Expedify

We often get ROAS wrong and that can lead to some frustrating discussions and misleading conclusions - leading to wasteful and costly decisions about media spends. One of the most common pitfalls is looking at monthly revenue generated through ads on a specific platform like Facebook and taking media spends for the month and then using these two numbers to calculate ROAS for that media channel. This completely mispresents the true picture as: 1. It attributes all the sales to the last click while almost always there are multiple communications across different channels that contribute to sales. Even if one uses MTA or Multi-Touch Attribution model it's often arbitrarily done without any statistical basis. It gets worse as close to 40% of site visits these days happen without cookies so very little click data gets collected over time making MTA less informative. 2. There is no lag or time effect taken into consideration. An ad seen today can lead to a purchase 2 weeks later - in fact quite often this is the case. Yet we look at daily ROAS and monthly ROAS without modeling any of this time effect. 3. We ignore base sales. There is a considerable amount of sales that will persist for a definite period even if we stop all advertising activities - at least for any decent brand. If we don't use proper regression techniques like #MMM or Marketing Mix Modeling, we CAN NOT correctly establish this base sales and may end up considering total revenue for calculating ROAS. To avoid these pitfalls, we must implement at least a basic marketing mix model which uses regression to overcome all the above challenges. Marketing Mix Model will: 1. Isolate media impact 2. Ascertain the delayed impact of media spends, and 3. Establish the base sales and therefore the incremental sales as well over and above this base sales.. Then, we are able to calculate the incremental sales contributed by each media channel over a given period and get a much more robust and accurate picture of ROAS for that media channel. For a complete deep dive into how to build a robust Marketing Mix Model from scratch you can find the link for a free eBook in my comment below. Or you can simple comment or DM me and I will share the link for my eBook free. #marketing #metric #marketingkpi #roas #cac #mmm #mta #marketinganalytics #marketingmixmodeling