If you’ve landed on this page, that means you’re wondering, “What is ROAS, and how can it help my business”? ROAS stands for return on Ad Spend and is an easy and effective way to gauge the effectiveness of your ads. It will give you a better idea of which ads are performing and which need to be stopped. Knowing how effective your ads are, empowers business owners like you to spend your ad money where you’ll get the “most bang for your buck.” Determining how to calculate ROAS will be the first focus of this article, followed by creating a digital product. Undoubtedly, digital products are great because they are easy to create, require no shipping costs, and can be delivered to your customers in a matter of seconds.
How to Calculate ROAS
For instance, the most simplistic formula for calculating ROAS is as followed:
Note: Before you continue any further, we want you to know there are better ways to calculate the profitability of your Ad spend. ROAS is particularly useful in digital products, so we are focusing this article on a digital product. But if your business needs to ship an item and factor in costs of goods sold, then ROAS may not be the best metric to use. Calculating your “contribution margin” may serve you better.
What is ROAS and How it Relates to a Digital Product?
Creating your digital process is simple and can be broken down into five easy-to-follow steps.
- Deciding upon which product they would like to create,
- Which problem will that product fix,
- Creating the product,
- Publishing the product,
- Finally, marketing it.
Deciding on the product
Your first course of action should be deciding what you wish to create. Will it be an ebook, a video tutorial, a short course, a webinar, or something else unique to your brand? Take into consideration the time you have to create your product and the amount of work and effort you can dedicate to it. An ebook can take over 10 hours to write. In contrast, a short video can be recorded and edited in as little as 30 minutes to an hour. Knowing which type of product you wish to create will guide you through this whole process.
Which problem will it fix?
You’re creating a product to fix a problem. What are the most common problems your customer base faces? For example, our customer base faces a visibility issue. They want to be seen, but they have no idea how to reach out to their potential audience. We step in and offer a multitude of services to help increase our customer's visibility. Pick one of your target audience's main problems and set out to fix it.
As a tip: You want the problem to be something the customer can fix in less than an hour. Maybe a quick tweak of their website or how to store your gear within your RV for the winter. So find something quick and easy that your customers will appreciate.
Create It
Now comes the fun part. Creating your product. We know at first this can be extremely intimidating if you’ve never done this before. But we promise you it will be rewarding. Focus on delivering your promise. Solve the problem for your customer, and the rest will flow from there. Don’t worry about making a flashy or perfect product your first time around. Furthermore, if you’re creating an eBook or even a video tutorial, you can always outsource your work and allow them to do your product's editing and “beautification.” Focus on the meat and bones. The content is what your customers will remember you for. If you solve their problem, you will have gained a customer for life.
Publish It
Now you need a page that will be able to market your product. Publishing your product to a sales page does take some technical expertise. But here's the basic concept. Create a web page that focuses on showing off this amazing product you have created and how it will help solve your customer's problems. You’ll want to make this page visible from your homepage. Perhaps if you have a service page, you can link it directly here. Otherwise, a pop-up showing off your amazing product might do the trick. Once you have that squared away, you need to ensure your customers can actually purchase the product directly on that page.Finally, make this an automated process. They make the purchase, and then a few minutes later, they receive the product. Simplicity is the best option when creating your page.
Marketing
We have now come full circle and can talk about how ROAS ties into your new digital product. Using paid ads, you will be spreading the word about your new digital product.Effectively choosing the platform will help you gain better exposure to your product. Here are a couple of examples of places you can promote your product:
- Google Ads
- Facebook Ads
- Snapchat
- Youtube
- Bing
This might also be the time to add upsells and show off your main product to your clients. Effectively doing so can increase your business's overall revenue. Don’t forget about your existing customers. You can always reach out to them and show off your amazing product to people that already purchased from you.
After each week, check the effectiveness of your ad campaign. Use the ROAS calculation to calculate the effectiveness of your ad campaign and your overall return on Ad spend. First and foremost, shoot for a ROAS above 1. Anything lower means your campaign is costing you more money than it is making you.
If You Need Some Help
In conclusion, if you find yourself stuck at any of these steps or are just looking for some additional guidance, we are here for you. Feel free to book an appointment at the time that works best for you, and we will gladly share some more pointers to help you get going.
