Shopping KPI Survey: ROAS—What is your return on ad spend?
The Search Monitor recently conducted a survey to aggregate performance metrics for shopping campaigns on Google, Bing and Amazon.
Shopping engines don’t publish any directional stats, and few research papers have been published on this topic. Therefore, benchmarking and goal setting for shopping campaigns is challenging. That’s why we took on the task of anonymously aggregating the top most requested KPI's, including CTR, Conversion Rate, and ROAS for advertisers running shopping campaigns on Google, Amazon and Bing.
What is your return on ad spend?
About the stat: ROAS (return on ad spend) measures how much a business earns in revenue for every dollar spent on marketing or advertising. For example, if your ROAS is 5:1, that means you are making $5 in revenue for every $1 you spend on advertising. ROAS is calculated as Gross Revenue / Ad Spend.
Return on Ad Spend (ROAS) is an important metric to track in shopping ad campaigns. ROAS is essential for quantitatively evaluating the performance of ad campaigns and how they contribute to a retailer’s bottom line. By keeping careful tabs on ROAS, advertisers can make informed decisions on where to spend ad dollars and how to become more efficient.
So, what is a good ROAS? Target ROAS is influenced by several factors, including profit margins, operating expenses, the age and overall performance of a business.
While there's no "right" answer, a common ROAS benchmark is a 4:1 ratio — $4 revenue to $1 in ad spend.
37% of our survey respondents indicated they are seeing ROAS of at least 4x.
Here are a few tips to optimize ROAS:
- Set up targeted ROAS. Google shopping ads allow you to set up targeted ROAS which automates the management of your bids to maximize the value you get from your Shopping campaign.
- Consider gradually reducing the target ROAS of your campaigns. This lets the bid strategy know that you are willing to spend more for each conversion, so the strategy will spend more to increase sales and conversion value.
- Review your bid strategies and ROAS often to track performance and adjust strategies.
- Make sure you remain competitive with other advertisers by monitoring competitors’ performance and strategies.