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FEATURED RESOURCE: Use this spreadsheet to calculate critical KPIs like CPA, target ROAS, and gross profit.
Your main objective for the first few months of any digital campaign should be to come away with a deadly accurate pulse on your market conditions, your purchasing audience, what compels them to pay for your product and any obstacles getting in the way of paying for your product.
Armed with this knowledge, you can make critical decisions around HOW to market your product in digital ads, through a keen understanding of your audience’s pricing tolerance, preferred messaging and detailed targeting.
For the first phase of your digital campaign, ROAS is simply the cherry on top. You’re building the sundae from the bottom up, starting with:
Detailed demographic, interest and behavior-based breakdown of what groups of people are eager to buy from you, those who can be coaxed into buying from you and those who aren’t worth your ad spend
Average number of impressions it takes for a person to reach the purchase tipping point
What X price point you need to set to achieve Y ROAS under non-cyclical conditions
Accurate comparison of how messages perform (and compel to purchase) with various audiences
How other channels might be brought in to assist in a conversion – and to increase the long term value of the customer by upsell and repeat purchase
Which customers are most likely to purchase again (and again) and why
While any business owner would jump at the above information, few actually get there. Far too many are dissuaded from the testing it takes to uncover this valuable information by one difficult truth: These kinds of objectives are often at odds with increasing short-term ROAS.
Unlocking seven or eight figures of revenue might mean taking a hit on the first few months of ad spend. Brace yourself – it may be even more with big ticket items or those with a long purchase path. That's not a bad thing if you're laying the foundations for long-term success!