ROI focused approach for your marketing.

To know more on how to generate an ROI from your campaign, give us a call on 050 6986164 today.