How to measure your return from advertising spend

There are many ways of measuring a return on advertising spend with the right budget, and while certain tracking apps and spreadsheets can help with this, there are other, better methods of doing this.

With that, here are a few tips on measuring your return from the advertising spend.

Measuring the Way

Regardless of what your business is, or what it’s about to be, it needs some advertising spend in order for people to find it, otherwise, you’re pitching the business in the dark. Technology has been at the forefront of being able to help with this, and while there are formulas such as ROAS (Return On Advertising Spend) to help measure the return, there are also tools such as Google Analytics that can do this as well. 

By setting up ecommerce tracking, with the help of implementing some code on the website, this feature from Google Analytics can easily measure the transactions made on the website, while seeing what channels and campaigns are most profitable.

Of course, it can be slightly more difficult if one is running a lead-generation campaign, so it may be more difficult to measure this, so it may be best to transfer the goals into ‘Google Ads’ as conversions for much more accurate reporting.

With ROAS, the best way to calculate the return is this:
ROAS = Revenue from Campaign divided by Cost of Ad Campaign

By measuring it through the ROAS model, you know exactly how much the ad spend is, and how effective it is becoming towards the campaign.

This method can really help in evaluating how the performance of an ad campaign has been going so far, while it also shows just what the return is generating so far. 

Leading the Way

Simply using a model to measure the return as a whole isn’t enough; you also need to measure and evaluate the leads that come as part and parcel with a campaign.

Some leads can be better than others, and this can make working out a return on the investment, difficult for a lead campaign. The Life Time Value, or LTV, is a measure of calculating the projected revenue that a customer will generate during their lifetime, so whether it’s in accountancy or a publishing firm, it needs to be measured to evaluate the return.

However, even if your cost per conversion is low, do consider whether those customers will be much more likely to stick around after they have bought your product or service.

Leads can take slightly more time in going through the funnel, as they are more often than not, asking for a quote or more information for your business’ services, so it’s important to keep this in mind.

Make sure to also keep a note of each lead; as each one may not turn into a sale, make sure to highlight them, just in case they have a potential to be one. Factor them into the return of your advertising spend, and it will be able to give you more accurate results once the campaign ends.

One final point is the attribution model. These allow you to choose how much credit an interaction with your ad receives for your conversions.

Often, people visit your site several times through different channels before converting, they need the assurance of your product, that it’s going to help them in whatever need they have for it. This may mean that your advert played a role at the start or beginning of their journey, but when they finally decided to purchase or enquire they visited your site directly. In this scenario, if your attribution model only gives credit to the last source that a client visited your website from, it will disregard the part that your ad may have played, even though this could have been how they found your site in the first place! So don’t shut down the campaign or any part of it too soon, it may just be because that your adverts are targeting potential customers further up the decision funnel while being ignored by your current attribution model.

Overall, you need to measure and lead the way in how an advertising campaign runs, it’s essential in making sure that the return is accurately measured and able to be evaluated once the campaign concludes.

It applies to every facet of what the business is trying to achieve to gain potential customers, so make sure that the accuracy is exact, and to the point of where you can improve and optimise the conversions and LTV over time.