Decide if digital advertising is right for you

Is a new advertising channel a good investment for your brand? In this lesson, you'll learn what digital advertising is and whether or not it's right for you.

Overview

Before building a full digital advertising strategy, determine if this additional channel is right for your brand by:

Defining digital advertising
Calculating your expected return on ad spend (ROAS)

Then, you can feel confident and empowered to create an ad strategy that suits your business needs. Let's get started!

Note: Already have a budget or approval in place for this initiative? Great! Continue on to build out your ad strategy in either of the following courses:

Define digital advertising

So, what is digital advertising? Learn what this term entails and how this additional source of marketing can drive revenue for your business.

Calculate projected return on ad spend

Now that you have a better handle on what digital advertising is, it's time to estimate the value of this channel. To do so, calculate your projected return on ad spend (ROAS) and evaluate whether this adds to or detracts from your current marketing strategy.

Step 1: Understand return on ad spend (ROAS)

Return on ad spend (ROAS) measures the value of your advertising investment divided by its cost.

With any investment you make for your company, you will either see a net profit, loss, or break-even point. By projecting this in advance, you can better assess whether or not a specific project is worth the money you must spend to make it happen.

Step 2: Calculate ROAS

Calculate ROAS using the following formula:

ROAS = (Conversion value / Cost of investment)

Let's say that you will make a profit of $50 from each sale you get from your ad campaign. You also project that this ad will cost you about $5 per click. In that case, your ROAS is 10 (because 50 / 5 = 10). Thus, for every dollar you spend on this campaign, you will make a $10 profit. It's then up to you to decide if that value is worth the cost and effort you're putting into it.

Need some helpful tools to get started?

Calculate estimated value: use this tool to input data that aligns with your business and calculate the value you expect to see from your ad campaign.
Check out industry benchmarksfor metrics in Meta, like click-through rate and conversion rate.
Set up a budget in Meta or Google Advertising: keep yourself on track to hit your allocated budgeting goals, by setting up budgets and utilizing built-in tools within the ad platform you are working in.

Step 3: Determine if this project is worth the investment

With any project, you should aim to gain a positive return on your investment. The same applies to digital advertising. Make sure that the amount of money, time, and energy you put into your ad strategy is likely to pay off. While not every ad you run will be a smashing success, you should feel confident going into the project that running an ad is the right choice for your business.

Do you project a positive ROAS?
Great! Share with your team and make a plan to execute a thoughtful ad campaign. Check out the resources below to implement an ad strategy following industry best practices:

Do you expect a negative ROAS?
If your costs outweigh the projected profit you would gain from this advertising, then you may want to re-strategize. Perhaps this channel is not the right fit for you or your customer base. No worries! Not every brand needs to run robust digital ad campaigns, and we have many recommendations for cost-effective strategies across Klaviyo Academy. Explore our wide range of courses to help determine the best fit for your brand.

Decide if digital advertising is right for you

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