What Should a Business Do if It’s Getting a Good Return on Ad Spend from a Particular Platform?

If a business is receiving a strong return on ad spend from a specific advertising platform, the short answer is to increase investment in that platform. By putting more budget behind what works, the business can potentially scale those positive results and maximize profitability.

Full Explanation

When advertising on any platform yields a high return on ad spend (ROAS), it indicates that the amount of revenue generated is significantly higher than the costs incurred for the ads. In this case, the platform is proving effective at driving business results—such as new customers, bookings, or sales. Therefore, increasing the budget on this platform makes logical sense. Doing so allows the business to capitalize on the success by attracting more customers and increasing total revenue without proportionally increasing costs.

Step-by-Step Breakdown

1. Identify the platform providing a strong ROAS. Monitor your ad spend and returns to pinpoint where your investment is most profitable.
2. Analyze current spend and results. Understand the relationship between your costs and the revenue generated to ensure it remains positive.
3. Allocate more budget. Increase your investment in the platform where ROAS is high to amplify positive outcomes.
4. Monitor performance. Keep tracking results to ensure that increased spend continues to yield a good return.

Real Examples

Imagine a business spends $2,000 per month on Yelp advertisements and receives $100,000 in jobs or sales attributed to those ads. This is an excellent return on investment, indicating that Yelp is an effective platform for this business. It would be a strategic move to increase the Yelp advertising budget to generate even more revenue while maintaining profitability.

Common Mistakes

• Failing to increase budget on a successful platform due to fear of overspending.
• Ignoring data and not identifying which platform yields the best return.
• Scaling budget too quickly without monitoring resulting changes in ROAS.

FAQs

Q: Should I increase my budget immediately once I see a good ROAS?
While increasing your budget makes sense, it is best to do so gradually and continue monitoring the returns to ensure the platform remains effective.

Q: What if the ROAS decreases after increasing spend?
If the return diminishes, reconsider the budget allocation or test other platforms to find where your investment performs best.

Key Takeaways

• A good ROAS signals that your ad spend on a platform is effective and profitable.
• Investing more in a high-ROAS platform can help scale your business results.
• Always monitor performance continuously to maximize returns and adjust budgets wisely.