ROI for Paid Advertising Strategies
As so many marketers know, paid ads can present many issues to strategy. You decide what platforms to launch on, you choose how long your ad will be visible, and then you set your prices and budgets. From there, what do you do next? Paid ads are notoriously hard to measure in their value. If you run ads without figuring out how you will measure their effectiveness, you may be throwing money down the drain. You know that your ad is being shown somewhere to someone, but how do you know it is working to convert your passive viewers into customers? Measuring your return on investment, or ROI, answers all of these questions and helps you to improve your paid ad strategy. The team at Lyv Marketing is here today to walk you through measuring ROI for your various paid ads strategy.
Measuring ROI in Paid Advertising
ROI is a very important data metric that marketers collect after they run their campaigns. It helps to tell you if what you are doing is working or if you need to pivot your money and priorities. When you get to the bottom of it, ROI is measured by telling you how much profit you are turning for every dollar you are spending. For example, if you make double your investment from an ad, it is safe to say that your campaign is successful. If you make half of your investment, it might be time to change the strategy. By figuring out what is turning you a profit and what isn’t, you can decide what marketing tactics work for your business and which ones do not.
Why Your Marketing ROI Matters
When you first begin testing out different marketing strategies, it can be hard not to hone in on things like social media clicks and impressions. Even though these things are good to know, they don’t necessarily accurately measure how effective your efforts are. Measuring ROI specifically allows you to figure out where your money is doing the most for you. Maybe your ROI on Instagram is double your ROI on Facebook. This means that your money is more well spent on the former than the latter.
Understanding Your Budget & Profitable Channels
The way you segment established buyers and new buyers should be different. This is because in this case we know one of these customers has an established knowledge of the brand and the other will be finding it for the first time. For the previous buyer, you want to analyze what they’ve already purchased and what they might come back to you for. For the new customer, you want to help them find what they’re looking for as seamlessly as possible. Look at the key online/social platforms that previous and new customers visit. Knowing where people are finding you and your products/services helps you a lot in terms of how and where to target them. This is also another way you can continue to build your customer segments. These traits and online activity are good ways to keep creating the groups that will receive different marketing efforts and strategies.
Metrics You Need To Measure Your ROI
Now, how do we find the right numbers to get an accurate ROI reading? Let’s dive in. The formula is called the “Cost per Acquisition” and it is measured like this: CPA = Total Ad Spend / Total Conversions. This relates to the cost it took you to sell to a customer. This number is found in different places for each channel.
Google Ads: Campaigns > Columns > Conversions > Cost / conv.
Facebook Ads Manager: Performance View > Cost per Result.
TikTok Ads Manager: Campaign > Metrics > Cost per Result.
Another important metric that you can add to your measurements is the “Clik-Through Rate) or CTR. The formula looks like this: CTR% = (Total Clicks / Total Impressions) x 100. This tells you how well your ad entices people to click on it. Here’s where to find it.
Google Ads: Campaigns > Columns > Performance > CTR.
Facebook Ads Manager: Columns > Performance > CTR (Link Click-Through Rate).
TikTok Ads Manager: Campaign > Metrics > CTR.
Changing Your Budgets and Bids Regularly
Bidding strategies are good to have, but they are not something to just leave alone once you set them. With trends shifting and changing, along with the user experience, you should be updating these as the platforms and your audience shift and change. Tweak what you’re doing as the performance on your ads varies. It also helps you to show ads to people who have visited your site before but haven’t converted yet. This is called remarketing. It can be a great place to involve your ads, especially when you’ve seen them working on first-time customers.
Takeaway: Paid Ads are Only as Good as You Let Them Be
While paid ads are a great thing to have in your toolbox, they only thrive with the right amount of attention and focus. They require you to not only look at your audience, but the market at large. If you’re looking for a team to take over your paid ads, Lyv Marketing is here for you. We use our knowledge of the market and the strategies that are successful on certain platforms and apply them to your brand. Fill out the content form on our website to schedule your free consultation today!
