• December 1, 2022
  • By Linda Pophal, business journalist and content marketer

Using ROAS to Maximize Your Limited Ad Dollars

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Since 2015, research firm Statista has seen “a visible advantage in the focus on digital marketing and advertising over traditional channels.” And while in general marketing leaders have been reducing their investment in traditional advertising, growth in digital advertising has remained strong. Earlier this year, U.S. chief marketing officers said that their digital spending grew by 16.2 percent relative to the preceding 12 months, according to Statista.

Digital marketing does offer some real significant advantages over traditional marketing, including potentially lower costs and a far greater opportunity to measure and manage advertising investments.

One metric on which virtually all digital marketers rely when evaluating the effectiveness of their advertising dollars is return on ad spend (ROAS). It’s based on digital attribution—tracking where leads, clicks, inquiries, and so on originate. And, while it seems pretty straightforward, it can get quite complex. Google offers some basic advice and information to help advertisers understand the options available to them.

Google notes that ROAS depends on what is referred to as attribution models, which are based on certain factors, such as the following:

  • First click—counting the first ads or links users clicked on as the ones that drove the conversions.
  • Last click—counting the last ads or links users clicked on as the ones that drove the conversions.
  • Linear—sharing credit for conversions across all user interactions.
  • Time decay—crediting actions that occurred most closely to the conversions.
  • Position-based—crediting the first and last ad interactions at 40 percent and those in the middle at 20 percent collectively.
  • Data-driven—using historical data to calculate contributions across conversion pathways.

As these attribution model options illustrate, while the digital environment definitely offers benefits from a tracking and analytics standpoint, it’s not perfect. Just as in the traditional advertising world, it has historically been challenging, if not impossible, to perfectly understand where lead or sales actually started. This is because there is rarely one single driver but rather a number of touchpoints that ultimately lead to action. And, in fact, some of those touchpoints might occur in the analog world, such as a billboard, word of mouth from a friend, or a media report.

The goal, though, is to be as accurate and precise as possible in tracking the online behaviors of consumers as they respond to your ads and reach your websites, landing pages, and other destinations. Starting down that pathway requires decisions related to what you will track and how, recognizing the potential limitations of these choices.

“When it comes to determining ROAS and using it for proactive decision making, it all comes down to two things: having the right analytics framework—tracking setup, accurate data, and relevant benchmarks—and leveraging a visualization tool that enables you to see all real-time ROAS metrics in one place,” says Clemens Rychlik, chief operating officer of Bourbon Creative, a digital marketing agency.

But there’s another consideration that comes first that can help marketers be as effective as possible in maximizing the impact of their ad spends, says Nate Amspacher, owner and founder of Upstream Digital Marketing, and it’s a pretty simple step.


“When it comes to determining where to spend your money with limited ad dollars, I always tell my clients to start on platforms where people are already looking for you,” Amspacher says. “This usually leads them to Google Search and Microsoft Advertising.”

The benefits of these search platforms, he says, “is you, as the advertiser, know you will be spending your budget on the segment of your audience that is actively in-market for your product or service and they are much more likely to convert because of that intent.”

Beyond being present on highly used search platforms, companies should next turn to some of the leading social ad platforms, Amspacher says. “Even with Apple’s recent privacy changes, Facebook and Instagram ads are still the best social ads to be running due to their scale,” he says. “If you utilize Meta’s algorithm correctly, Facebook and Instagram ads have the potential to bring in similar costs per lead and total number of leads as Google or Microsoft.”

Once these platforms have been maxed out with spend, Amsbacher says, marketers should “turn to more brand awareness channels like YouTube, Spotify, Hulu, Programmatic/OTT, etc.”

Of course, despite solid reasoning behind his recommendations, not all marketers will achieve the same results with the same platforms. It depends on what they have to offer, to whom they’re offering it, with whom they’re competing, and a number of other factors that can make one company or brand do very well on a platform like Pinterest while another one tanks.

That’s where attention to return on ad spend comes into play.

“Determining where to spend ad dollars really boils down to the ROAS and the ratio between customer acquisition cost and customer lifetime value,” says Joe Karasin, head of growth marketing at CircleIt, provider of a platform that lets users create, schedule, and send cards. The ratio helps marketers compare customer value over time to the cost of acquiring them in the first place. “These metrics give us the insight we need to determine what works, what doesn’t, and the cost-benefit of specific marketing initiatives,” Karasin says.

While goals like brand awareness are nice, Karasin says these are the kind of metrics that “larger, established brands have the luxury of focusing on.” Smaller companies, he says, need to focus on metrics that drive growth. Fortunately, finding these numbers is relatively easy, he says.

Using ROAS and other metrics effectively requires the right framework that is focused on each marketer’s unique interests and needs.

Having the proper tracking setup is foundational to effective tracking, Rychlik says. “If you don’t have the expertise yourself or within your team, then just hire an external freelancer or agency to set it up for you, especially for setting up the right goal achievement tracking and calculations for ROAS data,” he advises. This could include enriching data with customer lifetime value.

It’s also important to have reference points to determine whether the data is “good” or “bad.”

“To interpret data, you need reference points,” Rychlik says. “This can be industry benchmarks, competitor benchmarks, or even just internal benchmarks.”

For example, internal benchmarks might be created by doing A/B testing on your campaigns or the channels you use, helping to identifying which efforts work best—and what “best” is from a quantifiable standpoint. That then becomes the baseline or target for “effective.” These reference points, Rychlik says further, “should exist for each specific channel separately to provide the most relevant insights.”

Another important reference point, according to Amsbacher, is the number of leads required to generate a sale. He recommends that “business owners have in-depth conversations with their advertisers to determine how many leads it takes to lead to an actual sale—lead gen—or what their return on ad spend needs to be for the business to be profitable.”

Finally, it’s critical to ensure the data is accurate and valid—that it’s telling you what you think it’s telling you. This could mean, for example, ensuring your data is free of fraudulent or internal team member traffic and clicks, he adds, noting that this can be done manually or by working with an ad fraud prevention solution.


Which brings us to the tools that can be used to help in the ad tracking process.

Google Analytics is undoubtedly one of the top tools for analyzing ad results.

“Making sure you have a proper Google Analytics (Universal) and GA4 (new) properties setup is crucial in making sure you are spending money in the right places,” Amsbacher says.

Privacy restrictions have negatively impacted metrics in the ad platforms themselves, Amsbacher says, “so I always recommend using Google Analytics as the source of truth when it comes to leads because Google Analytics is the main platform used on websites to track actions on-site—form submissions, phone calls, email clicks, etc.”

Setting up conversion tracking in Google Analytics, Amsbacher says, is important “to see what advertising platform you are spending money on is bringing actual leads in for the business.”

Google Ads, Karasin notes, “allows you to target your ad spend by desired ROAS, and you can easily see your CAC. At CircleIt we see across all platforms that our CAC is averaging $1.17. We use Firebase to measure user retention and conversion within our app, which can help us determine the LTV. Once you have those numbers in front of you, you can determine how to allocate your budget.” Karasin says that when he’s told he has a $200,000 budget for the month, he immediately looks at which path has been best for converting consumers into members. That, he says, “is where the bulk of the marketing dollars will go.”

Rychlik points to the potential for fraudulent traffic—something that really is the bane of many marketers. Even the big players are subject to fraud. Forrester Research recently found that 69 percent of companies spending $1 million per month reported that at least 20 percent of their budgets were being lost to digital ad fraud. Though not 100 percent effective, click fraud software can help marketers detect and block fraudulent clicks.

While Google Analytics generally tops the list, it doesn’t necessarily meet every marketer’s needs. There are a wide range of other tools that are prevalent and popular among digital marketers, including the following:

  • Adobe Analytics, which offers the same type of functionality as Google, as well as the ability to generate predictive insights.
  • Hotjar, which uses heatmaps to show where site visitors go on your site to determine what attracts their attention and what doesn’t, as well as what they click and how they use your site.
  • HubSpot, which offers both automation of marketing emails and analysis of traffic results with more than 500 app integrations.
  • SproutSocial, a social media monitoring tool that includes cross-channel analytics capabilities.

Ideally, Rychlik says, marketers should have one tool that does it all. “You definitely don’t want to have to log in and check five different dashboards every time or have to export and upload reports into one spreadsheet or tool manually.” He points to smart tools that allow marketers to automatically gather and visualize ROAS data for different channels in real time; these include Chartio, Looker (acquired by Google in 2019 for $2.6 billion), Tableau (acquired by Salesforce in 2019 for nearly $16 billion), and Sisense.

Other top business analytics platforms include Anaconda, Alteryx Analytics, RapidMiner Studio, KNIME Analytics Platform, TIBCO Spotfire, Arcadia Data, Knowi, TIMi Suite, Viscovery Software Suite, FICO Xpress Optimization Suite, TARGIT Decision Suite, Einstein Analytics, Rapid Insight Veera, Trend Miner, Civis Platform, Guavus, Reflex Platform, and Vanguard Business Analytics.

The sheer number of vendors, the frequency with which these platforms change, and the constant emergence of new market entrants can make it challenging for digital marketers to choose a platform, or platforms, and to know when to change. That’s why, as Rychlik suggests, turning to an agency for help can make sense and be cost-effective. They are not only on top of new entrants and changes to the tools available but experienced in their use.


There’s an important caveat with ROAS: While it is a useful and commonly used tool to measure and monitor digital ad spend effectiveness, marketers also need to understand its limitations. Relying too heavily on ROAS can lead to short-term thinking and missed opportunities. After all, digital marketing is really a rich tapestry of many different touchpoints that combine to influence sales.

Still, while not perfect, ROAS in the digital environment does offer more granularity and relevant insights than signals in the traditional advertising environment. And the tools available to help track results are becoming increasingly sophisticated.

Starting from a foundation of understanding your audience and where they travel in the digital world, establishing a framework of what is important to track and what good results are, and selecting a tool or tools that can help you reliably measure results will provide important insights to help shape smart ad placement decisions. 

Linda Pophal is a freelance business journalist and content marketer who writes for various business and trade publications. Pophal does content marketing for Fortune 500 companies, small businesses, and individuals on a wide range of subjects, from human resource management and employee relations to marketing, technology, healthcare industry trends, and more.

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