Whether you’re a potential client interested in hiring WTM Digital for PPC (pay-per-click) advertising or a current partner looking to gauge your campaign performance, you have probably wondered what results you should expect from our team.
It’s in that spirit that we’re proud to release our first edition of the WTM Quarterly ROAS Report where we’ll share the median* ROAS results for our customer base across Google, Microsoft Advertising, and Amazon.
Having just completed the third quarter of our fiscal year, our report will recap Q3’s performance, compare it year to date, and sprinkle in some industry trends/ insights along the way.
What is ROAS?
If you’re unfamiliar with ROAS, it stands for “return on ad spend.” This metric is used to help businesses evaluate the success of their various advertising campaigns. To calculate ROAS, simply use the following equation:
Revenue from ad sales / Cost of advertising = ROAS
Therefore, if you spend $1 on advertising and make $2 in revenue, you’d express ROAS as 2X, which as you will see isn’t a terribly strong return.
With that out of the way, on to the insights!
The Amazon Bump Up
It’s been a great year for sellers on Amazon. The platform continues to grow, and more and more advertisers are embracing Amazon’s many capabilities. Due to the Amazon marketplace’s more homogenous seller pool, individual seller performance varies less than what we see on other platforms where a healthier mix of B2B and B2C retailers exist.
YTD figures for WTM Amazon clients are currently tracking 7.43X ROAS on the platform. The third quarter, unsurprisingly, was the lowest of the year with a median ROAS of 6.89X. As we begin to creep into the holiday season, ROAS has steadily grown over the past two months and will be expected to spike even higher next quarter.
And just to prove that Amazon can really pour on the gas, one new WTM client debuted during Q3 with an amazing ROAS of greater than 50X!
With Microsoft, It All Depends
Of all the platforms we provide paid search services for, Microsoft Advertising (formerly Bing) provides the greatest variance in performance. Two simple reasons may account for this:
- Across the board, WTM customers spend less money on the platform. The lower the ad spend, the less data there is to optimize for.
- The Microsoft Explorer audience is less diluted than Google, meaning that the user demographics can determine which products will be successful on the platform.
With that, overall performance our managed campaigns on Microsoft Advertising for the year currently stands at 9.03X ROAS. Whether or not there’s enough audience on the platform to justify a higher spend is a reasonable question, but across the board, WTM clients are doing well.
But again, the big difference on Microsoft is how unique each brand’s performance is. Despite the median 9.03X, one of our brands had a nearly unimaginable September return of more than 120X. This same brand has enjoyed an average return of more than 60X throughout the year in their B2B space.
Like Amazon, Q3 performance remains the lowest of the year but is expected to climb in Q4.
Google Dominates Ad Spend and Performance
Maybe we shouldn’t be surprised that Google’s performance is the best of the three platforms for WTM customers. After all, new audience and bidding strategies continue to make the world’s best platform even better, and our customers are reaping the rewards as our PPC experts continue to pull the right levers.
Across the board, YTD Google ROAS for the year stands at 9.88X, meaning a strong Q4 has the potential to put us over 10x for the year. Equally predictable, Google performance was not exempt from the Q3 dip. It was, however, impacted to a lesser extent with performance remaining higher than 9X.
Despite two newly onboarded WTM customers coming hard out of the gate with returns greater than 12X during the quarter, several clients earned below the median as they are highly seasonable companies in their slow season.
*Note: Because we are a boutique agency with less than one hundred clients, the WTM ROAS Report relies on median data, rather than averages. This is the preferred approach when using smaller data sets.