{"id":624,"date":"2024-12-03T14:54:49","date_gmt":"2024-12-03T14:54:49","guid":{"rendered":"https:\/\/internship.infoskaters.com\/blog\/2024\/12\/03\/advertising-metrics-how-to-track-impact-for-sustainable-business-growth\/"},"modified":"2024-12-03T14:54:49","modified_gmt":"2024-12-03T14:54:49","slug":"advertising-metrics-how-to-track-impact-for-sustainable-business-growth","status":"publish","type":"post","link":"https:\/\/internship.infoskaters.com\/blog\/2024\/12\/03\/advertising-metrics-how-to-track-impact-for-sustainable-business-growth\/","title":{"rendered":"Advertising Metrics: How to Track Impact for Sustainable Business Growth"},"content":{"rendered":"

Return on ad spend<\/a> (ROAS) has become the default metric for many marketing teams. It’s clean, precise, and makes CFOs happy. Spend X dollars, get Y dollars back. Simple \u2026 right?<\/em><\/p>\n

Not quite. Here’s the issue: The more exact a marketing metric is, the easier it is to manipulate. Want a 2x ROAS? You can get it. Want a 20x ROAS? That\u2019s possible, too. Just toggle a few levers \u2014 increase retargeting, run more discounts, reduce spend \u2014 and watch that ROAS number climb.<\/p>\n

The real problem is that ROAS only measures how efficiently you are at capturing existing demand \u2014 not creating new demand<\/em>. It’s like fishing in an ever-shrinking pond and celebrating that you\u2019re getting better at catching the remaining fish.<\/p>\n

In a recent Marketing Against the Grain episode<\/a>, Kieran and I discussed the solution. Don\u2019t abandon ROAS entirely, but broaden your strategy with other measurements. That\u2019s where the buckets model<\/strong> comes in: a framework for balancing short-term returns and long-term growth by breaking your ad strategy into three main categories.<\/a><\/p>\n

Table of Contents<\/strong><\/p>\n

The Buckets Model: a Balanced Approach to Advertising<\/a>
\n Checklist: How to Use the Buckets Together<\/a>
\n The Bottom Line for Choosing Sustainable Advertising Metrics<\/a> <\/p>\n

<\/a><\/p>\n

Download Now: Advertising Planning Kit<\/a><\/p>\n

<\/a> <\/p>\n

The Buckets Model: a Balanced Approach to Advertising<\/h2>\n\n

To get a clear view of your online advertising\u2019s impact<\/a>, you need to diversify beyond a single metric. The buckets model<\/a> provides a simple, effective way to organize your ad investments into three main categories: direct ROAS, incrementality,<\/strong> and brand awareness<\/strong>. Each bucket has a distinct role in capturing returns and building future demand, creating a more sustainable growth model.<\/p>\n

Bucket 1. Direct ROAS (Demand Extraction)<\/h3>\n

Your first bucket is your money machine. Here, you capture existing demand, aiming to get a direct return on every ad dollar spent. For example, if you’re seeing a 3-to-1 return on ad spend, then for every dollar you invest, you\u2019re capturing three dollars back in sales.<\/p>\n

The goal here is to maximize returns on measurable actions,<\/strong> like clicks and conversions, by targeting audiences who are already aware of and interested in your brand. You should almost always saturate this bucket first because you can directly track profit and efficiency.<\/p>\n\n

Bucket 2. Indirect ROAS (Demand Extraction & Demand Creation)<\/h3>\n

The second bucket focuses on incrementality <\/strong>\u2014 the measure of new demand generated by your ads. Incrementality models track how your marketing reaches new audiences who wouldn\u2019t otherwise engage with your brand.<\/p>\n

Unlike ROAS, which captures existing demand, incrementality shows you the \u201cextra\u201d value your campaigns generate over time, especially in channels like video or display ads where conversions aren\u2019t immediate.<\/p>\n

Expert tip<\/strong>: Your incrementality bucket should help your first bucket grow over time. As you create new demand, you expand the pool of customers that your direct response advertising can capture efficiently.<\/p>\n

Measuring Incrementality With Conversion Lift Studies<\/h4>\n

One of the best ways to measure incrementality is with conversion lift studies<\/strong>. Here\u2019s how it works.<\/p>\n

Split your audience by region (e.g., states in the U.S.), run your campaign in certain areas, and keep it dark in others. Then, track the performance difference. If conversions go up in ad-active regions, that difference is your incremental lift \u2014 the extra growth that wouldn\u2019t have happened without the ad spend.<\/p>\n

Caveat<\/strong>: The downside to incrementality models is they need regular updating. Plan to rerun your lift studies every three to six months (or a maximum of nine months) to maintain accuracy. This may mean temporarily going dark in some areas, but it ensures you stay on track with how your ads generate new demand.<\/p>\n

Bucket 3. Brand ROAS (Demand Creation)<\/h3>\n

The third bucket focuses purely on demand creation through brand building. Think of this as your engagement<\/strong> bucket<\/strong>, where you’re not holding yourself accountable to ROAS metrics.<\/p>\n

Instead, you’re investing in tactics that create familiarity and trust over time \u2014 billboards, podcasts, and other broad-reach activities that help you expand your total addressable market. In this bucket, success is often measured by reach or impressions, rather than conversions.<\/p>\n

<\/a> <\/p>\n

Checklist: How to Use the Buckets Together<\/h2>\n

The key to using the buckets model effectively is to fill each bucket in sequence<\/strong>. Here\u2019s your step-by-step path.<\/p>\n

Start by saturating your direct ROAS bucket. <\/strong>Run burst tests \u2014 spending heavily on a platform to identify the maximum budget you can spend efficiently. This tells you exactly how much existing demand you can capture profitably. <\/p>\n

Watch for signs that your direct ROAS bucket is full.<\/strong> When your ROAS approaches 1:1 (spending a dollar to make a dollar), that\u2019s your signal to expand beyond demand capture. <\/p>\n

Begin your incrementality testing<\/strong>. Set up conversion lift studies in specific regions while keeping others \u201cdark.\u201d This creates your baseline for measuring indirect impact. <\/p>\n

Calculate and monitor your indirect ROAS ratio from these studies.<\/strong> This ratio shows how many additional conversions you\u2019re driving indirectly. Update these measurements every three to six months to stay accurate. <\/p>\n

Layer in brand awareness spending. <\/strong>Focus on broad-reach channels like billboards and podcasts, knowing these investments will feed back into your other buckets over time. <\/p>\n

Keep cycling through all three buckets<\/strong>. Adjust your spend as markets evolve. And remember: As your brand awareness grows, you create more opportunities for incrementality, which generates more customers for your direct ROAS efforts to capture.<\/p>\n

<\/a> <\/p>\n

The Bottom Line for Choosing Sustainable Advertising Metrics<\/h2>\n

The path to sustainable growth isn’t about choosing between measurable and unmeasurable marketing \u2014 it\u2019s about building a framework that accommodates both. By following this roadmap and filling your buckets in sequence, you’ll create a balanced strategy. This lets you capture today\u2019s demand and create new opportunities for tomorrow.<\/p>\n

To learn more about advertising tactics and metrics, check out the full episode<\/a> of Marketing Against the Grain <\/em>below:<\/p>\n

This blog series is in partnership with Marketing Against the Grain, the video podcast. It digs deeper into ideas shared by marketing leaders Kipp Bodnar (HubSpot\u2019s CMO) and Kieran Flanagan (SVP, Marketing at HubSpot) as they unpack growth strategies and learn from standout founders and peers.<\/em><\/p>\n

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