Quick note: I’m testing different topics to write about. This week, I’m trying a Marketing-related post to see how much you’ll enjoy reading articles like these. Let me know in the comments or by dropping me an email 🙂
When I first started working in digital marketing almost 10 years ago, I was fascinated by how measurable it was.
In my previous roles, I couldn’t find a way to measure the impact of my papers or my projects. Digital marketing, however, was different. I could make a tweak in a setting, and immediately see how that influenced the revenue I was driving. It was fun! I felt like a little kid manipulating the controls of a huge, complex, video game.
But lately, I’ve started to notice that this measurability can also be a trap. And it’s a trap that I’ve seen impact hundreds of smart, resourceful digital marketers.
A Quick Primer on ROAS
There’s a metric called “Return on Ad Spend” (ROAS) that every marketer has heard of. Quite simply, it’s how much revenue your ad budget generates. If you spend $100 on ads and those ads bring in $1,000 in revenue, your ROAS is 10X ($1,000 revenue divided by $100 spend).
Marketers love ROAS. It’s a sexy metric. They even have T-shirts saying “In ROA$ We Trust”. If you, as a marketer, grew your ROAS from 10X to 20X, other marketers will look at you in awe and whisper you name in hushed tones as you stroll through the office cafeteria in slow motion.
The problem is: You can’t measure ROAS for everything. At least, not directly.
ROAS is most easily measured in an area called performance marketing. Performance marketing usually involves digital channels like Search and Social, where users click on ads and buy something. It’s super easy