Return on Ad Spend, abbreviated as ROAS, might be the most telling digital marketing metric available on any platform. Calculated by taking the total revenue generated and dividing that number by the total spend, ROAS can help detail a digital campaign’s impact on your bottom line. Historically, measuring ROAS on digital campaigns was far from precise. Methods relied heavily on cookies and UTM codes, which gave no indication as to who was targeted and who responded. With the popularization of audience onboarding and first-party tracking pixels, pixel-based ROAS and Response Analysis are the next wave of measurement methods for this metric.
While tracking pixels can provide a higher level of confidence over legacy methods, they do not compare to a Response Analysis. Here’s why.
What is a Response Analysis Report?
A LiftEngine specialty, a Response Analysis parses each individual transaction that has taken place over the lifetime of a digital campaign and checks to see if that individual appears in the original targeted audience. If a “match” is made, attribution for that transaction is given to that channel, campaign, and targeted audience. Similar practices have been used for decades in the direct marketing sector, helping brands gauge the success of their direct mail campaigns.
In an extremely simplified example, if you know John Smith of 123 Main Street in Anytown, USA was only onboarded to Facebook for your Back-to-School campaign, and you found that John Smith of 123 Main Street in Anytown, USA purchased from you over the course of the campaign, you can reasonably attribute credit for the sale to the channel, the campaign and the audience he originated from.
Advantages of Response Analysis Over Tracking Pixels
There are several advantages a Response Analysis has over tracking pixels alone. Here are the most notable.
Digital advertising platforms are notoriously secretive, keeping much of their logic and business rules to themselves. When Tracking Pixels are used, when and how a conversion is credited to a campaign most likely varies platform-to-platform, but we’ll never know for sure because of a lack of transparency.
While the method for counting conversions vary by vendor, the process is normally extremely transparent for a Response Analysis. Typically, a match is performed on a name and mailing address level. More savvy shops integrate additional logic to capture both indirect and offline / out-of-channel purchases. More on that below.
Account for Indirect Purchases
Take the following example: John Smith of 123 Main Street in Anytown, USA is sent your Facebook ad and tells his wife, Jane Smith, about the promotion. Jane Smith then goes to your website on her device and completes a purchase under her name. In the world of tracking pixels your campaign will not get the credit it deserves.
With a Response Analysis, special cases like indirect purchases can be worked into the logic so campaigns can be properly awarded. The result is a more robust understanding of where your customers come from, and how each campaign impacts your bottom line.
Account for Offline or Out-of-Channel Purchases
Using a similar example above, if John Smith receives a Facebook ad for your brand but calls up to order, your Facebook ad should be attributed some success for the sale. A Response Analysis can capture these offline, out-of-channel purchases.
Wider Scope and Attribution
When ROAS is calculated via tracking pixel on an individual platform, the resulting value only accounts for that specific environment. For marketers running campaigns across a number of different channels, or campaigns that have additional costs associated with creative or data, trying to piece together the full picture can be a headache.
A Response Analysis can be as comprehensive as your campaigns. As long as you know who is being onboarded to each marketing platform, the analysis can be customized to meet your attribution requirements.
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ROAS is an extremely important measure to track. At the very least, you should have tracking pixels installed on your website for each digital platform that offers it. It’s definitely better than nothing. However, to gain some next-level insights a Response Analysis is a must-try.
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Published on Jun. 11, 2019, Last Updated on Jul. 18, 2022