ROI Calculations for Campaign Debriefing

ROI Analysis & Budget Recommendations for Multi-Channel Ad Campaign

Project Overview

In this project, I analyzed Return on Ad Spend (ROAS), Lifetime Value (LTV), Customer Acquisition Cost (CAC), and Conversion Rates for a recent multi-channel ad campaign. The goal was to evaluate the efficiency of spending per channel and determine future budget allocation for maximum profitability.

1. ROAS Analysis

📊 Key Findings:

• Social Ads had the highest ROAS (4.7), followed by Shopping Ads (3.6).

• Search Ads (1.7) and Display Ads (1.8) had the lowest returns—suggesting inefficiencies in ad spend.

💡 Budget Recommendation:
✔ Reduce spend on Search & Display Ads—shift $37,500 from Search Ads to Social Ads since Social Ads had a 4.7 ROAS.
✔ Do not increase Shopping Ads budget—even with high ROAS, revenue was 20% lower than Social Ads.

2. Average Order Value (AOV) & LTV Analysis

📊 Key Findings:

• Search Ads had the highest AOV ($128.7), followed by Social Ads ($87.4).

• Display Ads had the lowest AOV ($27.6), leading to a lower LTV.

💡 Budget Recommendation:
✔ Increase budget for Social Ads—LTV is high ($131.1), meaning customers tend to make repeat purchases.
✔ Reduce focus on Display Ads—AOV is too low ($27.6), impacting profitability.

3. LTV to CAC Ratio Analysis

📊 Key Findings:

• Social Ads had the highest LTV:CAC ratio (4.68), indicating strong customer lifetime value.

• Search Ads (1.72) and Display Ads (1.78) were below the ideal threshold of 2.0, meaning acquisition costs were too high.

💡 Budget Recommendation:
✔ Reduce budget for Search & Display Ads—low LTV:CAC ratios suggest higher acquisition costs.
✔ Increase investment in Social Ads—with LTV:CAC of 4.68, there's room to scale without losing profitability.

4. Conversion Rate & New Customer Analysis

📊 Key Findings:

• Shopping Ads had the highest conversion rate (23.16%), meaning users from this channel were more likely to buy.

• Social Ads had the lowest conversion rate (13.51%), despite high ROAS.

💡 Landing Page Optimization Recommendation:
✔ Customize landing pages for Social Ads—since only 13.51% of new customers purchased, an optimized landing page could increase conversions.
✔ Prioritize landing page optimizations for Search Ads over Display Ads—since Search Ads had higher new customer purchases (19.75%) than Display (17.54%).

5. Final Budget Recommendations

📌 Reduce budget for Search & Display Ads to improve ROAS & LTV to CAC.
📌 Increase investment in Social Ads, but optimize landing pages to improve conversion rates.
📌 Maintain current Shopping Ads budget, as it's already performing well.

By reallocating funds from inefficient channels to high-performing ones, we can maximize ROI while maintaining profitability. 

What I Learned

Through this project, I gained hands-on experience in measuring digital marketing ROI using key performance indicators like Return on Ad Spend (ROAS), Lifetime Value (LTV), and Customer Acquisition Cost (CAC). I learned how to:

✅ Calculate and analyze ROAS to determine which ad channels were most profitable.
✅ Assess LTV and CAC ratios to understand long-term customer value.
✅ Evaluate conversion rates to identify areas for improvement.
✅ Make data-driven budget recommendations to optimize future ad spend.
✅ Use metrics to improve landing pages and customer experience to boost conversions.

This experience reinforced the importance of not just collecting data, but interpreting it effectively to make strategic decisions.

Mistakes I Made & What I Learned from Them

🔴 Focusing too much on total revenue instead of efficiency

• Initially, I focused on total revenue rather than ROAS and LTV to CAC ratios. This led me to overlook inefficiencies in some ad channels.

• Lesson: High revenue doesn’t always mean high profitability. Efficiency matters more than volume.

🔴 Ignoring AOV when evaluating LTV

• At first, I didn’t pay enough attention to how AOV impacted LTV. Some channels had low AOV but high frequency, which meant they were still valuable.

• Lesson: A high purchase frequency can compensate for a lower AOV, making LTV a more reliable metric for long-term success.

🔴 Underestimating the impact of landing page optimization

• I initially thought higher ad spend alone would increase conversions, but some channels underperformed due to poor landing page experiences.

• Lesson: Even a high-ROAS channel can underperform if the landing page isn’t optimized. Conversion rate optimization (CRO) is just as important as ad spend.

How I Improved

🔹 Prioritized efficiency over raw revenue – I shifted my focus to ROAS, LTV, and CAC, ensuring that every dollar spent was used effectively.
🔹 Refined budget recommendations – Instead of blindly increasing budgets for high-revenue channels, I reallocated funds based on LTV to CAC ratios.
🔹 Integrated landing page optimization – I suggested customized landing pages for low-conversion but high-ROAS channels, improving overall conversion rates.
🔹 Developed a more strategic mindset – Instead of just calculating numbers, I analyzed trends and made actionable recommendations based on data insights.