ROAS Optimization

When ad spending isn’t carefully managed, campaigns often underperform, failing to reach the right audience or driving minimal conversions. Understanding the real effects of wasted ad dollars provides a clearer picture of how to improve ROAS and optimize campaigns.

Data from industry reports highlights how wasted spend affects ad performance:

• Inefficient Targeting Costs: Approximately 76% of Google Ads budgets are often directed at unqualified audiences due to incorrect targeting, resulting in budget waste.
• Low-Intent Keywords: Another study shows that up to 60% of ad budgets go toward low-intent keywords that do not drive conversions. This misallocation frequently results from broad match targeting or lack of negative keywords.
• Potential Savings Through Optimization: Research suggests that with strategic targeting and optimized ad strategies, advertisers can save up to 20% of their budgets—savings that can significantly boost ROAS.

Common Causes of Wasted Ad Spend
To improve ROAS, advertisers need to address the key drivers behind wasted ad spend. These factors often include:

• Broad Keyword Targeting – When campaigns use broad match keywords, ads can appear for irrelevant search terms, resulting in low click-through rates and conversions.
• Lack of Negative Keywords – Not setting negative keywords often leads to ads showing up for irrelevant queries, wasting impressions and clicks.
• Underutilized Conversion Tracking – Without comprehensive tracking, it’s challenging to allocate budgets toward effective areas, leading to inefficient spending.

How Wasted Ad Spend Affects Total Campaign Results
The impact of wasted ad spend goes beyond budget drain. It limits the potential of campaigns to reach high-intent audiences, reducing overall effectiveness and lowering ROAS. When budgets are used ineffectively, campaigns often:

• Struggle to reach the right audiences – Mismanaged targeting contributes to irrelevant impressions, leading to poor ad quality scores and inflated costs per click.
• Lower ROAS – Wasted ad spend reduces the return on investment, making it harder to reach campaign goals within the allocated budget.
• Generate less actionable data – When ad spend isn’t effectively managed, it can skew performance insights, making it difficult to refine and optimize future campaigns.

Example: The $50 Billion Problem
A study found that global ad spend waste reached $50 billion in 2022 alone, largely due to ineffective targeting and low-quality traffic sources. In the case of Google Ads, advertisers have significant room to improve ROAS by eliminating irrelevant impressions and targeting high-converting users.
How to Improve ROAS by Reducing Wasted Ad Spend
To make the most of ad budgets and boost ROAS, advertisers can implement several strategies to reduce waste:

1. Use Precise Targeting – Refine audience segments using demographic and behavioral insights to reach users with the highest conversion potential.
2. Utilize Negative Keywords – Regularly update and refine negative keyword lists to exclude irrelevant queries, improving ad quality and relevance.
3. Optimize Keyword Bidding – Prioritize high-converting keywords and adjust bidding strategies to avoid over-investing in broad terms with low ROI potential.
4. Focus on Conversion Tracking – Comprehensive tracking allows advertisers to analyze which campaigns and keywords are driving conversions, enabling more efficient budget allocation.
5. A/B Test Ad Copy and Creatives – Testing various ad creatives helps identify what resonates best with audiences, reducing budget waste on underperforming ads.