Top 2024 ROAS Benchmarks for Ecommerce Stores

In the competitive world of ecommerce, ROAS (Return on Ad Spend) is the key metric. For Shopify brands who are seeking rapid, sustainable growth, mastering ROAS in marketing is crucial. In this article, we show you ROAS benchmarks and share 5 strategies to optimize your ROAS formula for the best possible results.

However, navigating the ROAS ecommerce landscape is not straightforward. It’s a complex path filled with challenges, requiring more than just minor adjustments to your marketing strategy.

This guide will assist you in:

• Understanding ROAS trends and performance analytics.
• Comparing your current performance to the wider Shopify ecosystem.
• Discovering practical, expert strategies to improve your advertising efforts.
• Acquiring the tools needed to optimize your strategies and surpass your 2024 ROAS goals.

In a recent study Triple Whale, one of the best ecommerce analytics platforms analyzed data across more than 5,000 Shopify brands with $1M+ in revenue, offering clearer insights into the mechanics of successful ROAS ecommerce strategies.

Benchmarking is crucial for every brand because sometimes you don’t know whether the 3 or 5 ROAS achieved by your agency or internal team is good or bad compared to others. That’s where we want to help you.

Here is an overview of the ROAS benchmarks across social media channels.

You can also see that brands primarily allocate their budgets to the two biggest platforms, but I want to highlight two alternatives. One is Bing Ads, an undervalued search engine that can deliver significantly better results, although on a smaller scale, than Google. The other is Pinterest, with which we have had excellent experiences, particularly in the fashion and jewelry sectors. In our recent Pinterest case study, we detailed how we achieved a 25x return on ad spend.

On the next table, the main industries are highlighted along with their key performance metrics including ROAS (Return on Ad Spend), CPC (Cost Per Click), CPM (Cost Per Thousand Impressions), CPA (Cost Per Acquisition), CTR (Click-Through Rate), CVR (Conversion Rate), and AOV (Average Order Value).

For example, the Sporting Goods industry shows the highest among the ROAS benchmarks at 5.61, with a low CPC of $0.55 and a high AOV of $123.66. Conversely, Pet Supplies have one of the lowest among the ROAS benchmarks at 1.43, despite having a higher CPC of $0.93 and a lower AOV of $55.31. These metrics provide valuable insights for optimizing advertising strategies across different sectors.

Maximizing ROAS through AOV is simple: the higher the amount each customer spends per transaction, the more revenue your advertising generates.

Increasing AOV not only boosts your profits but also helps counterbalance the rising costs of customer acquisition and advertising. Offering free shipping is one of the most effective strategies to increase AOV.

By targeting your free shipping promotions to the right audiences, you can maximize your ROAS and avoid missing potential revenue. Here are a few effective strategies for using free shipping to incentivize customers to spend more and increase your AOV:

• Set minimum spend thresholds for free shipping: According to ShipBob’s research, nearly half of brands require customers to spend between $30 and $100+ to qualify for free shipping. By setting your threshold just above your current AOV, you can encourage customers to add an extra item or two to their cart.

• Create irresistible product bundles: Combine complementary products and offer them at a slightly discounted price that meets your free shipping minimum. This increases the perceived value for the customer and also helps you move more inventory and boost your AOV.

• Implement strategic upselling and cross-selling: Suggest related products or higher-priced alternatives when a customer is about to check out. This can grab their interest and help them reach the free shipping minimum. For example, if they’re buying a new body scream, recommend a serum or a facemask to go with it.

The benefits of free shipping go beyond improving AOV and ROAS.

Brands cannot afford to concentrate only on acquiring new customers. While attracting new business is essential, ignoring retention strategies can result in a leaky bucket scenario, where resources are continually spent on replacing lost customers. With rising advertising costs and saturated channels, investing in retaining your current customers is more crucial than ever.

Investing in owned channels and first-party data acquisition enables you to build relationships with your customers on your terms, without relying on algorithms or facing increasing ad costs.

Here are some actionable ways to do just that:

• Create a VIP experience: Segment your top spenders and make them feel special with exclusive events, dedicated support, and custom offers. For instance, your brand could organize an online preview of your new collection exclusively for VIPs to build loyalty and increase spending.

• Encourage referrals: Turn your loyal customers into brand advocates by implementing a referral program that incentivizes them to spread the word to their friends and family. For example, you could give a $10 discount to the referrer and 20% off the first purchase for the referee, fostering a community of brand advocates.

• Personalize your communications: Use first-party and zero-party data from post-purchase surveys to customize marketing messages, making them more relevant and engaging for your audience. For instance, if customers frequently purchase running shoes, send them emails, SMS messages, or push notifications highlighting new arrivals and exclusive deals on athletic gear.

• Launch a loyalty program: Reward frequent shoppers with a points system that increases benefits with more purchases, encouraging repeat business. /Best loyalty apps for Shopify stores/ For example, boosted loyalty by offering points redeemable for discounts, increasing LTV by 35%.

While it’s tempting to pour all your resources into chasing new customers, don’t underestimate the power of cultivating loyalty among your existing ones.

In the world of ecommerce, timing is everything. Just as you wouldn’t wear a fur coat in July (unless you’re setting a fashion trend), you shouldn’t use the same ad strategy year-round.

Maximizing your ROAS requires aligning your campaigns with the seasonal peaks and troughs of consumer demand and channel performance.

The key lies in identifying when your audience is most likely to engage and convert. Our data analysis shows that months with historically high consumer spending, such as November, July, and August, are ideal for launching targeted campaigns. This approach ensures your advertising efforts are both timely and effective, capturing your audience’s attention when they are most ready to buy.

Once you’ve identified these high-impact periods, schedule major promotions or advertising pushes during these times to significantly enhance your marketing results.

Here are a few ways to make the most of your peak season spend:

• Sync your campaigns with major shopping events: From Black Friday to back-to-school, there’s no shortage of prime opportunities to capture consumer attention. Plan your ad strikes around these critical dates to tap into the surge of purchase intent. For instance, if you’re planning a campaign for Black Friday, start teasing your offers early in November through social media posts and email newsletters. This builds anticipation and ensures your audience is primed to take advantage of your deals when they drop.

• Dial up your budgets during high-impact months: When ROAS is high, it’s time to scale. Analyze previous years’ data to identify when your ads performed best in terms of ROAS and CVR, then plan to increase your ad spend during these periods. For example, the previous ROAS benchmarks report data shows that Google Ads campaign ROAS peaks at 6.42x and CVR jumps to 6.23% in November, so consider reallocating budget from lower-performing months to double down on your November campaigns.

• Tailor your messaging to seasonal themes: For a winter holiday season campaign, use festive imagery and copy that evokes warmth and family, offering special holiday bundles or gift-wrapping services as part of your promotion. Highlight how your product fits into the holiday experience, such as suggesting your headphones as the perfect gift for the music lover in someone’s life. This approach makes your ads more relevant and engaging while tapping into the emotional aspect of holiday shopping.

By using historical data to inform your strategy and focusing your efforts on peak engagement times, you can ensure that every dollar spent on advertising works harder for your brand. Additionally, leveraging high-impact months for targeted campaigns will deepen customer relationships by offering them value when they are most receptive. This strategic approach will strengthen customer loyalty.

By gathering first-party data directly from your customers through your own channels (like your website, app, or email) and encouraging them to voluntarily share zero-party data (such as preferences and feedback), you can accumulate a wealth of accurate, relevant insights. These insights will enable you to create personalized experiences that significantly boost engagement, loyalty, and ROAS in marketing generally.

Begin by pinpointing key moments in the customer journey where you can seamlessly request information, such as during post-purchase surveys or account creation forms. Ensure you offer something valuable in exchange for this data to encourage participation.

Here are a few ways to make data collection a positive experience for your customers:

• Gamify the process: Utilize quizzes and interactive tools that offer personalized recommendations or content in exchange for their input. For example, Hum Nutrition’s “Build Your Routine” quiz is an excellent example of this strategy. The quiz guides users through a series of questions about their health goals and lifestyle habits to provide personalized vitamin and supplement recommendations. This approach not only engages customers but also helps them find products tailored to their specific needs.

• Offer exclusive or personalized experiences: Provide unique experiences or tailored recommendations based on user preferences. A fashion brand called Stitch Fix, for instance excels in providing personalized experiences. Customers fill out a detailed style profile that includes their size, style preferences, and budget. Using this information, Stitch Fix’s stylists and algorithms curate personalized clothing selections for each customer. This approach ensures that every delivery is tailored to the individual’s tastes and needs.

• Clearly communicate the benefits of sharing data: Highlight the advantages of sharing data, such as faster checkout, early access to sales, or VIP treatment. Make it evident that the goal is to enhance their experience, not just collect data. For instance, offering customers who complete a profile questionnaire a fast-track checkout option on future purchases can streamline their buying process using the data they’ve provided.

• Incentivize participation: Provide tangible rewards for sharing data, like discounts, exclusive access to products, or loyalty points. This not only encourages customers to share information but also shows appreciation for their engagement, fostering a positive relationship.

The Omnipresence strategy involves creating a cohesive brand presence across all channels to engage with your audience continuously and consistently. This approach ensures that your brand remains top-of-mind, fostering stronger customer relationships and driving higher conversions.

• Unified Brand Messaging: Maintain a consistent brand voice and message across all platforms, ensuring your audience receives the same experience whether they interact with you on social media, your website, or through email.

• Integrated Multi-Channel Presence: Establish a presence on various channels where your audience is active, such as Facebook, Instagram, YouTube, and even offline channels. Ensure these platforms work together seamlessly to create a unified brand experience.

• Data-Driven Insights: Use analytics to understand where your audience spends their time and tailor your content and ads to those platforms. Track engagement and conversion rates to continually refine your strategy.

• Personalized Customer Interactions: Leverage customer data to provide personalized experiences. For instance, use their browsing history, purchase behavior, and preferences to tailor your messaging, making it more relevant and engaging.

• Leverage Influencers and User-Generated Content: Collaborate with influencers to extend your reach and build credibility. Encourage customers to share their experiences and repost this content to enhance authenticity and trust.

By adopting the Omnipresence Strategy, you can ensure your brand is always visible to your audience, creating a seamless and engaging customer journey. This approach not only enhances brand recognition but also significantly improves ROAS by driving higher engagement and conversions.