Web Talent Marketing’s Quarterly ROAS Report: Q1 2020
In this edition of our ROAS report, we will be exploring what we saw for our clients for the past three months. Though it seems as if we’ve all been feeling the “COVID effect” for a long time, Internet activity didn’t really indicate a new normal until mid-March. As such, relatively strong January and February numbers helped prop up weaker March numbers.
During this period, metrics were impacted a number of ways, whether it be supply and demand or modified policies resulting from the pandemic.
What is ROAS? If you need a refresher on what return on advertising spend means and how it can help measure success, you can find the definition in our first report.
As this report specifically looks at a RETURN on investment, these particular numbers won’t show overall revenue drops or gain, but simply if advertisers were able to maximize the return on their ad spend.
Microsoft Performs Best This Quarter
In a surprising twist, Microsoft Ads had the best performance in terms of high ROAS for clients, with a median return of 6.7X. However, this dropped significantly compared to Q1 of 2019, which was 14.6X.
Not surprisingly, much of the drop from last year could be attributed to verticals that were hit harder by COVID-19. Apparel and sporting goods suppliers, in particular, showed much lower numbers than last year. Still, there were a few bright points, with one client in particular outperforming the median for all clients in 2019.
As we’ve often said, Microsoft Ad performance tends to vary when compared to Amazon or Google. We’ll see if this trend is magnified or reduced in the next quarter.
Google Ads Dropped from Last Quarter
Our clients’ mean for ROAS on Google Ads was 5.5X, which was a significant drop from Q1 of 2019, thanks, no doubt, to COVID-19.
Though decreased demand was responsible for much of the lackluster performance, several of our clients also suffered from supply-side issues. This prevented them from shipping products in a timely manner. In fact, one of our clients in the snack food industry had to dial back their spending due to supply shortages, thereby limiting ROAS at a time when they could’ve taken advantage of the greater demand.
At the same time, one client in the gardening vertical enjoyed nearly a 16X ROAS. This is four times better than what they experienced in the same quarter of 2019. Products that can be used at home have fared well during the crisis, and naturally, this client is no exception.
Amazon Suffers from Hold on Non-Essential Items
Because Amazon placed a hold on selling non-essential items during this quarter, the median ROAS for our clients on this platform declined by around two points compared to the first quarter of 2019, to 6.1X. This large decline was due to the shifting demand for products and changing rules from Amazon, with decisive gains and losses for certain clients.
Sporting goods and fashion lagged on all of the other platforms and Amazon was no exception. Clients from these verticals have had their ROAS drop by as much as 40%. In many cases, a lack of supply coupled with luke-warm demand was to blame.
All in all, Q1 was a challenge for many of us, and we shouldn’t discount the fact that next quarter’s numbers have the potential to disappoint as well. That said, approved stimulus packages and the gradual re-openings have the potential to restart an economy that hasn’t stalled so much as it’s been frozen in animation.
If you need help meeting your target ROAS, check out our Paid Search services and contact us today!