Is your return on ad spend (ROAS) not meeting expectations?
Maximizing your return on ad spend (ROAS) is crucial for driving growth and increasing revenue. You can create the most engaging ads, but your efforts won't reach their full potential if you don't effectively leverage key insights and targeting effectively. Follow these best practices to ensure your advertising dollars work harder and deliver better results.
Best practice #1: Improve acquisition by targeting lookalike audiences
Many brands miss key opportunities to effectively target and engage the right audience, which leads to inefficient use of their advertising dollars. By leveraging Klaviyo’s RFM analysis, you can build targeted lookalike audiences that mirror your best customers, improving acquisition rates while optimizing your ad spend.
How to implement:
- Segment Champion or Loyal customers: Klaviyo automatically identifies RFM groups for you, so you can trust the model and create these segments using RFM properties.
- Create lookalike audiences: Leverage your RFM segments to create lookalike audiences in your ad platforms like Meta Ads or Google Ads, targeting new prospects with similar characteristics.
Key takeaway: This strategy helps you attract new customers who are more likely to convert, driving higher acquisition rates and reducing reliance on guesswork.
Best practice #2: Recapture disengaged customers with personalized ads
Customers in your Needs Attention or At Risk categories might not be opening your emails or texts. To re-engage these customers, personalized ads are an effective solution that may be worth a larger investment.
How to implement:
- Recapture disengaged customers: Use RFM analysis to find customers showing signs of churn.
- Deliver tailored ads: Offer exclusive or time-limited discounts to Needs attention or At Risk customers to rekindle interest.
Key takeaway: Investing in targeted ads for lower-engagement segments can strengthen customer retention and maximize return on ad spend.
Best practice #3: Improve efficiency by excluding lower-priority segments
Not every customer needs to see every ad, and targeting the wrong audience wastes budget. Excluding segments like Recent purchasers or Loyal customers from certain ad campaigns can increase efficiency and boost ROAS.
How to implement:
- Segment and exclude: Filter out customers who don’t need further incentives, such as Recent purchasers or Champion customers who don’t require discounts to convert.
- Use the median performance chart in RFM analysis to roughly identify when each group is likely to purchase again so you know when to stop excluding them.
Key takeaway: This strategy focuses your budget on customers who are more likely to respond and convert, protecting your margins and optimizing ad spend.
Best practice #4: Refine ad content based on product insights
Use product analysis to identify patterns in customer purchasing behavior and build your strategy with these insights. This tactic enhances the relevance of your ads and drives higher-order values.
How to implement:
- Identify product pairings: Klaviyo’s product analysis dashboard automatically reveals frequently purchased product pairings, helping you create targeted ads that showcase popular combinations and increase cart value.
- Create dynamic ads: For example, if customers frequently buy mascara and eyeliner together, create ad carousels in Meta Ads to highlight both products.
Key takeaway: This strategy increases average order value and boosts ad relevance, making your advertising efforts more effective.
Summary
Many brands miss valuable opportunities to target and engage the right audience, leading to inefficient ad spending. By leveraging proven tactics, you can attract new customers, reconnect with less-engaged ones, and refine your ad content, ensuring the right message reaches the right audience at the right time.