Marketing 101 — How ROAS can be Improved?

M. Ahmed Tayib
11 March 2021
6 Minutes Read

Data Science to the Rescue

ROAS stands for Return On Ads Spend. This measurement of the marketing campaign is slightly different than the other ones like ROI, Conversion Rates and etc. Unlike the other ones, ROAS is about how much return you are getting from a marketing campaign along with how much you can minimize the cost of the campaign. It's a little trickier since you have to balance both sides of the coin.

If you want to learn more about ROAS and is how it is calculated then please go ahead and this article, which explains thoroughly the topic: What is ROAS and Why is it important?

The Cheap Tricks and How it Fails

If you searched on the internet, you will come across hundreds of tips and tricks on how to improve the ROAS of your marketing campaigns. But do keep in mind that most of them are click baits and will tell you some trivial methods that you probably already know.

For instance, the most common method widely spread is; expand your target audience, expand your mediums of platforms for the marketing campaigns. Well to give them some credit, they work partially, but with a catch. It's very obvious that if you expand the target audience to let's say tens of thousands you are likely to attract more viewers and generate a little more return from the campaign. However, this does not address the fact that reaching more audiences using more mediums and platforms raises the cost significantly. Is the added cost worth it?

In a nutshell, it's easy to increase the campaign conversion and return on campaigns, but it is hard to do without raising the cost significantly. So how do we maximize the return on ad spend while minimizing the campaign cost?

Back to Basics

The method I am about to propose is very simply a basic one, however, it has to be done well. The most overlooked view is the filtering of the target audience. It’s not like reinventing the wheel but about how to effortless fine-tune it perfectly for its purpose.

The secret is to make your marketing campaign more relevant for the viewer. The intuition is if a person is interested in buying shoes then portrait shoe ads with perfectly placed discount promotions or free sipping will convince the viewer. Exposing the particular viewer with ads of perfume even attached with huge discounts will do you no good. This article here explains the power of relevant ads in the modern era: One Step Closer to Achieving A More Relevant Advertising

So, the key is to understand what the audience wants, but how do we know that?

The Data Science Part

It is easy to get intimidated by the term data science, but it necessarily does not have to be that way. After reading this, you can be the judge of the fact if it is simple or not.

To all the e-commerce and online stores out there, you are sitting on a gold mine that you might be unaware of. Website visitor data is packed with a tremendous amount of insights than we care to know. Here is a toy example, quoting from the previous blog post:

If a person is looking at a product for a certain amount of time, there are many things to take away from here. How long was the user looking at the product page, what category was the product from, did the user visited other product pages from the product category, did the user interact with the ratings and comments on the product when was the last time this particular user visited this product page, what device the user is using, and so many more possibilities of information we are not accounting for.

In other words, the website visitors’ data holds many behaviors of the visitors that can help us determine the visitors’ interests and preferences. There are many tools that allow you to extract such behaviors, Enhencer is one of them. Enhencer is an AI platform specifically designed to extract website visitors’ behavior.

Here is how to do that:

Simplicity is the Key

Enhencer has a custom ready to use API that can be integrated into your website. After integrating, Enhencer will automatically collect the visitors’ data from the website. If integration is not your policy you can connect your database or upload the data in whatever format you have. The choice is yours.

Now get ready for too good to be true, yet true anyways scenario :)

After the data is automatically collected or connected or uploaded by the user, Enhencer will do the following:

  • Clean and Prepare the data
  • Create many features automatically from the data like the ones explained in the example above.
  • Train many Machine Learning Algorithms on the data and choose the best one automatically.

Too good to be true right? but that's exactly what Enhencer will do. It manages to do these things by using AI Algorithms on its own. After all these it will hand you with a report like this:

Purchase Propensity

The visitor segments you see on the left are automatically constructed by Enhencer according to the visitors’ behavior on the website. Enhencer breaks down the behavior of the visitors in an informative way: It says these 272 visitors have viewed more than 1 jeans, while never visited accessories page and special prices page, they all have been coming to the website for more than 33 days and have checked out the blazers page. These particular visitors have a 14 times higher chance to purchase a jeans-related product than other visitors.

You can export the list of the visitors from this segment and then simply target these visitors for an ad campaign for jeans with promotional free shipping or discount. Additionally, you can use this list in your Facebook Ads and Google Ads directly so that everything is automated and always synced.

This way you are addressing the visitors by what they actually want, rather than blindly targeting the audience. Therefore, chances are most of these visitors will respond to the ad campaign, increasing the conversion rate. Since you are targeting very specific visitors for very specific needs the cost to reach them is significantly lower than blasting out ad campaigns in every channel to every possible person.

This brings me to another point. This is just one segment of the visitors. All the other segments similarly hold these insights with different behavior and different target audience. Therefore, the ad campaigns for products will be very relevant to the viewers, the return will be higher, while the cost is always is in check.

It is a simple solution to the complex problem of audience targeting. Enhencer ables to do that by using AI algorithms as its backbone. Most of the groundwork is done however the most important work is yet to be done and to be done by the company itself.

The Proper Action

Enhencer helps you understand the website visitors and their preferences while handing you the target audience for the campaigns. It goes without saying that the action you take as the company will affect ROAS the most. You have a list of visitors with certain behaviors that indicate a certain preference for products. The right channel to reach them and the right campaign to attract them is still up to you. Chose what works for you the most. This will overtime curate all target audiences for all your marketing campaigns. As a consequence, your ad campaigns will be more relevant than ever, increasing the conversion rate and minimizing the campaign costs.

Moreover, if integrated using the API, Enhencer will predict the likelihood of purchasing a product for the visitors in real-time. This opens up even more doors of possibilities with push notification and real-time promotion serving and real-time actions. This is a topic for a separate blog post as a whole.

That's how you improve the ROAS using Data Science. Now you can be the judge of whether this is simple and effective or not.

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Written By M. Ahmed Tayib
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