Library > ROI vs ROAS

ROI vs. ROAS: Mastering the metrics for maximum marketing impact in B2B

Written By Camilla Østergaard

Contents:

  1. ROI Defined: Measuring overall profitability

  2. Navigating the ROI landscape

  3. Things to look for in your ROI analysis tools

  4. ROAS Defined: Evaluating ad campaign effectiveness

  5. Navigating the ROAS landscape

  6. Things to look for in your ROAS analysis tools

  7. ROI vs. ROAS: When to use what in B2B marketing

  8. Maximising ROI and ROAS for B2B success

  9. Automated offline conversions


Introduction

In the world of B2B marketing, achieving success requires a deep understanding of various metrics and their implications. Two such metrics, ROI (Return on Investment) and ROAS (Return on Ad Spend), are critical in measuring marketing performance. This comprehensive guide will take you through the intricacies of ROI and ROAS in the context of B2B marketing, helping you harness these metrics for maximum impact on your marketing campaigns.

1. ROI Defined: Measuring overall profitability


ROI, or Return on Investment, is the cornerstone of marketing metrics. It calculates the overall profitability of your marketing efforts by considering all costs and returns. In the B2B landscape, understanding how to calculate and interpret ROI is crucial for assessing the effectiveness of your marketing strategy.

Calculating ROI in B2B marketing: A step-by-step guide

  1. Identify Your Costs: Begin by listing all the costs associated with your B2B marketing campaign. This includes advertising expenses, production costs, overhead, and any other expenditures directly related to the campaign.

  2. Determine Net Profit: Calculate the net profit generated from your campaign. This can be the revenue generated minus the total costs.

  3. Calculate ROI: Use the formula ROI = (Net Profit / Total Investment) x 100. This will give you the ROI percentage specific to your B2B marketing campaign.

The Significance of ROI in the B2B Landscape

ROI offers a comprehensive view of marketing effectiveness in the B2B realm. It considers overheads, production costs, and more, making it ideal for long-term strategic analysis.

2. Navigating the ROI landscape


When to Use ROI

Use ROI for assessing long-term profitability and efficiency of marketing strategies. It's ideal for understanding how your marketing efforts impact the entire B2B marketing funnel over extended periods.

ROI and the B2B Marketing Funnel: Gaining a Holistic View

  • Top of the Funnel (ToFu): Assess how well your campaigns are attracting potential leads and creating brand awareness.

  • Middle of the Funnel (MoFu): Evaluate the effectiveness of nurturing leads and guiding them through the decision-making process.

  • Bottom of the Funnel (BoFu): Measure ROI in terms of lead conversions, customer acquisitions, and long-term customer relationships.

Integrating ROI into decision-making

  • Data-Driven Decisions: Use ROI insights to make data-driven decisions at different stages of your marketing funnel. For example, if the ROI at the ToFu stage is low, consider refining your targeting.

  • Budget Allocation: Allocate your marketing budget more effectively based on ROI data. If campaigns with high ROI are in the MoFu stage, consider investing more resources there.

ROI Challenges in B2B Marketing: Pitfalls to avoid

  • Attribution Models: Use multi-touch attribution models to correctly attribute conversions and assign ROI accurately to various touchpoints.

  • Long Sales Cycles: Adjust ROI expectations for B2B marketing, considering the longer sales cycles. Understand that ROI may not always be immediate.

Predictive Analytics for ROI: Forecasting future returns

  • Data Collection: Gather historical data from past B2B marketing campaigns.

  • Analysis: Utilise predictive analytics tools to analyse historical data and identify patterns.

  • Forecasting: Forecast future ROI based on historical trends and patterns, aiding in strategic planning.

3. Things to look for in your ROI analysis tools

  • Comprehensive Data Integration: Ensure your ROI analysis tools can seamlessly integrate data from various sources, including CRM systems and marketing automation platforms.

  • Advanced Reporting Capabilities: Look for tools that offer customizable reporting features, allowing you to generate reports tailored to your B2B marketing needs.

  • Real-time Data Updates: Choose tools that provide real-time data updates, enabling you to make timely decisions based on the latest information.

  • Scalability: Opt for tools that can scale with your business as it grows, accommodating an increasing volume of data and campaigns.

4. ROAS Defined: Evaluating ad campaign effectiveness


ROAS, or Return on Ad Spend, focuses on assessing the effectiveness of your advertising campaigns. Gain a clear understanding of ROAS and its role in B2B marketing.

Calculating ROAS in B2B marketing: A step-by-step guide

  • Identify Advertising Costs: Begin by determining the costs associated with your advertising campaign, including ad spend and related expenses.

  • Calculate Revenue from Ad Campaign: Calculate the revenue generated directly from the specific advertising campaign in question.

  • Compute ROAS: Apply the formula ROAS = (Revenue from Ad Campaign / Cost of Ad Campaign) to calculate the ROAS for your B2B marketing campaign.

The significance of ROAS in the B2B landscape

ROAS is critical for assessing the direct impact of specific advertising efforts on your overall marketing strategy, especially in the context of B2B marketing campaigns.

6. Things to look for in your ROAS analysis tools

  • Ad Performance Metrics: Ensure your ROAS analysis tools provide detailed metrics on ad performance, including click-through rates (CTR), conversion rates, and cost per conversion.

  • Integration with Ad Platforms: Look for tools that seamlessly integrate with major advertising platforms like Google Ads and LinkedIn Ads for efficient data retrieval.

  • Customisable Dashboards: Choose tools that allow you to create customisable dashboards, enabling you to monitor ROAS in real-time and focus on the most relevant KPIs.

  • Multichannel Tracking: If your B2B marketing involves multiple advertising channels, opt for tools that can track ROAS across different platforms and campaigns.

5. Navigating the ROAS landscape

When to Use ROAS

ROAS is invaluable for gaining tactical insights that allow you to make immediate adjustments to your advertising strategies in the fast-paced world of B2B marketing.

ROAS and B2B Campaigns

  • Campaign-Specific Insights: ROAS helps you evaluate the performance of individual advertising campaigns within the broader marketing strategy.

  • Optimising Campaigns: ROAS helps you evaluate the performance of individual campaigns within the broader marketing strategy. For example, if you're running 3 Google Ads campaigns and 2 LinkedIn Ads campaigns, and you find that the LinkedIn campaigns consistently achieve a higher ROAS, you can adjust your spending to focus more on LinkedIn Ads for better results.

Leveraging ROAS for Quick Decision-Making

  • Real-Time Adjustments: ROAS provides real-time data on campaign effectiveness. Use this data to make quick decisions, such as adjusting bidding strategies or reallocating resources.

  • Testing and Iteration: Implement A/B testing based on ROAS insights to continually refine and improve your advertising campaigns.

7. ROI vs. ROAS: When to use what in B2B marketing


Understanding when to deploy ROI or ROAS in your B2B marketing strategy is essential for optimising performance. In this chapter, we'll delve into specific scenarios and strategies for deciding which metric to emphasise.

  • Long-term Strategy vs. Short-term Tactics: Explore how ROI fits into long-term marketing strategies, while ROAS is ideal for short-term tactical adjustments.

  • Product Launches and Campaign-specific Focus: Learn how product launches or highly-targeted campaigns benefit from ROAS insights.

  • Marketing Funnel Stages: Understand which metric aligns better with different stages of the B2B marketing funnel, from awareness to conversion.

  • Balancing ROI and ROAS: Discover strategies for integrating ROI and ROAS to achieve a balanced and dynamic marketing approach.

9. Automated offline conversions

One powerful tool that can significantly impact ROAS is the integration of offline conversions tracking, a game-changer for B2B marketers looking to maximise their marketing impact.

Understanding offline conversions in B2B marketing

Integrating offline conversions into your B2B marketing strategy can significantly impact ROAS and marketing efficiency. Here's how it works:

Automated Data Feed: B2B marketers can automatically feed data from offline conversions back into their digital advertising platforms, such as Google Ads. This data serves as invaluable feedback for AI-driven advertising platforms to focus on high-quality leads, resulting in lower CPAs and improved ROAS.

Enhanced Ad Performance: By informing digital platforms about what constitutes a high-quality lead, you enable them to target similar audiences more effectively. Machine learning algorithms optimise bids for each ad auction, increasing the likelihood of winning those auctions. The net result is increased pipeline, improved ROAS, and reduced CPA.

Streamlined Efficiency: All these improvements occur automatically, saving B2B marketers valuable time and resources. Instead of manually adjusting bids, marketers can focus on more strategic aspects of their campaigns.

Continuous Learning: Algorithms continuously learn from campaign performance data, refining and enhancing bid adjustments over time based on real pipeline data. This ensures that B2B marketing campaigns become progressively more effective and efficient as more data is collected and analysed.

8. Maximising ROI and ROAS for B2B success

  • Multi-Touch Attribution Models: Explore advanced attribution models that help you accurately assign value to various touchpoints in complex B2B customer journeys.

    Report on marketing impact using Dreamdata’s Customer Journeys feature, gain complete transparency of every touch of every account.

  • Predictive Analytics for Informed Decision-Making: Leverage predictive analytics tools to forecast ROI and ROAS, enabling proactive strategic planning.

  • A/B Testing for Continuous Improvement: Learn how to implement A/B testing methodologies based on ROI and ROAS data to refine your marketing campaigns.

  • Marketing Automation Integration: Discover how integrating ROI and ROAS data with marketing automation systems can streamline decision-making and campaign optimisation.

  • Building a Culture of Data-Driven Marketing: Understand how to foster a culture of data-driven decision-making within your marketing team, ensuring that ROI and ROAS insights are at the core of your strategies.

Conclusion

Navigating the complex terrain of 'ROI vs. ROAS' is essential for modern B2B marketers aiming to optimise their strategies and maximise impact.

Understanding how these metrics compare and when to use each is crucial. ROI provides a comprehensive view of marketing effectiveness, considering all costs and returns, making it ideal for long-term strategic analysis. On the other hand, ROAS focuses on specific advertising campaigns, offering insights for immediate tactical adjustments, making it invaluable in the fast-paced world of B2B marketing.

Whether you're evaluating long-term marketing strategies with ROI or fine-tuning specific advertising efforts with ROAS, these metrics are your trusted allies in the world of B2B marketing.