Analyse Return on Ad Spend by Product

Acquisition > Return on Ad Spend > By Product

Summary

The Return on Ad Spend (ROAS) Trend report helps you assess the performance of individual products in your digital ad campaigns by comparing how much you’re spending on digital ads to the revenue generated from new customers for each product.

Questions the report answers

• Which products are generating the highest return on ad spend (ROAS)?
• What is the cost of acquiring new customers (CAC) for each product?

How to read the report

Evaluate Product Efficiency with CAC and ROAS

• High ROAS, Low CAC: This is the ideal scenario. The product is providing a high return on your ad spend, and the cost of acquiring new customers is low. This means your ad campaigns for this product are highly efficient.
• Low ROAS, High CAC: This suggests that acquiring new customers for this product is expensive, and the return on ad spend is low. You may need to reconsider how much budget you allocate to ads for this product or optimize the campaigns to reduce CAC.
• High ROAS, High CAC: In this case, the product is providing a good return on ad spend, but the cost of acquiring new customers is high. Consider ways to reduce the acquisition cost without compromising returns.
• Low ROAS, Low CAC: Although the cost of acquiring new customers is low, the return on ad spend is also low. This may indicate that the product isn't generating enough revenue or attracting high-value customers.

Compare Product Performance

• High ROAS Across Products: If certain products consistently deliver a high ROAS, consider increasing the ad budget for these products.
• Low ROAS Across Products: If certain products consistently deliver a low ROAS, assess whether the issue is related to the product itself or the ad campaign.
• Higher New Customer Order Amount: If certain products are bringing in higher new customer order values, this indicates that these products are attracting high-value customers.
• Lower New Customer Order Amount: If certain products are bringing in lower new customer order values, consider improving the ad messaging or product positioning to appeal to higher-spending customers.

Glossary

Digital Ad Spend

The total spend on advertisements across all advertising platforms. It is calculated by summing the costs associated with each ad platform.

New Customer Orders

The total number of orders placed by New Customers. It is calculated by counting the orders by New Customers.

Customer Acquisition Cost (CAC)

The cost associated with acquiring a new customer through advertising efforts. It is calculated by dividing the total ad cost by the number of new customers.

New Customer Average Order Value

The average amount spent per order by customers making their first purchase. It is calculated by dividing the total sales amount from new customers by the number of orders placed by those new customers.

New Customer Order Amount

The total revenue generated from customers who are making their first purchase.

Return on Ad Spend (ROAS)

The revenue generated for every dollar spent on advertisements across all advertising platforms. It is calculated by dividing the total ad revenue by the total ad cost.