Media Optimization
Media Spend vs. ROAS
ROAS vs. TROAS
TROAS

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How to Optimize Media Spend Towards Performance

Campaign Optimization Best Practices

There is no single recipe for optimization. Every product is different, external conditions (seasonality, special days, competition, weather, etc) can all influence the performance of media activities, but there are some helpful guidelines every marketer should consider in order to get the most out of their media spend.

 

Know thy Strategy

Marketing doesn’t (or shouldn’t) happen in a vacuum. Marketing is a means to an end, and that end is called Your Company’s Strategy. 

Marketing is a critical stakeholder in forming the strategy, as while a company is seeking to reach certain goals and objectives for growth, revenue, profitability, marketing may sometimes be the driving force using skills and resources to meet those goals.

Various company goals dictate different marketing strategies:

 

Company Strategy

Marketing Goal 

Critical Questions

Revenue Growth!

Acquire as many potential customers as you can

Is there a secondary margin goal ?

Is there a set CAC goal ?

Absolute Profit Growth!

Minimize your CAC by eliminating waste, focusing on value, and maximizing your LTV

Is there a $ target to reach?

ROAS & Moderate Growth

Marketing should continue and try and scale as long as Return on Advertising Spend (ROAS) remains positive

Is ROAS calculated only for Results coming from Paid Marketing ? 

Or is Total ROAS (All Revenues from a Cohort / Spend) the goal ?

 

When not defined correctly - conflicts between marketing and the company goals can lead to catastrophic outcomes, wasting budgets and even taking the company into bankruptcy. 

For example - companies setting a ROAS target, but not including a specific Total ROAS (total revenues from a new cohort) may create counterproductive incentives for the marketing team to focus on growth, even if growth comes at the expense of of attributing organic customers to paid media by overspending. 

 

What Makes Sense and What Does Not ?

Marketers appreciate when their media vendor know something about their product. Price point, user funnel, demographics and so on.

But how well do YOU know your own product ?

If you are marketing an app, do you consider the app initial file size ? Do you consider the normal distribution of app store page visit to opening the app ? do you spend time considering the marketing 5p’s ?

And most importantly - do you look deeper into anything that looks out of the ordinary ? (Good / Bad)

 

The Marketing 5p’s :

  • Product

    • What’s special about your product ? 

    • What are the features, look and feel making it appealing to customers ?

    • Who are your competitors ? 

    • What differentiates your product from those of competitors ?

  • Price

    • What is the price point of your product/service ?

    • What is the perceived value customers get ? 

    • What costs do you have to cover when customers pay for your product ?

    • What additional costs do you have (overhead) ?

  • Promotion

    • What methods can you use to promote your product ?

    • What should the messaging, look and feel, call to action be ?

  • Place

    • WHERE are your customers ?

    • What is the BEST place to position your product to get your customers and prospects attention ?

  • People

    • Who are your customers ? 

    • What are they expecting from you ?

    • What do you need to do in order to keep them happy ?

 

Change from Daily to Cohorted view

The most common method to look at reports is looking at daily reports. This is so wrong…

In marketing - we’re seeing the new customers of today, but the revenues of customers we acquired days/weeks/months/years ago.

A Cohorted view is the best way for a marketer to monitor the effectiveness of their current activities rather than taking credit for past activities.

Here’s an example Media Spend vs. ROAS in a daily view:

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...leading to poor overall results

Looking at the table below, we can see that while marketing conversions and revenues went up - marketing activities are essentially cannibalizing organic results.

This is probably the biggest shock factor - however, campaign performance shift from good > bad for so many factors. A cohorted view is the best method for marketers to be on top of their activities. 

 

Test Everything, It’s OK to make mistakes

Nobody has been fired for doing their job. The marketer’s job is to test test and test more. 

Test how a new creative idea influences performance, test a new vendor, after you pre-qualified them with some filtering questions. Test call to action. Test a new optimization technology.

Strategize, create a hypothesis, and TEST

Log every test you do and make it available for future colleagues to utilize the learnings and come up with new and more elaborated ways of tests.

Marketing is constantly changing. 

 

ROAS vs. T.ROAS

Return on Advertising spend (ROAS) is a very common goal for marketers, but we do face companies who completely ignore changes to the organic customer base leading to a conflict between marketing and the company they serve.

While ROAS is a good KPI to measure marketing performance - if a company ignores the TOTAL revenues of all new customers in a given cohort - they are either giving marketing no credit at all, or giving too much credit to marketing.

The graph below shows ROAS vs. marketing spend and conversions attributed to paid marketing. 

 

When looking at the ROAS in a cohorted view: