Here’s a riddle for you:
- Your Facebook Ads manager reports a 4.1x Return On Ad Spend (ROAS)
- Your Google Ads manager reports a 5.4x ROAS.
- They’re each telling the truth, but together, they’re wrong.
How?
You might be thinking, “Because I’m paying to show ads to some people that were going to convert anyway.” There’s some truth to that, of course; but there’s another issue, and that’s audience overlap.
ROAS and the Audience Overlap Problem
Facebook and Google are likely showing ads to some of the same people. If a person sees a Facebook ad in the afternoon and clicks on your Google search ad in the evening and converts, both platforms assign the same revenue to their respective campaigns. In reality, they should share credit—but neither platform knows what the other platform is doing, so there’s no way for them to share that credit.
There is a platform that has information about multiple ad platforms: Google Analytics.
Tracking Your Blended (or Unified) ROAS
Using Google Analytics, you can identify all (well, most) of the online revenue that came from your paid channels. (Technical tip: Consider using the Default Channel Grouping rather than Session Default Channel Grouping or User Default Channel Grouping, so that you get data-driven attribution.) Then you can divide that number by your total ad spend (which you need to get from your ad platforms), giving you a “blended” or “unified” ROAS—which does not double-count any revenue.
That process is simple to do for a given time period, but if you want to automatically track this, there are a couple of techniques you can use. These are both somewhat technical. The purpose of this post is not to provide all of the specifics, but if you are trying to automate this and have questions, contact Brian below.
- Import data from Google Analytics and ad platforms into a spreadsheet, and create a combined report.
- Combine the data in a platform such as Looker Studio through data blending.
Blended ROAS Calculated In This Way is Conservative. Here’s Why.
Google Analytics does not know which users saw an ad but didn’t click on one. Perhaps you showed a Facebook ad to someone, and they visited your page that evening through your Google Business Profile. How much credit will Google Analytics give to advertising channels in your Blended ROAS metric? None.
Blended ROAS has another problem, and it’s one that your ad platforms also share: Unless you’re importing offline revenue, none of these platforms know when someone converted over the phone or in-person.
For these reasons, I tell our clients that Blended ROAS—calculated using only ad-attributed revenue from Google Analytics—is a very conservative way to track ROI. It needs to be interpreted for each client based on their situation. Still, it’s worth tracking since it provides insight that none of the ad platforms alone can give.
Final Notes
Blended ROAS is just one of the terms used for this metric. You may also see “holistic ROAS” or other terms. And it’s possible that not every agency uses the same revenue source in their blended ROAS calculation, so the term may have varying definitions. Some agencies are working with ecommerce companies whose revenue comes in entirely via the web, while in tourism, a large portion of the revenue often comes in via calls and walk-ins.
The consensus in the industry seems to be that we’re past the peak of data reliability, and that we have little choice but to return to this broader ROAS metric to assess the effectiveness of advertising. That certainly may be true, but the industry will continue pursuing reliable ROAS data from ad platforms because knowing whether we’re getting a positive ROI isn’t enough—we need to know what parts of our marketing funnel are the most effective.
Lastly, it’s important to look beyond ROAS and watch your margin. Often when clients partner with us, it’s for the purpose of growth. One of the best things you can do, in addition to selecting a transparent, data-focused agency, is to know your margin and track it every month as you scale your marketing investment.
