Welcome to the second edition of Debullshified – glad to have you here!
Before we continue, here’s what we have for you this week:
- MEME of the week: The best cure
- Metric of the week: ROAS
- Life Hack of the week: No more motivation
- Joke of the week: Practical eye test
Before we begin, let me ask you something
Were you the child allowed to go out and play ONLY after you finish your chores?
Are you now the adult who can’t relax because chores are never-ending when you grow up?
Yeah… Sorry about that…
MEME of the week
Author’s Note: well, isn’t this true…
This is one of my favourite tong-twister metrics – try to say it fast and you sound like you’re a little tipsy…
ROAS is quite literally what it says on the tin – Return On Advertising Spend.
You calculate it simply:
($ revenue from campaign / $ ad spent) * 100 = ROAS%
Example
If you sell running shoes and you run an advertising campaign on FB, you divide total value of your sales (a.k.a revenue) by the spent on your platforms of choice (Google, Facebook, Instagram, else).
- You made $80,000
- You spent $4000
- Your ROAS is ($80,000 / $4000) * 100 = 2,000%
Calculate it as a ratio
If you want to see it as a ratio, it’s also easy. Your formula is:
($ revenue from campaign / $ ad spent) = ROAS Ratio
If you’re calculating it this way, you’d present it as ROAS Ratio:1.
If we use the numbers from the example above, ROAS ratio would be 20:1 (twenty to one).
What is a good ROAS?
Metrics don’t matter if we don’t have a benchmark, right? Like any metric, you need to have your own expected ROAS after running a benchmark campaign (a.k.a. campaign with no monetary expectations – you run it to “test the waters” and find out how much you can make).
As a general rule, however, you can expect:
- Awareness campaign: ROAS can be as low as 1:1 (a.k.a. it’s just covered your costs but have generated newsletter sign-ups, social media likes or follows, or news coverage)
- Sales campaign: international benchmark is 4:1 (meaning that for every $1 you spent, you made $4)
EXPERIENCE TIP: REVERSE CALCULATE IT!
If you’re going to rely on ROAS in your ad campaigns and your delivery costs are high, you want to establish break-point ROAS. Let me explain.
If you offer a service and for every $100 you make, you need to spend $70, then you only have $30 in profits.
Say that a campaign costs you $4000, you need to make at least $15,000. Why? Because you’ll have to spend $10,500 to deliver the product/services. Add the cost of $4000 for advertising, and you’ve only really made $500…
Anyway, I’ve made life easy and created an easy ROAS calculator for you, so you can establish your benchmark. Download it and play around.
YOU DON’T NEED ANY MORE MOTIVATION!
Listen to me. You’re FINE! You don’t need to be motivated, pushed, stretched, forced, inspired, bla, bla, bla.
All you need is rest.
I want you to think about something. We, human beings, are biologically predisposed to evolution, a.k.a. adaptation to change. It’s uncomfortable, but we do it..
Historically, however, we’ve had hundreds of years to respond to changes and it has taken generations upon generations. Nowadays, we have change coming out of our ears. It’s a lot.
Internet’s official birthday was in 1983. Funky, right? Some of us were even born then. Before that, it took months to hear about events on the other end of the world and often, we never ever knew what was happening 100 miles from us.
We only needed to process the issues in our immediate surroundings.
Nowadays, news are an effing constant flow. You have to intellectually process the war in the Middle East, the war in Ukraine, the worry about nuclear war, latest AI tech promising to make you obsolete, next door neighbour’s constantly barking dog, your change in bowel habits or recurring headache, taxes, inflation, parent criticism.
Need I carry on?
You’re not unmotivated. You’re drained.
So, shut notifications down, put your device on silent mode, and please:
- Go for a walk, or
- Go to the pub, or
- Go dancing, or
- Play with your children/pets
- Have a conversation
- Call a friend you’ve not spoken to for a while and spend an hour on the phone
All I’m saying is, shut the world that doesn’t matter out!
It’s not your job to change it anyway….
So, you trust yourself? Think twice…
If you think there’s red colour in this photo, just zoom it in. Then reconsider how much you can really trust your eyes…
