Years ago, when digital-only advertising platforms arrived, they seemed to make everything easier. From reporting to ad placements, digital advertising made our lives easier, so we stopped prioritizing anything but digital ad metrics. As demands on performance and budget increased, our commitment to faster and easier digital ads only strengthened, whether or not they resulted in the sort “results” our CEOs were expecting. 

In 2024, we just can’t justify prioritizing digital advertising metrics. Marketers need to shift to more thoughtful, comprehensive plans built with a single goal in mind: real business results. Here’s how you make that possible. 

1. Concentrate Efforts on Brick and Mortar Customers

The internet has taken over all of our lives in a way that makes it seem silly to differentiate between online and offline lives. We stay connected to cross-country friends online, we make big announcements online, we shop for homes online. 

But the truth is, 83% of all retail purchases still happen in brick and mortar locations. We are still largely offline buyers, which means, if your Marketing team does not have an explicit plan for driving in-store visits, you’re leaving money on the table. 

To grow consistently in today’s competitive landscape, advertisers must shift their strategies away from digital-metrics-first and create more balanced media plans. That means instead of low CPMs, your North Star metric should be in-store visits. Rethink how you build audience segments so that you are targeting people with proven intent rather than just affinity. Partner with companies that can help you draw clear lines of attribution between each ad set and traffic. 

Unless you make this fundamental shift, your company is at risk for overspending on marketing that will keep you stagnant at best, despite great-looking CPMs. 

2. Expand Your Performance Goals for Connected TV and Other Channels

Beyond that, advertisers need to expand the way they think about audience segments and behaviors across channels. Because digital platforms made it easy to find audiences based on what they engage with online, marketers got out of the habit of thinking about people complexly. 

We see an audience segment named Sports Enthusiasts and we automatically start to narrow what our creative might look like, what the copy is, what actions they will take. It’s not all wrong, of course. A Timberwolves fan likely won’t turn away from an upcoming playoff to visit a new restaurant in town. But, just because you don’t get a conversion at that moment doesn’t mean you didn’t drive one at all. They do need to eat at some point.

When you’re building media strategies, ensure that you can tie impactful channels, like CTV, to real business results, like in-store visits. Don’t settle for views or click-thru rates. Push your media partners to show you how each channel contributed to the goals your board cares about. 

3. Test and Optimize with Real Business Results in Mind

Finally, marketers must shift the way they test and optimize their campaigns. A couple of months ago, I mentioned that marketers often forget that Return On Ad Spend (ROAS) is an efficiency metric. Many believe that if they just hit a benchmark (3:1, for example), that means they’re performing well. But, that isn’t always the case. Higher ROAS is sometimes required to break into new markets or audiences. In other words, for growth.

Digital advertising has conditioned marketers to think about performance in black and white terms. We sometimes optimize for the wrong goals, or, goals that aren’t aligned with what CEOs are asking from us. Goals that feel good in a digital metrics dashboard but don’t correlate to real impact in our business. 

Again, keep your company’s unique goals in mind when you’re testing campaigns and optimizing for results. If you want more repeat customers, optimizing for unique visitors to your website isn’t an effective strategy. Similarly, if your goal is to increase sales, you should be optimizing for in-store visits rather than website visits. Of course, a strong marketing strategy makes room for all these actions, but the main focus, your single goal, should be at the forefront when you make choices about testing and optimizing. 

There is no silver bullet to the top, but in today’s market, marketers who refuse to incorporate these shifts into their strategies risk not growing at all.

The post The Real Reason Your Ad Campaigns Aren’t Working (And 3 Ways to Fix Them) appeared first on GroundTruth.

What ROAS should ultimately reveal is the balance between profitable ad spend and consistent audience growth. If you don’t know how to find that balance, your company won’t be able to scale, particularly in a competitive marketplace. So, how do you get there? Let’s talk about it. 

Maintain ROAS that Makes Your Business Profitable

ROAS should not be used as an isolated performance metric. It does measure efficiency, but the goal is not to be the most efficient. The goal is to drive the maximum amount of sales/traffic/conversions efficiently. ROAS shouldn’t come at the expense of growing those real business results. 

In truth, most businesses are profitable at a ROAS of 3:1. And the tendency is to think that if a 3:1 ROAS is profitable, then a 5:1 ROAS must be even better. That’s true in a standard performance metric. But, with ROAS, it may mean you’re holding back media spend that could drive more net sales.  

Let’s look at the numbers.

Say the real business result you need is to increase sales. If you earn $5 in sales and turn a profit for every $1 media spent on an audience of 100 people, your sales benefit is $400 (revenue minus the ad spend). When you reach beyond that first 100 people, you see ROAS go down. Many are tempted to keep their audience capped at 100 so they maintain 5:1 ROAS. 

But if that same campaign, scaled to 10,000 people, achieves the lower ROAS, $3 earned for every $1 spent, the company is still profitable, and your sales benefit is $20,000. ROAS isn’t higher, but you have made a measurable improvement to sales because you’ve driven sales from more people. Efficiency isn’t getting in the way of real business results. 

And that doesn’t even take into account the benefit of future sales of that bigger audience you’ve now captured. 

ROAS will tend to be higher at lower reach in any effective campaign. The goal is to get to the best return against the real business result you want—in-store visits, sales, check growth, whatever. Efficient ad spend is not the ultimate goal. 

Spend More on Advertising that Drives a Real Business Result

Now is a good time to be clear that not all audiences are created equal. Advertisers can’t expect to maintain profitable ROAS by adding thousands of shoppers to their audience segments arbitrarily. Instead, each campaign should teach you something about where to spend your marketing dollars and on which audiences. 

The best thing to do is find a media partner that can identify audiences likely to become customers. At GroundTruth, for example, we use in-store visits, purchases, and other data based on real-world behaviors to build our audiences. 

Our customers know that when they scale campaigns to include more shoppers, they won’t just see an improvement in vanity metrics, like impressions. They are investing in the kind of audiences that will help them scale the real business result they’re seeking. And on top of this, GroundTruth measures if people you target with advertising are actually showing up to your store through those same real-world behaviors. 

Evolve ROAS Targets as You Scale

Of course, not every campaign will scale exactly as planned. When you find yourself in a situation where ROAS starts to dip below your profitability margin, that is when you need to optimize in a more traditional sense.

Rather than throwing money into bigger audiences, invest your money into advertising you know works for you. Move budget away from awareness campaigns that are meant to grow your audience and into smaller, targeted campaigns that you know will convert to more foot traffic and a lift in sales. The changes don’t have to be forever, just long enough that your ROAS is balanced again. Once you’re back to a profitable ROAS, refocus your investments on audience growth, scaling conversion, and increasing real business results. 

Key Takeaways

• Improving the real business results you’re seeking, like sales growth, can be held back by just focusing on the best ROAS. Sometimes you’ll need to give up some efficiency to grow your audience and scale real business results, then optimize once you begin achieving the result. 
• Better audience targeting can help you deliver advertising with a higher likelihood to drive customers in. Invest in the right platforms to reach audiences based on proven behaviors that lead to conversions, not just interests or broadest reach. 
• The right ROAS target will change throughout the year. Make sure your ad strategy accounts for the ebbs and flows of scaling your campaigns, and always keep the real business result you are seeking as your primary measure of success. 

The post ROAS Is A Great Efficiency Metric, But Advertisers Are Asked to Deliver on Real Business Results appeared first on GroundTruth.

It sounds simple enough. Measure performance constantly, optimize in real time, and don’t let your ROAS metric fall below the goal. But there is nuance to understanding ROAS, particularly when running sophisticated, multi-channel ad campaigns. The numbers aren’t black and white, at least not in performance reports. To be successful this year, companies need to start thinking differently about what ROAS measures and how to improve it for your 2024 goals. 

ROAS requires nuance to help teams solve the most important problems

Our marketing team just finished our planning process for this year. The single question that guided all our strategy sessions was “What problem are we trying to solve?” We know the objectives we need to achieve, but the reality is we could get there using a variety of strategies. Remembering the main driver of each tactic helps us decide how to measure ROAS in a meaningful way. 

For example, we might track ROAS for new business compared to existing customers to understand how we’re impacting customer retention and growth. We might compare ROAS from different channels (including mobile, CTV, DOOH, foot traffic, online store visits, etc.), using different media on different audience segments to understand what resources we need. We know which channels are an investment for the future and which ones need strict adherence to our target. And the same is probably true for your organization. At least, it should be if you want to be competitive in the year of big advertising budgets. 

As a single metric, ROAS is a powerful way to understand what provides a reasonable return in your marketing mix at the most crucial moments of your customers’ decision process. Add to it another, correlating measure of business impact, like foot traffic, and it becomes even stronger. By connecting ROAS to your other performance metrics, you improve your chances of running an efficient and impactful campaign. 

ROAS requires context for each channel 

The other critical change to how your marketing team uses ROAS is to always keep context in mind. I mentioned earlier that we have some channels that are an investment in the future. We, like most teams, have identified places we want to expand. That might mean breaking into a new market, trying a new advertising channel, or repositioning your company. In terms of performance, that means you’ll need to decide what your target is, and how long you’re willing to wait before you reach that target. 

Let’s say your ROAS for display ads right now is 3:1. That works for a market that is familiar with you and people who know the quality of your product. The same steps you took to reach that ROAS will not work when you’re trying to break into a new customer base. You cannot expect the same formula to work under new conditions. As such, you need to rethink what your threshold will be for each channel and plan for the months that may require more spend. A single ROAS target won’t work for everything. It may be useful as a gutcheck, but in order to make the best optimization decisions, you’ll likely need a flexible range based on the context of your campaigns. 

It sounds counterintuitive to make your targets flexible, but when you’re thinking about quarterly and long-term growth goals, adding context to your performance data is critical. 

Always prioritize real business results

It takes a sophisticated marketer to find the balance for all of your team’s efforts. This year will require teams to be creative and precise in the ways that they reach their audiences efficiently and effectively, driving a return for that investment. It might mean new ways of thinking about foundational marketing strategies or ensuring context when considering specific metrics like ROAS. But the good news is we have access to the tools we need to tie most decisions to real business results, further enhanced by media partners that can measure correlating real business results like foot traffic. And that is a great place to start the year, despite the challenges 2024 will pose to CPMs. 

Key Takeaways: 

• 2024 will be an expensive year for advertising, putting pressure on CPMs and ROAS
• Ensuring you’ve defined a clear problem to solve, not just a KPI, is important 
• ROAS should be evaluated in context of the problems you’re solving 
• Comparing correlating metrics to ROAS, like foot traffic or sales, will help you show a real business result to your marketing investment

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