A return on investment from the advertising efforts on social media will be tested vis-à-vis the cost of running ads against the same inflow of revenues.
Other important KPIs and metrics that can be employed in the measurement of the effectiveness of such campaigns include conversion rates, average order value, customer lifetime value, and return on ad spend.
It is the measure of where a business is found by dividing the revenue from the ads by the total ad spend and then expressed as a ratio or percentage. For example, if a business spends $1,000 for advertising on social media but earns $5,000 in revenue, then the ROAS would be 5:1, which is read as 500%.
This practically means that 5 dollars reimburse every single dollar that has been made. In a more specific way, tracking pixels and other forms of conversion tracking tools are made available by most social media and therefore help a great deal in giving credit to some of the conversions and attributing them back to a particular ad campaign or interaction.
This enables the identification of the ads that drive the most revenue, and subsequently, one can optimize campaigns accordingly. Businesses should also account for lifetime value from customers gained by social media advertising, not merely the direct marketing impact, and the impact of brand awareness/engagement on long-term revenue.
Other important KPIs and metrics that can be employed in the measurement of the effectiveness of such campaigns include conversion rates, average order value, customer lifetime value, and return on ad spend.
It is the measure of where a business is found by dividing the revenue from the ads by the total ad spend and then expressed as a ratio or percentage. For example, if a business spends $1,000 for advertising on social media but earns $5,000 in revenue, then the ROAS would be 5:1, which is read as 500%.
This practically means that 5 dollars reimburse every single dollar that has been made. In a more specific way, tracking pixels and other forms of conversion tracking tools are made available by most social media and therefore help a great deal in giving credit to some of the conversions and attributing them back to a particular ad campaign or interaction.
This enables the identification of the ads that drive the most revenue, and subsequently, one can optimize campaigns accordingly. Businesses should also account for lifetime value from customers gained by social media advertising, not merely the direct marketing impact, and the impact of brand awareness/engagement on long-term revenue.