Average ROAS by Industry: The Most Difficult Metric to Measure
Return on ad spend (ROAS) is a metric that measures the amount of revenue generated from each dollar spent on advertising. It’s a valuable metric for businesses of all sizes, but it can be especially difficult to measure in some industries.
In this article, we’ll discuss the average ROAS by industry, as well as some of the challenges of measuring ROAS in certain industries. We’ll also provide some tips for improving your ROAS.
What is ROAS?
ROAS is calculated by dividing the total revenue generated from advertising by the total cost of advertising. For example, if a business spends $100 on advertising and generates $200 in revenue, its ROAS would be 2.
A high ROAS means that a business is generating more revenue from its advertising than it’s spending. A low ROAS means that the business is not generating as much revenue from its advertising as it could be.
Average ROAS by Industry
The average ROAS varies by industry. Some industries, such as e-commerce, have a higher average ROAS than others, such as the automotive industry.
Here are some of the average ROAS by industry:
- E-commerce: 3.2
- Travel: 2.7
- Lead generation: 2.4
- B2B software: 2.2
- App marketing: 1.9
- Automotive: 1.6
Challenges of Measuring ROAS
There are a few challenges of measuring ROAS in certain industries. One challenge is that some industries have a longer sales cycle than others. For example, it may take several months for a business in the software industry to close a sale. This makes it difficult to track the ROAS of advertising campaigns in these industries.
Another challenge of measuring ROAS is that some industries have a high churn rate. For example, a business in the subscription industry may lose a significant number of customers each month. This makes it difficult to track the long-term impact of advertising campaigns in these industries.
Tips for Improving ROAS
There are a few things that businesses can do to improve their ROAS. One thing is to target their advertising more effectively. Businesses should focus their advertising on their target audience and on the products or services that are most likely to generate sales.
Another thing that businesses can do to improve their ROAS is to track their results more closely. Businesses should track the ROAS of each advertising campaign and make adjustments as needed.
Finally, businesses can improve their ROAS by using more effective advertising channels. Some advertising channels, such as pay-per-click (PPC) advertising, can be more effective than others.
Conclusion
ROAS is a valuable metric for businesses of all sizes. However, it can be difficult to measure ROAS in some industries. By understanding the average ROAS by industry and the challenges of measuring ROAS, businesses can improve their ROAS and get more value from their advertising campaigns.
