Be honest: when you’re investing in programmatic advertising, even instant gratification would be too long.
Businesses not only want to see results from every dollar spent, they ideally want to see it yesterday. As unrealistic as that might be, that kind of thinking can exacerbate the worries that come when campaign performance – measured by return on ad spend (ROAS) – takes an unexpected dip.
Nobody wants to show the kind of numbers that prompt a question like “How could you let this happen?” Yet few marketers were ever schooled in how to roll with the punches if their monetization efforts momentarily take a beating. There’s no universal script you can use to explain why long-term results may look different than what you see in the moment.
The most natural reaction is like the marketing equivalent of a fight-or-flight response: lower bids across the board before ROAS gets worse. Here’s why you should take a beat first:
Blanket Bid Reductions Come At A Cost, Too
Your focus is obviously on getting value for the money you’re putting into a campaign. When it starts to look like the value isn’t there, blanket bid reductions seem like the responsible thing to do. You’re preventing a bad situation from getting worse. You’re ensuring your employer’s cash isn’t being wasted. Most importantly, you’re protecting your professional reputation.
That’s not all that happens, though. Blanket bid reductions can also mean:
- May lead to less-valuable inventory due to more competition for premium placements
- Reduced campaign visibility due to fewer quality ad placements
- Less engagement from the remainder of the campaign
- More consistent but underwhelming results
What you perceive as the near-term benefit of lowering your bid, in other words, won’t necessarily help you reach your overall performance marketing goals.
The ‘Keep Calm And Carry On’ Approach To ROAS
There’s a better way to contend with falling ROAS, and it’s the exact opposite of panicking.
- Take time to assess
Remember that the goal of bidding is to find a balance—placing bids high enough to secure valuable impressions, but not so high that the cost eats into profits. A ROAS drop might be cause for concern, but not always a time to take immediate action. Instead, you want to examine the severity of the drop and any factors that could be contributing to it. - Revisit your objectives and tactics
Most campaigns are aimed at converting valuable audiences. Getting there means making higher bids to win more auctions and get access to the ideal ad placements, such as high-traffic apps or times when users are most engaged. Riding out a temporary ROAS dip could be the best way to make sure you continue to make progress and achieve the outcomes you want. - Turn to trusted partners for data and insights
Part of providing the best value to clients lies in assisting them with research into problem areas. LifeStreet has experimented with adjusting bids by 2% up or down, for example, in order to save performance marketers time and help them avoid making the wrong decision. Here’s what we can tell you: decreasing bids does not necessarily lead to an increase in ROAS. It’s a “maybe” at best, and when it doesn’t work you lose opportunities to reach the right audience and achieve the level of engagement that would really matter for your business. The dynamics of auctions may seem black and white, but the truth is there are a lot of nuances to consider. - Make targeted bid adjustments
By analyzing performance data, you can adjust bids for specific segments. For example, you might reduce bids during weekends when traffic is typically lower but keep them higher during peak engagement times. This approach allows you to allocate your budget more effectively, focusing on periods and segments that offer the best return. - Talk to your customer success manager
Your CSM likely has valuable insights into the advertising landscape that you might not see. Regular discussions with your CSM about periods of softer monetization can help you anticipate challenges and plan your strategy accordingly. They can suggest adjustments based on industry trends and your specific goals. - Double down on what works
Instead of reducing overall spend, direct your budget to the high-performing segments of inventory. This strategy focuses on being smart with where you allocate your resources, ensuring that you maintain a strong presence in areas that yield the best results. Conversely, if you reduce your bids, it can change the types of inventory and users your ads reach, limiting access to your target audience by making it harder to compete for premium inventory. This can negatively impact ROAS, as less valuable users may not perform as well. Enhanced your model
Use sophisticated data models and predictive analysis to detect patterns in how short-term bid changes affect performance. This allows you to proactively adjust bids or maintain strategies, ensuring you seize opportunities in a more informed and timely way.- Try strategic bidding optimization
Rather than making sweeping changes, fine-tune your strategy for specific campaigns. This approach involves adjusting your tactics based on the unique characteristics of each campaign, allowing you to optimize performance and achieve your objectives.
Mastering the Bidding Landscape
Every campaign is unique, and what works for one may not work for another. It’s easy to lose sight of that when you’re worrying that falling ROAS will snowball into an avalanche of disastrous campaign results.
The more adept you become at adapting to shifts in monetization, the better you’ll be able to plan and execute future campaigns, and inform the future performance marketing strategy within your organization. A return to higher ROAS will just be the first sign of the successes to come.
Ready to enhance your bidding strategy? Connect with LifeStreet’s team today and discover how our mobile-first demand-side platform can help you maximize your advertising efforts with true bidding transparency.