{"id":3954,"date":"2022-08-08T01:50:05","date_gmt":"2022-08-08T01:50:05","guid":{"rendered":"https:\/\/www.connectedculture.com.au\/?p=3954"},"modified":"2023-05-25T03:02:16","modified_gmt":"2023-05-25T03:02:16","slug":"what-considered-good-when-it-comes-to-e-commerce-ad-performance","status":"publish","type":"post","link":"https:\/\/www.connectedculture.com.au\/what-considered-good-when-it-comes-to-e-commerce-ad-performance\/","title":{"rendered":"What’s considered ‘good’ when it comes to E-Commerce ad performance?"},"content":{"rendered":"\n
Firstly, you might simply be asking this because you want to know how your results compare to other E-Commerce brands. <\/p>\n\n\n\n
To answer this I\u2019d give you some hard data. <\/p>\n\n\n\n
If your brand is tracking at greater than 1.78 ROAS on Facebook then you are doing better than most E-Commerce brands, based on a set of data produced by Statlas. <\/p>\n\n\n\n
This stat is taken from their compiled data from a data set of 230 ecommerce brands totalling $2.39b+ in online revenue over the last two years. <\/p>\n\n\n\n
I think we can safely assume this is a pretty good representation of the eCommerce market!<\/p>\n\n\n\n
The trouble with this comparison is that it doesn\u2019t capture the nuance of each brand\u2019s individual strategy and where they are at in their evolution. <\/p>\n\n\n\n
The second way (and in my opinion the best way) to figure out if your ads are \u2018successful\u2019 is to tie your targets back to your goal as a business. <\/p>\n\n\n\n
Start with what you are aiming to achieve in the long term. <\/p>\n\n\n\n
Some brands choose profit over growth – they might be relatively mature, have strong organic channels, and choose only to invest in paid advertising to top up their organic revenue. <\/p>\n\n\n\n
For them \u2018good\u2019 might be a 5X ROAS that allows them to profit on every single transaction. <\/p>\n\n\n\n
Other brands might be aiming to scale to 100M users and be VC backed, with high potential for repeat purchases and low Average Order Value (AOV). A brand like this might be extremely happy with 1X ROAS. <\/p>\n\n\n\n
Do you need profit now, are you happy to break even, or can you stomach a loss if it leads to long-term profit? <\/p>\n\n\n\n
This will help you figure out what is your highest possible Cost per Acquisition (CPA). <\/p>\n\n\n\n
Your target ROAS is your AOV divided by your CPA. <\/p>\n\n\n\n
So if you can afford to pay $10 per sale and your average order value is $25 then your target ROAS is 2.5. <\/p>\n\n\n\n
Now you have your own benchmark to define success by, and this becomes your criteria for whether to spend more or less on a given channel.<\/p>\n\n\n\n