Return on Ad Spend (ROAS) is a critical metric for measuring the effectiveness of your marketing campaigns. It’s a measure of the revenue generated by your ads compared to the cost of running those ads. However, traditional tracking tools have limited information and are not capable of truly measuring what marketing channels generated more sales. In this guide, we’ll explore why traditional tracking tools fall short and how AB testing can provide more accurate and actionable insights for measuring ROAS.
Traditional Tracking Tools and Their Limitations
Traditional tracking tools rely on tracking pixels, cookies, and other techniques to track user behavior on your website. They can provide insights into which marketing channels are driving traffic and conversions to your site, but they have significant limitations. For example, tracking pixels can only track user behavior on your website, not across different devices or platforms. Cookies can also be blocked by users or deleted, making it difficult to track the same user over time.
Moreover, traditional tracking tools provide limited information about the true incremental sales that a marketing campaign can generate. They assume that all sales that occur after a user clicks on an ad are a direct result of that ad. But in reality, users may have been exposed to your brand or products through other channels, like social media or word of mouth, before clicking on your ad. This means that the ad may not have been the sole driver of the sale, but rather one touchpoint in a longer customer journey.
AB Testing: The Only Way to Measure True Incremental Sales
AB testing is the process of testing two versions of an ad or marketing campaign to determine which one performs better. In an AB test, you show one version of the ad to a portion of the audience (the test group) and another version to another portion (the control group). You then compare the results to determine which version of the ad is more effective.
AB testing is the only way to measure the true incremental sales that a marketing campaign can generate. By comparing the results of the test group to the control group, you can see the incremental lift in sales that the test group generated as a direct result of the ad. This means that you can accurately attribute sales to the ad and adjust your marketing spend accordingly.
However, AB testing requires careful planning and execution to be effective. You need to define clear goals for the test, design the test groups and control groups carefully, and ensure that the test is statistically valid. You also need to monitor the test closely to ensure that it’s not negatively impacting other aspects of your marketing campaigns.
Measuring ROAS accurately is critical for optimizing your marketing campaigns and maximizing your return on investment. However, traditional tracking tools have significant limitations when it comes to measuring the true incremental sales that a marketing campaign can generate. AB testing is the only way to accurately attribute sales to specific marketing channels and adjust your marketing spend accordingly. As CFOs and marketing executives, it’s essential to understand the limitations of traditional tracking tools and the benefits of AB testing to make informed decisions about your marketing spend.