By Pay-per-click (PPC) advertising can be a powerful marketing solution for your ecommerce clients, but you need to monitor return on ad spend (ROAS) to ensure budgets are spent effectively. Your client’s business model will impact what a good ROAS on ecommerce is but as a starting point, most marketers aim to achieve a $4 return for every $1 spent.
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In this article, we’ll show you how to evaluate ecommerce ROAS so you can monitor performance of your PPC reselling program and show clients the results of your digital advertising efforts. We’ll show you how to calculate return on ad spend and compare it by platform to put your client’s metrics into context.
Table of Contents
- What is a good ROAS on ecommerce ads by platform?
- How to calculate ROAS for ecommerce ads
- Tips and tactics for improving ROAS on ecommerce ads
- Leverage dynamic product ads
- Optimize your product feed
- Improve your website’s conversion rate
- Optimize for customer lifetime value
- Optimize for mobile
- Incorporate long-tail keywords
- Implement ecommerce chatbots
- Support conversions with SEO
- Identify negative keywords
- Build out your email marketing list
- Frequently asked questions
What is a good ROAS on ecommerce ads by platform?
Many variables affect return on ad spend, from your client’s industry niche to consumer spending trends. While it’s difficult to nail down a benchmark figure, one study found an average ROAS across industries of $2.63 for online display ads and $2.45 for mobile ads (NCS Solutions).
Digital ad platforms offer diverse potential for return, however. The table below compares the average ROAS for ecommerce ads on popular platforms (BeProfit). You’ll see that some channels such as Twitter and Pinterest have an average ROAS close to the figures cited above, while others are significantly higher.
| Ad Platform | Average ROAS (per $1 ad spend) |
| $13.76 | |
| $10.68 | |
| $8.83 | |
| Amazon | $7.95 |
| $2.70 | |
| $2.70 | |
| TikTok | $2.50 |
Determining the best platform for your client
Dominating around 90% of the search engine market (StatCounter), Google provides a high level of ad visibility and, on average, the greatest return per dollar spent. You can help clients make the most of this channel by managing their Google Ads through a white-label service, delivering outstanding service even if you don’t have the capacity to handle pay-per-click campaigns in-house.
Choosing the most effective platform is more than picking the one with the highest average ROAS for ecommerce, however. For the best return on ad spend, take a strategic approach. Get to know your client’s target audience and brand, and pick platforms based on where you’re most likely to reach qualified customers.
What to keep in mind with ecommerce ROAS
While it can be tempting to compare your PPC campaign’s ROAS with averages that you find on the internet, the most useful way to look at this metric is in the context of your client’s specific business.
A good ROAS for ecommerce may be lower than average for some companies, for example, depending on their costs and how much of the revenue they keep as profit. For many marketers, the value of ROAS is as a benchmark for refining campaigns and improving return over time.
How to calculate ROAS for ecommerce ads
Let’s look a little more closely at how ROAS is calculated. To work out your return on ad spend, you’ll need to know:
- Revenue generated by the PPC ad campaign. This is the value of sales resulting from ad clicks, before expenses are deducted. For non-sale conversions, assign a value to the action you want customers to take. For example, if you consider a white paper download a conversion, take the number of leads and multiply it by the value assigned to each lead.
- Investment in the ad campaign. This is the total amount spent on the PPC campaign.
With those figures in hand, calculate ROAS by dividing the revenue generated by the ad campaign by the amount invested in the campaign. This gives you the return on your investment. You can multiply the answer by 100 to get a percentage or express ROAS as a dollar figure.
Sample ROAS calculation
If your client’s ad campaign sparked $12,000 in sales and required a $4,000 investment, divide $12,000 by $4,000. The ROAS is 3:1, or 3 times what you invested. You could report to your client that your top-notch PPC campaign generated 3 times the return of their investment, a 300% return, or a return of $3 for every $1 invested.
Streamlining ROAS reporting with Advertising Intelligence
Although return on ad spend is a relatively simple calculation, agencies that provide PPC management need to track it at scale across multiple campaigns and clients. White-label reporting software such as Advertising Intelligence enables you to automate campaign reports under your brand.
Use this software to track analytics for digital ads placed on Google, YouTube, Facebook, Instagram, and other platforms. You can monitor important metrics such as impressions, click-through rates, conversions, and ad spend in one place, without logging into different accounts. Advertising Intelligence also gives you the power to customize reporting and easily compare performance on different platforms, providing clients with insight into which of their paid ad campaigns are delivering the best outcomes.
Tips and tactics for improving ROAS on ecommerce ads
A well-executed PPC campaign can deliver customers to your website and landing pages, but these ads offer the most impressive results when complemented by other digital marketing strategies. When you combine paid ads, website design, and search engine optimization (SEO) tactics, you can build a strong and well-rounded online presence.
Add some tactics below to your toolkit to maximize your pay-per-click campaigns and support the revenue generation and growth of your client’s business.
Leverage dynamic product ads
Dynamic product ads are templated ads that update in real-time based on audience interests, improving relevance and the chance of engagement and conversions. Personalization can enhance marketing efficiency by up to 30 percent and lift revenues by 5-15 percent, helping to increase your ROAS (McKinsey).
Here’s the beauty of dynamic product ads: Everything is automated, precisely targeting customers without requiring extra effort on your part. Technology gathers data about your audience’s online behaviors, and relevant products are then pulled and displayed.
For example, a jewelry store could use a dynamic ad to serve a user with images of a necklace instead of earrings, if that’s what they’ve been browsing for. You also see dynamic ads employed in remarketing strategies, where customers view an item on a website and are later shown an ad with the same product in the hopes that they’ll now convert.
Optimize your product feed
Make sure the products in your ads stand out so you can garner your audience’s attention and entice them to learn more. Use clear, high-quality, and attractive images, and provide as much product information as possible so customers can decide whether they want to further explore your offerings.
Whether you’re managing campaigns in-house or through expert white-label PPC services, clients need a robust product feed that includes:
- Accurate product categories
- Concise titles and product descriptions
- Important attributes such as size and color
- Prices and discounted prices, if applicable
- Product page URL
Improve your website’s conversion rate
A great pay-per-click campaign can funnel visitors to a website, but it takes an outstanding user experience to motivate them to convert. We can't emphasize this enough—even if you get them to the checkout, an average of 70% of customers still abandon their cart (Baymard Institute).
Before starting your PPC ad campaign, review your client’s website for obstacles that might cause a customer to leave the site without converting. Visitors should feel that the site is trustworthy, their financial information is safe, and they have all the information they need to make a purchase. Make sure the website:
- Has an appealing, professional design that demonstrates credibility
- Loads quickly, is easy to navigate, and is free of technical errors
- Features high quality images and detailed production descriptions
- Provides social proof such as testimonials, ratings, and reviews
- Clearly outlines return policies, shipping options, and customer service contact information
- Has an SSL certificate in place indicating information is encrypted
- Provides clear calls-to-action with prominent buy, view cart, and checkout buttons
- Offers an easy checkout process, including a guest option
- Requests the minimum amount of information on forms to complete the transaction
- Displays badges to build trust
Optimize for customer lifetime value
It’s much easier to convert previous customers than new ones, so focus on repeat business to maximize ROAS in ecommerce. Rewards programs, email marketing, hassle-free returns, and superior customer service can help you retain customers and improve their lifetime value.
You can use PPC to target users you’ve built relationships with, cross-selling or promoting items they might be interested in based on past purchases. You can also reignite interest in your offerings by advertising new products and reminding them of your client’s brand.
Optimize for mobile
About 60% of web traffic comes from devices such as smartphones and tablets (Statista), with mobile commerce accounting for 40% of North American ecommerce sales in 2022 (Statista).
Improve ROAS by ensuring ads are mobile-friendly and that users can effortlessly navigate websites and landing pages from their devices. They should be able to obtain product information and make purchases with ease. Mobile optimization will also help with organic search rankings as Google crawls and indexes mobile versions of websites first. Consider bundling PPC and SEO services to provide more value to your clients.
Mobile ad optimization
To better target your ads to smartphone users who are on the go, consider choosing keywords based on voice search. Customers are more likely to use questions when speaking to a voice assistant, and phrases when typing in a search box.
Use responsive ads that adapt to the device being used, and make the most of the limited screen space on smartphones with ad extensions. This feature provides extra information in ads such as locations and star ratings to make it more convenient for customers.
Businesses relying on local customers can use geotargeting to reach those in a certain zip code, city, or area. It’s also helpful to complement paid ads with local SEO so your client’s business appears in Google Maps.
Mobile website optimization
Customers are 5 times more likely to leave a site if it isn’t mobile-friendly (Google). Make sure that smartphone users clicking on ads can easily navigate your client’s website by confirming that:
- The site loads quickly
- Images and text fit neatly on different sized screens
- Pages have a clean layout and are well-organized
- Key information is easy to find
- Buttons are prominently displayed and easy to tap
- Forms require minimal information to execute a transaction
Incorporate long-tail keywords
Long-tail keywords consisting of three or more words typically have lower search volume than short-tail keywords, but they can attract customers who are further in the buyer journey. The more specific the keywords, the more likely the user has done their research and are motivated to buy.
Someone searching for “slow cookers” is probably exploring their options, but the person looking for a “7-quart oval slow cooker” may be comparing prices or brands and ready to take action. You’ll typically have less competition for these types of long-tail keywords, enabling you to put in lower bids. The chances of conversion are also higher—even though you may have less traffic, your prospects are better qualified.
Implement ecommerce chatbots
While online shoppers enjoy the convenience of ecommerce stores, there’s no sales clerk to assist them if they need it. Some people may not want to call a customer service line or wait for an email response if they can’t find the answer online.
Don’t lose out on a potential sale. Ecommerce chatbots can remove some of these barriers and boost conversions by answering routine questions about shipping, return policies, and product features. Chatbot technology is also useful for collecting data and understanding customer concerns, which can be addressed in FAQs to remove friction from purchases.
Support conversions with SEO
Google considers many factors when ranking web pages in its search results, including the quality of user experience. That’s why search engine optimization is such a cost-effective marketing strategy—high-performing websites are typically easy for customers to use, reducing bounce rates and improving the chance of conversions.
Agencies offering PPC management should encourage clients to optimize their websites to improve ROAS. These SEO strategies include:
- Implementing a logical site structure
- Improving page speed and load times
- Using concise and descriptive titles and headers
- Creating well-researched and helpful content
- Organizing content in clusters or pillars for easier navigation
- Formatting content into sections, short paragraphs, and lists for effortless reading
Identify negative keywords
One of the best ways to keep ROAS in check is to ensure you don’t pay for clicks from people who aren’t interested in your offerings. Negative keywords improve the cost-effectiveness of a paid campaign by excluding your ad when someone uses irrelevant search terms.
For example, a retailer that sells only high-end goods might add “cheap” or “discount” to their negative keyword list to ensure their ad doesn’t display to those looking for a bargain. A stainless steel water bottle company might exclude searches that include the word “plastic” and a bakery could prevent its ad from showing to those searching for “recipe.”
Build out your email marketing list
Some people who click on ads may not convert right away, but you can improve your ROAS by building in channels to connect with them in the future. Use a chatbot or pop-up to welcome users and invite them to sign up for a mailing list to receive updates.
On average, about 1% of visitors will join a sign-up campaign. You can boost that to about 5% with a coupon offer and 10% with an enter to win campaign (Privy). Once you’ve added customers to your email list, you can send promotions to them and personalize marketing based on their online activity.
Frequently asked questions
How does the ROAS vary between different advertising channels in ecommerce?
Businesses can track their return on ad spend for both paid and organic channels to help determine how to allocate their marketing budgets. The average ROAS is 1.55 for pay-per-click or search engine marketing, 1.6 for online public relations, 1.8 for Facebook ads, 2.3 for LinkedIn ads, 3.45 for influencer marketing, 3.5 for email marketing, and 9.1 for SEO (First Page Sage).
Are there any insights or trends on how ROAS has changed over time in ecommerce?
The digital landscape is always evolving, which can impact ad performance. AI is improving its capabilities to help marketers better predict customer behavior, and platforms continue to introduce features to help businesses maximize their ad spend. Marketers who keep tabs on industry trends and developments can best help clients take advantage of trends in PPC to boost ROAS.
