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How I, Your Friendly Neighborhood Marketing Genius, Track ROAS to Determine Campaign Profitability

How to Track ROAS to Determine Campaign Profitability

How I, Your Friendly Neighborhood Marketing Genius, Track ROAS to Determine Campaign Profitability

Welcome, fellow business builder!

Today, I, Barrie the Marketing Magician, will reveal my top secret ROAS tracking techniques to determine if your campaigns are actually making you money. cue dramatic music

Now, ROAS stands for Return On Ad Spend. It’s a critical metric that shows the profitability of your campaigns.

In simple terms:

ROAS = Revenue Generated / Cost of Campaign

For example, if you spend £1,000 on a campaign and it generates £3,000 in sales, your ROAS is 3.0.

You spent £1,000…you made £3,000…so for every £1 of ad spend, you generated £3 in revenue. Cha-ching!

But enough background, let’s get into the juicy details of how I track this powerful metric…

Step 1: Connect Campaign Data with Revenue Data

To calculate ROAS, you first need to connect data from your ads platform (Facebook Ads, Google Ads, etc) with your actual revenue data.

Here’s how I do it:

  • Use tracking parameters – I add campaign parameters like utm_source, utm_medium, etc to my landing pages so I can see which campaign visitors came from.
  • Integrate analytics – I connect my analytics platform like Google Analytics to my ads account to track conversions and goals.
  • Sync to my CRM – I sync my CRM platform like HubSpot with my analytics to link campaign data with actual revenue data.

This 3-step tracking process lets me accurately attribute sales revenue to each of my ad campaigns. Cha-ching again! 💰

Step 2: Calculate ROAS

Once my data is integrated, it’s easy to calculate ROAS. Here’s the formula:

Revenue From Campaign / Cost of Campaign = ROAS

For example:

  • I ran a Facebook campaign that generated £5,000 in revenue
  • The cost of the Facebook campaign was £2,000
  • ROAS = £5,000 / £2,000 = 2.5

So my ROAS for this campaign was 2.5, meaning I generated £2.50 for every £1 I spent. Not too shabby!

I calculate this ROI metric for every campaign to see which are producing a profit.

Step 3: Set ROAS Targets

Simply tracking ROAS isn’t enough. I also set ROAS targets for each campaign to aim for.

My minimum ROAS target is usually 2.0 or higher, meaning I want at least £2 back for every £1 I spend.

Setting targets helps me determine if campaigns are under or overperforming. I can pause losing campaigns and double down on winners.

Pro Tip: Always test different ROAS targets to find the optimal balance of profit vs scale.

Step 4: Optimize and Repeat!

Now the fun begins! I analyze campaigns that aren’t hitting targets to identify improvements.

A few optimization tactics I use:

  • Try lower cost bid strategies
  • Tweak targeting to reach more qualified leads
  • Test new creatives, offers and messaging
  • Look for wasted ad spend and prune it

I implement optimizations, then calculate ROAS regularly to see if they moved the needle.

The journey to campaign profitability is a never-ending process of measurement, optimization and repeat.

But these 4 steps allow me to continually improve results and squeeze maximum profit out of my ad budget.

Now go, young grasshopper, and unleash your own profit-generating campaigns!

What’s a good ROAS benchmark to aim for?

A ROAS of 2.0-3.0 is generally good. Anything over 3.0 is stellar. Ultimately it depends on your profit margins. Set targets based on your business model.

How often should I calculate ROAS?

Calculate ROAS at least monthly. Ideally you’d track weekly or even daily to react faster if campaigns underperform. Automate it with reporting dashboards.

What’s better – higher ROAS or more revenue overall?

Focus first on a healthy ROAS of over 2.0. Once you’ve achieved that profitability, you can scale spend to maximize overall revenue. Balance of profit and volume.

How do I know if ROAS is good for my industry?

ROAS varies a lot by industry. Research benchmarks for your specific niche. SaaS products may target 5.0+ ROAS while ecommerce could be happy with 1.5.

Should I pause campaigns below my target ROAS?

Give underperforming campaigns a chance first with optimization. But yes pause campaigns that consistently miss ROAS targets after several optimization cycles.

Well, there you have it – how this marketing magician tracks and improves ROAS! Now get out there, open your books, whip out your calculators, and start crushing those profitability targets!

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