Is ROAS still effective in measuring ad performance? The evolving landscape of digital advertising

Common online advertising metrics, such as last-touch attribution, viewability, and click-through rates, are often inaccurate and outdated. While ROAS (Return on Ad Spend) is widely favoured, it can also be deceptive, particularly when it shows significant returns from campaigns aimed at existing customers or those in the final stages of purchasing. A falsely high ROAS does not necessarily indicate an increase in overall sales, sometimes giving a false impression of effectiveness.

Instead of focusing solely on immediate financial returns, it is advisable to concentrate on broader business objectives, such as ROMO (Return on Marketing Objectives), which emphasises broader business goals, including market share and brand awareness. Achieving this requires more sophisticated measurement processes. Additionally, consider the Quality Reach Index, a metric designed to ensure that ads reach truly relevant audiences, with a focus on incremental reach.

It is advisable to leverage major platforms like Google, Meta, and Amazon, which are exploring metrics for gaining new customers and incremental attribution. These metrics prioritise market-level testing over individual user conversions.

Implementing these new metrics requires a substantial investment in resources, including geo-testing, creative testing, hiring data scientists, and continuous evaluation. Although it may be challenging and resource-intensive, integrating these metrics can lead to more informed and efficient advertising strategies.

To progress beyond outdated standards and enhance the transparency and effectiveness of advertising, advertisers and the industry are encouraged to be prepared to invest in and adopt these new metrics.