I’ve been on a rant about marketers with zero integrity lately.
Specifically, I want to comment about promising ROAS.
(And clients can be just as bad when it comes to this)
Let me just make one thing clear:
No advertiser on the planet can take any given offer and magically bring in ‘X ROAS’ with it.
(Maybe there’s some, but I don’t know them. They’re probably too busy making freaking bank, as they should be)
In case you’re wondering what ROAS means, it stands for ‘Return on Ad Spend.’ So, if you spend $500 on advertising and make $1,000, that would be a ROAS of 2:1. Because you returned twice as much as you spent. Simple math. So, what’s the big deal?
The deal is there are marketers that will promise 3x, 4x, 5x+ ROAS to their prospects just to close a deal.
There are also clients that demand X amount of ROAS as well. And when I see that bounce out of there faster than a New Year’s resolution gym member.
Let’s run a little thought experiment to show you why this media-buying ‘Bigfoot’ doesn’t exist.
Actually… let’s assume they do!
And I’ll show you why they’d never, in their right mind, work for anyone but themselves.
Here you go. This won’t take long.
Right now I can go to any affiliate site and choose from thousands of products that I’d like to sell and get a commission off of.
Let’s choose Golf.
The golf niche is an $84 billion industry. It’s a rabid marketplace full of hungry buyers with money to spend. So plenty of room to scale.
I see a $37 product, right now, where I can make 75 percent from every sale.
If someone could always get a 5:1 ROAS, no matter what, then they should be acquiring that $37 sale for every $7.40 in ad spend ($37 divided by 5).
Their cut would be $27.75.
So, minus ad spend, they would keep $20.35 on each sale ($27.75 – $7.40 = $20.35).
Pure profit with no overhead, headaches, dealing with whiney clients, or anything like that.
That’s a 2.75:1 ROAS selling a product that someone else created, hosts, manages, and everything else.
Now, I don’t know about you but, if I could put $1 into something and get $2.75 back, and not have to worry about ANYTHING else business-wise, I’d do that all day long, every day.
There’s no way on the planet that someone who has this talent would forego that to do it for someone else for a few thousand dollars per month. That would be absolutely bonkers.
Point is. Next time you hear a marketer say that they can do that, ask them why they don’t just do it for themselves?
They’ll probably say “oh, I don’t want to have to deal with payment processing, managing customers, support” and all that bull. In the scenario I just showed you there is no responsibility at all other than sending traffic. The vendor handles everything else.
Anyways, I’ll stop ranting. Now I’m all riled up.