Beyond ROAS: How A Health and Personal Care Brand Optimized Around a Better Metric
The shift in advertising from traditional mediums to online began in the late 90s, and during that time Return on Ad Spend (ROAS) became the standard metric to ultimately answer the question, “how much sales did my online ad generate?” While ROAS may consider how conversions are attributed to incremental sales, it does not consider the ultimate goal – profit.
Overall Top-Line Growth (vs daily average)
Increase in YOY Top-Line Growth
Increase in Profit
So is there a better metric to measure ad spend success? Yes, net margin profit. Solely focusing on ROAS as the goal metric limits a brand’s view of the full financial picture of the ad effectiveness and product sales. At Tradeswell our platform has the capabilities to look at and optimize ad spend to ensure this profitability down to a SKU level to enable brands to achieve top-line growth while improving the bottom line. This case study explores how one brand was able to adjust its strategies and target metrics to find greater success.
Before working with Tradeswell, a health and personal care brand saw good results during Prime Day 2019, surpassing their ROAS goal. However, after partnering with Tradeswell, the team crafted a new strategy for Prime Day 2020 that focused on tactics to drive incremental sales, new customer acquisition, and profit. This included flexible advertising investments targeting non-branded/category search. By leveraging the real-time data and insights from the Tradeswell platform, the brand was able to optimize its ad strategies.
The 2020 Prime Day campaign was a success. More was spent on advertising, but with a greater return. The brand saw total sales double versus Prime Day 2019, as well as a 4x increase in ad attributed sales, with 25% driven by new customer acquisition, and ultimately, surpassed their net margin goal. If the brand had solely measured the campaign based on ROAS, they would’ve missed out on the potential for greater sales and profit.
4x Growth in Ad Attributed Sales
20% Increase in New Customer Acquisition
45% Decrease Traditional Metric - ROAS
By focusing on ROAS in 2019, the brand constrained themselves in the amount of sales and profit they could generate. ROAS acted as a ceiling, limiting potential, instead of acting as a floor from which generated growth. Instead, by focusing on net margin, the brand was able to maximize its advertising spend to target and convert more incremental consumers. With this shift in strategy, the brand was able to increase sales and profit achieved for Prime Day 2020.
To read more about how Tradeswell has helped other brands find success during Prime Day, read our other case study. To learn more about how Tradeswell can help your business find financial ecommerce success, get started today.