ROAS stands for Return on Ad Spends. But of course, if you are a performance marketeer, this is already your holy grail.

And if you are a D2C brand owner, this metric will define everything else in the early days – your cash flow, your profitability, the health of your business and the peace of your mind (just kidding).

However, what most marketeers miss is that ROAS is in fact only an end-result, depending on some key in-process metrics. And if you are trying to solve for ROAS, you need to be solving for each of these individual metrics.

Here is a list of 3 in-process metrics to start with –

Click-through Rate (CTR)

Your click-through rate indicates the extent to which your ad generated curiosity. It also indicates the effectiveness of your hook message. In case of video ads, this would refer to the information shared in the first 3-4 seconds of a video. In case of a static ad, it would indicate the quality of your ad’s headline copy and visual imagery.

A higher CTR, upwards of ~1.2%, indicates that the message you are driving through your ads is generating curiosity. So you need to double down on this and create more versions of this communication angle. A lower CTR would indicate that the message is not landing with your potential customers. At this stage, you need to revisit the board and test different communication angles with your audience.

A higher CTR simply means that more people will visit your landing page, therefore increasing the top of funnel for the same amount of money spent.

Watch-out: Make sure that this higher CTR is not coming at the back of a lower CPM. A CPM (Cost per Thousand Impressions) that is lower than Rs. 100 typically indicates a poor quality of audience. In this case, test these ads against multiple different audiences before reaching a conclusion.

Hook Rate

Hook Rate indicates the number of people that stopped for more than 3-seconds on your video. It simply indicates the number of people you were able to ‘hook’ to your video ad.

Hook Rate = 3-Second Video Plays/Impressions X 100

The average watch-time for video ads on Instagram & Facebook is ~4 seconds (shocking, right?). Your messaging in these first 4 seconds needs to be powerful and engaging. Actively track the hook rate and work on improving it. This metric is a great indicator of what really matters to your customer.

A great way to improve and test the right hook is to create 3 versions of every ad, with only the first 4 seconds varying in each. Each version will have a different hook driving a unique message. Test these against multiple audiences. Then double down on the video with the highest hook rate. Scale it up and create multiple static versions of the winner hook.

A higher hook rate is an indication to Meta’s algorithm that viewers are interested in the video. If this is coupled with a high CTR, it indicates high engagement. Meta will reward this by reaching more potential customers.

Add to Cart Rate

Add to Cart Rate is the number of people who added the product to cart (adds to cart) against the number of people who landed on your page (landing page views).

Add to Cart Rate = Adds to Cart/Landing Page Views X 100

This indicates the effectiveness of your landing page. A great landing page will contain the following –

Features of the product
Potential benefits of using the product
MRP & Discounted Price
A sticky Add-to-Cart Ribbon
Social Proof in the form of customer testimonials & consumer testing
Scientific Claims (where products have been tested)
Trust badges like relevant certifications, secure check-out, cash-on-delivery, return & exchange policy
Similar Products Section that encourages up-sell & cross-sell

Remember, your landing page is synonymous to the customer visiting your physical store. It should contain as much information as needed in order to build trust, create aspiration and then trigger the act of ‘Add to Cart’.

You should aim to improve this rate on a monthly basis. Install Hotjar or Microsoft Clarity on your website in order to observe consumer behaviour on your landing pages. This will tell you the sections you need to improve to positively impact this metric.

These 3 in-process metrics should serve as a great starting point for you to improve your ROAS. I highly recommend picking up one metric at a time so you can clearly assess the impact of your tests.

If you want to read about 3 essential strategies to grow your D2C business, click here.