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The vicious cycle of ROAS targets is killing your business

While many companies focus on return on ad spend (ROAS) as their primary KPI for search, columnist Andreas Reiffen believes that ROAS targets can often inhibit growth and new customer acquisition.

Andreas Reiffen on December 14, 2017 at 3:40 pm

Your marketing team is hard at work tweaking ads and landing pages to drive efficiency and hit the targets set for them by the C-suite. And those targets are more than likely ROAS-related.

But, for two reasons, these ROAS targets are actually causing a lot of damage:

ROAS usually doesn’t take incrementality into account, which incentivizes marketers to turn on retargeting or brand campaigns to meet their targets while hardly generating any tangible results.
It sets incentives to sell more low-margin products to mainly existing customers because this type of second-class revenue is cheaper to get.

If, like most companies, you’re focused on growth and new customer acquisition, you need to ditch ROAS-based KPIs, come up with a new metric and include incrementality before it’s too late.

[Read the full article on Search Engine Land.]

Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.

About The Author

Andreas Reiffen

Andreas Reiffen is an entrepreneur, marketing technologist and thought leader in data-driven advertising. Between 2006 and 2008 Andreas operated as a PPC super affiliate working for Zappos and other retailers. In 2008 he founded crealytics, the Berlin-based provider of camato, the leading Google Shopping Tool to automate PLA campaigns and improve performance. Several of the largest international Ecommerce retailers are using camato to manage Google Shopping in more than 100 markets across the globe, generating over $3B in revenues per year. camato has been shortlisted for numerous awards in 2016 including European Performance Marketing and Drum Search.