Maximizing ROAS is the Opposite of What Your Want

I was asked by a young entrepreneur the other day, “What’s a good return on ad spend to target on the meta platform” and I only half-facetiously said, “the lower the better”.

The question of “What is my target ROAS?” is representative of the line of thinking many direct-to-consumer e-commerce brands have as they’re getting going - and, frankly, where a lot of the trouble begins in their efforts to build a profitable, growing, and scalable consumer brand.

The problem is that it orients your Brand’s growth around the need to spend money to acquire customers.

And that should not be your objective. In fact, it should be exactly the opposite.

Your objective should, instead, be to build such a powerful and resonant brand for your audience that you don’t need to spend money to acquire the vast majority of your customers over time.

It should be that your customers have such an emotional connection to your Brand, that they come straight to you when in-market for your product category.

Now, the unfortunate issue about building out this emotional connection is that it decidedly has “low return on ad spend“.

At any given point in time only about 5% (on average) of a brand’s potential customer base is actually shopping for the brand’s product category. And when they are in that 5% the most effective advertising makes rational appeals to the value proposition of your product at a certain price, with any promotional offers attached.

If you haven’t built an emotional connection before that moment, unfortunately, product/price/offer is all you’re working with.

However, this means that 95% of the time your customers aren’t shopping for your category. Now the downside of this is that your advertising/marketing towards this audience will have “low return on ad spend” based on current measurement standards because these audience members just aren’t in-market.

But the utterly fantastic news is 1) that this is the perfect time to build an emotional connection with your audience as they are no longer driven by the rational value prop, and 2) because these folks are not in-market, the cost to get in front of them is astronomically lower than when they are in-market and are bid on by every company in your category.

By investing in this emotional connection when your customers aren’t in-market, you create a value proposition that is much more significant when a potential customer finally begins shopping for your category.

This value proposition is something that delivers consistently in perpetuity. It’s so strong that it draws customers straight to your Brand without even hitting the Google/Facebook ads circuit. And it is the most difficult value proposition to compete against.

Because your competitors can match your features, they can match your price, your promotions, your “limited time only’s”, and the list goes on.

But they can never replicate your Brand.
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