As a business, it can be hard to identify the most effective way to measure campaign performance. At DVS, we understand that modern marketing is an ever-changing landscape and there are valid alternatives to the commonly-used Return on Ad Spend (RoAS). Today, we introduce a more refined metric: CLV-Adjusted RoAS (Customer Lifetime Value Adjusted RoAS). This offers a much more holistic view of our clients’ marketing efforts, helping them make more informed decisions.
Why RoAS Doesn’t Cut It Anymore
The traditional RoAS metric focuses on the immediate revenue generated from a specific advertising campaign. While it’s easy to calculate and understand, it’s also a short-term view. By concentrating solely on immediate revenue, RoAS overlooks essential aspects of customer relationships, such as their lifetime value and the profitability of the products they purchase.
The Three Pillars of CLV-Adjusted RoAS
1: Long-Term Customer Relationships Over Immediate Return
CLV-Adjusted RoAS extends the attribution window beyond immediate outcomes to include the long-term revenue a customer generates. Instead of just asking ‘How much revenue did this campaign bring in today?’, we ask ‘What will this customer contribute to our business over the next year or more?’
At DVS, our unique approach involves creating detailed customer profiles to predict long-term behaviours more accurately. This foresight ensures our clients invest in strategies that will continue to pay off in the future.
2: Profit Over Revenue
While revenue is essential, profitability is the actual key to sustainable growth. By focusing on profit, our clients have greater confidence that their marketing strategies are paying dividends in the short-to-mid term. The CLV-Adjusted RoAS metric goes one step further than traditional RoAS by focusing on the margin at a product level. This granularity allows our clients to discern which customer segments and channels are most profitable for their business.
Our tailored data analytics solutions at DVS dig deep into our clients’ sales and marketing metrics. We don’t just look at the surface; we analyse product-level margins to optimize advertising campaigns for sustainable profitability.
Recently, we helped a client set their annual marketing budget – they were struggling to identify the channels that brought the most profitable customers over the long-term. By creating the CLV-Adjusted RoAS metric, it became clear which channels were better at attracting the customers that generated ongoing profit for their business. Furthermore, we could make recommendations on who to target (customer segments), how to target them (categories, product type, campaign design) and when to target them (nursery journeys that reliably creates profitable, repeat customers).
3: Multi-Touch Attribution for Fair Assessment
Different marketing channels contribute to the customer journey in various ways. CLV-Adjusted RoAS incorporates multi-touch attribution to provide a more nuanced view of each channel’s contribution. This is critical for recognising the importance of channels often overlooked in last-touch attribution models, such as display ads for brand awareness.
Our team at DVS is skilled in leveraging multi-touch attribution to offer a more balanced overview of our clients’ campaign performance. We’re able to connect directly with attribution data, whether it’s Google Analytics or another platform. This ensures that budget is not misallocated and that each channel is getting its fair share of the credit, increasing overall efficiency.
Future-Proof Your Marketing Strategy with DVS
Understanding the impact of your marketing initiatives shouldn’t be a short-term game. CLV-Adjusted RoAS brings a broader, more profitable perspective to campaign performance assessment. The ongoing benefit of this approach is a more strategic allocation of marketing budget, aimed at long-term profitability and customer relationship building.
Our methods are not just beneficial for one project or client; they are universally applicable. The skills we have applied in crafting a more holistic view of marketing metrics can be tailored to suit the unique needs and challenges of each and every business.
If you’re interested in working together to make smarter, more profitable marketing decisions, reach out to us at contact@datavisionservices.co.uk