Return on advertising spend (ROAS) is a critical metric for measuring the effectiveness of your marketing spend. It gives a common metric to measure, compare and optimise results. It helps to get structured insight into how your marketing activity performed with a focused and synced view. In order to bring that structure to your data, it is important to understand the nuances and meaning behind it so you can determine what works best for your marketing team.
What is the problem with return on advertising spend?
The challenge with ROAS is identifying the revenue returned for the traffic you are paying for. For example, most eCommerce businesses will be running various marketing activities at any given time. That could include paid social media posts, PPC, PR or email marketing. Even though platforms like Facebook have their own analytics tool, Facebook Ads are always complemented by other marketing activities and influence conversion rates at the same time from different directions. So, how can you measure which top three activities performed the best in terms of revenue if they are all interlinked? Analytics tools don’t know how to differentiate between them. For example, traffic from Facebook ads often does not include a referrer, and that causes Google Analytics to classify the traffic as direct. So, in order to accurately classify traffic coming from Facebook, you would need to take a different approach.
UTM tags, or “Urchin Tracking Monitor”, can provide a clear view of return of advertising spend. A UTM tag is a simple code that can be attached to an URL in order to track a source, medium, campaign name, content and term. This enables your Analytics platform to tell you where searchers came from as well as what campaign directed them to you.
Other reasons to apply UTM tagging include:
• Accurately track specific promotions, and learn what works and what doesn’t.
• Determine how specific ad sizes perform in terms of site traffic.
• Understand which Twitter or Facebook copy is driving the most traffic and revenue.
• Understand the difference between what the ad dashboard reports versus your own site analytics.
How to Create UTM Tags for Your URLs
The simplest way to create UTM parameters for your links is by using the Google Analytics URL Builder. Using the above tool, you would enter the following and click on the ‘Generate URL’ button to get your link.
Keep in mind that UTM codes are public. So, for example, if you’re targeting a segment of people 18-25, don’t call the campaign “Millennials Targeting” as the UTM codes sit in the URL where anyone can see them. Always be aware of this and use codes (not actual descriptions) if you’re targeting specific demographics. For example, “Millennials” could be “ML.”
Here are the steps you can use to create a Facebook ad that is tagged for tracking in Google Analytics. First, open your Facebook Ads Manager and click ‘Create Ad’ as you normally would. For this example, let’s assume that you want to optimise for clicks to your website. So, select that option from Facebook. Facebook asks you to enter the URL of the landing page where ad clicks should send the visitor. At this point, head over to the Google URL builder and fill out the form provided to add tagging to your landing page.
Twitter has a similar process. With Twitter always use a link shortener, such as bit.ly or goo.gl, so that links look cleaner and the post is not cluttered. You can also test a few objectives with UTM parameters like finding what call-to-action (CTA) text gets you the most clicks or what is the best time to tweet.
utm_campaign = blog
utm_medium = social
utm_source = twitter
utm_campaign = blog
utm_medium = cpc
utm_source = twitter
The only thing that would be different in the two URLs is utm_content.
If you would like to compare if tweets in the morning at 9am have more clicks than tweets at 4pm, then the best option is to create two URLs, one with:
utm_content = time_09_00_am
and the other with,
utm_content = time_04_00_pm
Make sure that the tweets are identical in every other way except the tracking URLs.
Google Analytics will capture the UTM values on your landing pages. To see the utm_content values in your reports, you’ll need to enable the Ad Content dimension. You can do that by clicking Other -> Acquisition -> Ad Content.
If you are using UTM tags for your paid advertising you will be able to match your Analytics data with your spend and advertising data from you ad channels. This will also help with budget allocation by highlighting opportunities which would benefit from further budget investment. You will be able to see the effect of individual marketing campaigns and even specific ads. This way you can evaluate which ads and campaigns lead to sales and which ones have little effect.
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