Pros and Cons of ROAS
*This article is kindly contributed by StudioSpace agency, Shines Digital.
It wasn’t that long ago that ROAS was THE key metric clients wanted to know about in performance campaign reporting.
Although you’ll still see ROAS in our reporting, we also openly talk about the pros and cons with our clients. Join us as we unpack these nuances, offering valuable insights to inform your decision-making.
Pros of ROAS
Performance Measurement:
ROAS serves as a clear to-the-point metric, offering insight into how some advertising dollars translate into revenue. This allows marketers to measure the success of their campaigns and make well-informed, data-driven decisions.
Cost Efficiency:
Through ROAS analysis, marketers can pinpoint the channels and campaigns that yield the greatest returns. Armed with this knowledge, they can fine-tune budget allocations, enhancing the overall cost-effectiveness of their advertising efforts.
Strategic Optimisation:
The real-time nature of ROAS sets the stage for swift adjustments to advertising strategies. Marketers can allocate resources toward the most profitable channels, tweak ad creatives, or adjust targeting parameters – all in response to the instantaneous insights provided by ROAS data.
Cons of ROAS
Short-term Focus:
While ROAS shines a spotlight on short-term gains, there’s a risk of sidelining the long-term impact of brand building and customer loyalty. An overemphasis on immediate returns could potentially hinder investments in strategies that yield results over time.
Complexity in Multi Channel Attribution:
Attribution is an imperfect science, and metrics centered on conversions often cast a less favourable light on upper-channel activities. ROAS faces challenges in presenting a holistic view, especially in scenarios where customers engage with multiple channels before making a purchase.
Overlooking Customer Lifetime Value (CLV):
ROAS, with its focus on immediate returns from single transactions, might overlook the significant factor of CLV. This oversight could result in undervaluing customers who play a pivotal role in generating sustained revenue over an extended period.
And there you have it — the ROAS rundown! Harness these insights to guide your decision-making and enhance returns.
