Advertising Metrics: How to Track Impact for Sustainable Business Growth
By kbodnar@hubspot.com (Kipp Bodnar and Kieran Flanagan)
Return on ad spend (ROAS) has become the default metric for many marketing teams. It’s clean, precise, and makes CFOs happy. Spend X dollars, get Y dollars back. Simple … right?
Not quite. Here’s the issue: The more exact a marketing metric is, the easier it is to manipulate. Want a 2x ROAS? You can get it. Want a 20x ROAS? That’s possible, too. Just toggle a few levers — increase retargeting, run more discounts, reduce spend — and watch that ROAS number climb.
The real problem is that ROAS only measures how efficiently you are at capturing existing demand — not creating new demand. It’s like fishing in an ever-shrinking pond and celebrating that you’re getting better at catching the remaining fish.
In a recent Marketing Against the Grain
Table of Contents
- The Buckets Model: a Balanced Approach to Advertising
- Checklist: How to Use the Buckets Together
- The Bottom Line for Choosing Sustainable Advertising Metrics
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The Buckets Model: a Balanced Approach to Advertising
To get a clear view of your online advertising’s impact, you need to diversify beyond a single metric. The buckets model provides a simple, effective way to organize your ad investments into three main categories: direct ROAS, incrementality, and brand awareness. Each bucket has a distinct role in capturing returns and building future demand, creating a more sustainable growth model.
Bucket 1. Direct ROAS (Demand Extraction)
Your first bucket is your money machine. Here, you capture existing demand, aiming to get a direct return on every ad dollar spent. For example, if you’re seeing a 3-to-1 return on ad spend, then for every dollar you invest, you’re capturing three dollars back in sales.
The goal here is to maximize returns on measurable actions, like clicks and conversions, by targeting audiences who are already aware of and interested in your brand. You should almost always saturate this bucket first because you can directly track profit and efficiency.
Bucket 2. Indirect ROAS (Demand Extraction & Demand Creation)
The second bucket focuses on incrementality — the measure of new demand generated by your ads. Incrementality models track how your marketing reaches new audiences who wouldn’t otherwise engage with your brand.
Unlike ROAS, which captures existing demand, incrementality shows you the “extra” value your campaigns generate over time, especially in channels like video or display ads where conversions aren’t immediate.
Expert tip: Your incrementality bucket should help your first bucket grow over time. As you create new demand, you expand the pool of customers that …read more
Source:: HubSpot Blog
