How does Google calculate ROAS?
"Here's the math: $5 in sales ÷ $1 in ad spend x 100% = 500% target ROAS" (Source: https://support.google.com/adwords/answer/6268637)
Before I explain why ROAS kills profit, you need to understand exactly what ROAS means in Google AdWords. I have a complaint...
I recently got started with some work integrating some older systems with Magento 2 using their new REST API. Right at the top of the Getting Started with Magento 2 APIs Introduction there's a list of features, including this one:
- The framework supports field filtering of web api responses to conserve mobile bandwidth.
That sounds nice. Let's get some of those responses down to just the fields we need, and speed up the data transfer just a bit!
In a word, “No!”
In two words, “Hell no!"
In eight words, “No, because of the law of diminishing returns."
Direct response advertising through AdWords probably has an ROI greater than any other investment opportunity available to an ecommerce merchant. It’s far greater than most people realize. The real return on investment is obscured by the way traditional cost accounting records the transactions and reports on them on a monthly basis. It’s easy to get distracted by tax accounting rules and forget the fundamentals of solid financial decision making.
Ecommerce merchants are usually very quiet about their servers getting hacked. Obviously, they face some serious legal liabilities in situations like this, and the potential for lost sales if their customers lose faith in them. This may be good for business on the one hand, but it’s really bad for business on the other. Sharing security information with people who need it helps us all. We just faced a hack that didn't impact our business in any way, so I want to share it to help other people. I hope it's useful to other merchants.