ROAS for eCommerce: How Retailers Can Track Campaigns for Improved Profit

It comes as no surprise that the pandemic has put pressure on many industries, but retailers have found it particularly challenging. Marketers too are feeling the squeeze, with a recent survey finding that marketing budgets have dropped by almost 5% in the last year. This makes accurately tracking ROAS more important than ever.

Understanding your ROAS can help you understand what’s working, optimise your marketing campaigns, and make your budget work harder than ever. In the blog, we’ll explore how retailers, both high street and eCommerce, can track campaigns for improved profit and effective ROAS.

What is ROAS?

ROAS, also known as return on ad spend, is a marketing-focused metric that measures the amount of revenue generated for every pound or dollar you spend on advertising. Typically used to measure impact of digital advertising, it can also be used to measure granular activity such as specific ads, targeting, campaigns, channels and so on.

Calculating the ROAS of your advertising can help you understand how successful it is in driving revenue and identify which channels are working, which messaging is resonating most, and the impact all of these things have on your bottom line.

It’s worth noting that ROAS and ROI, return on investment, are not interchangeable. ROI focuses on all activity in a marketing campaign, ROAS focuses specifically on paid advertising. Essentially, ROAS measures the ROI of budget invested in advertising.

What is a good ROAS for retailers?

A good ROAS is somewhat subjective and depends on your marketing objectives. It can differ based on what you sell and whether you sell your products in a physical store or you run an eCommerce platform. ROAS is also closely aligned with your goals - are you trying to shift more stock or build awareness?

Generally, the higher your ROAS, the better. A good rule of thumb is to aim for an ROAS of 4:1, that is, £4 in revenue for every £1 spent. This gives you a starting point on which to improve. You might even find that you set different ROAS goals for different channels, depending on the likelihood of a channel effectively converting.

How do I calculate ROAS?

Calculating ROAS is simple, it’s a straightforward formula in which ROAS equals ad revenue divided by the cost of ads. You could do this holistically for all ads you’re running across all channels, or you might prefer to calculate the individual ROAS of paid social, PPC campaigns, and so on.

It’s also important to connect the dots between online customer journeys that become offline conversions. This is more common than you think. Almost two-thirds of online buyers want to have the option of calling at purchase phase and 86% of consumers prefer human interaction over digital channels.

This is important for retailers and eCommerce businesses, who depend on that online research stage to drive awareness and leads. However, calculating ROAS becomes a lot less simple if you’re not using marketing attribution to accurately track the channels that are driving revenue.

How can I track ROAS accurately?

Buyer journeys are complex and it’s not always clear which activity drove final conversion. That’s why marketing attribution is the key to accurately tracking revenue across your campaigns and channels.

Marketing attribution involves creating rules that enable you to understand which touchpoints in the customer journey have the greatest impact. Multi-channel marketing attribution enables you to assign value to each of your marketing touchpoints, resulting in more accurate ROAS tracking.

Marketers often use mechanisms such as cookies, tags, or UTM codes to collect data that can be fed into marketing attribution modelling and build a detailed picture of the campaigns, channels and keywords that are driving conversions.

How Call Tracking and Smart Match can increase profits

It’s more important than ever to match your insight to impact. Companies have experienced an almost 30% increase in calls year-on-year since 2020, demonstrating consumer appetite to talk to your teams before making that all-important purchase. If you want to accurately track conversions, as both a retailer and an eCommerce brand, you need to bridge the gap between online activity and offline sales.

For example, your customers are likely to be made aware of you as a direct results of your paid advertising and PPC campaigns, but if you’re not able to measure the full customer journey - from awareness right through to purchase - you might accidentally give the credit for conversion to another tactic and miss a golden opportunity to convert customers faster and increase profits.

Smart Match, part of Infinity’s suite of products, is the easiest way to connect revenue to your calls and campaigns. It goes beyond standard call tracking technology to help you understand the real value and outcome of each call. It does so by matching the sales and customer journey data to calls, showing you exactly which marketing activity is generating revenue.

Revenue and other outcomes can now be attributed to calls and their source – no CRM integration required!

By activating Smart Match, you can directly link call revenue to your marketing activities and performance reports. With this knowledge at your fingertips, you can quickly and easily identify which channels and campaigns are driving the highest value leads to pick up the phone. What exactly does this mean? Well, you can use call data to optimise your marketing efforts based on offline as well as online sales, boosting your bottom-line effortlessly.

A great example of the importance of offline sales comes from Internet Gardener, an award-winning online retailer. They noticed that 35% of their orders come from phone calls, and these calls tend to be their highest value orders. Customers were looking to discuss big ticket items such as sheds, garden furniture and even log cabins - accounting for over £1 million in revenue!

Internet Gardener swiftly installed Infinity to track and record every call that came into their business, showing them what source – such as search, email, or social - lead to the call as well as any PPC terms that were clicked. These calls were tagged based on the outcome, including the amount of revenue generated when a sale was made. This careful tracking increased the value of their phone orders by 30%, while also driving more sales calls and improving their call conversion rate by over 40%.

Key takeaways

Let’s review how retailers can track campaigns using ROAS for improved profit and performance:

• It pinpoints the moment of conversion by showing you which activity triggered the final purchase, enabling you to focus your efforts and your marketing budget.

• It aligns your wider strategy by demonstrating the high value leads that are converting, enabling you to create campaigns that are guaranteed to have impact.

• Using Smart Match, you can accurately connect revenue to your calls and campaigns, showing you precisely where you’re generating the most revenue.

Take the first step towards smarter marketing and find out more about Smart Match by starting a conversation with us today.