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Advertising: Want to accurately measure your ad spend? Here’s why it might be time to forget about ROAS

By: Author Nina Norman

Posted on  - Last updated:

Categories AdTech

The mathematics of online advertising has recently changed, in case you weren’t aware.

When data tracking was unregulated, you could just divide the money you invested in advertising with how much you earned, and that would be your return on ad spend (ROAS).

But with the introduction of Apple’s privacy regulations and the ever-tightening grip of regulations worldwide, the once renowned ROAS lost most of its pinpoint accuracy.

It simply can’t track customer touchpoints as accurately as it once did. Instead, it leaves you with imprecise data, badly optimized ads, and ultimately, wasted cash.

… Which is why Nigel Thomas is so vocal about multi-channel attribution, or as he calls it in his post, Marketing Efficiency Ratio (MER) – or your total revenue divided by total spend.

Say you’re spending $200k on ads and your ideal customer starts scrolling through their Facebook feed. This sequence can happen:

  1. They spot your ad on the feed and like what they see.
  2. They go to Google and type your brand name.
  3. They see one of your Display ads and land on your page.
  4. They add an item to checkout. But the phone rings, and it’s an emergency. They forget about you.
  5. A few days later on TikTok, they’re hit with your retargeting ad, a customer testimonial ad, for example.

And voila! They are buying, not one, but two or three of your products.

So what’s the deal here? Well, if you use only single-channel attribution, you would think that TikTok remarketing ad did all the legwork.

But then you zoom the buyer’s journey out and see that it’s really the joint effort of three completely different advertising channels:

  • Facebook for discovery.
  • Google Search for decision and high intent.
  • TikTok remarketing to an already high-intent target.

Remember, regulations are getting more and more strict, so it’s more important than ever to start looking at advertising as an omnichannel network for discovery, nurturing, boosting awareness, retargeting, and finally selling.

So tune your tracking tools, ditch the single channel attribution, and reap the benefits.