Optimizing for a high ROAS (Return on Ad Spend) can be detrimental to long-term growth. Instead, focus on a blended new customer acquisition metric (AMER) that aligns with your overall profitability goals, taking into account customer lifetime value (LTV) and operational costs. This allows you to outcompete others in ad auctions and achieve sustainable growth.
Key takeaways
Prioritize a lower AMER (Acquisition Media Efficiency Ratio) over a high ROAS to outcompete rivals in ad auctions and acquire more customers, even if it means a higher upfront customer acquisition cost (CAC).
Redefine "beating" last year's performance not just by a higher ROAS, but by achieving your overall profitability goals and increasing top-line revenue, which may involve a lower AMER.
Invest heavily in customer retention and LTV to enable a lower AMER. Businesses with strong retention can afford to acquire customers at a higher initial cost, gaining a significant competitive advantage.
Don't silo your ad performance metrics; integrate them with a full profit & loss (P&L) view, considering all cost centers, LTV, and returning customer revenue to set realistic and effective AMER targets.
Avoid rigid, set ad budgets and optimize for efficiency alone. Instead, allow for increased spend when creative unlocks or market opportunities arise, adjusting your AMER target based on overall business health and cash position.
Here’s a tough pill to swallow — chasing a high ROAS might actually be costing you growth and customers.Over the last few months, we’ve been deep in the weeds with brands trying to “beat” their ROAS targets, only to realize they’re leaving massive opportunities on the table by focusing on the wrong metric.In this episode, we’re tearing down the myth that higher ROAS is always better. Instead, we show why the smartest brands are going after the lowest sustainable new customer ROAS to dominate ad auctions, outbid competitors, and drive real profitability.This isn’t guesswork. We share real client examples where dialing down the ROAS target, backed by strong retention and lifetime value, created insane competitive advantages.Ready to rethink your ROAS strategy and win the auction? Let’s dive in.Key Takeaways:00:00 Intro00:42 Defining Acquisition Media Efficiency Ratio (aMER)01:48 Critique of chasing high ROAS benchmarks04:24 Winning ad auctions with lower bids07:39 Importance of aligning aMER with profitability goals10:03 Role of retention and LTV in lowering aMER targets11:37 Common client misconceptions about ROAS and profitability14:58 Business model impact on aMER targets17:29 Profitability targets affect acquisition strategy18:37 Why agencies must integrate forecasting and LTV knowledge20:40 OutroAdditional Resources:👉 Grow Your Bottom Line: https://www.kynship.co/?utm_source=podcast&utm_medium=audio&utm_campaign=68👉 Unlock Our FREE $10M Masterclass: https://www.kynship.co/free?utm_source=podcast&
What does this episode say about paid acquisition?
Prioritize a lower AMER (Acquisition Media Efficiency Ratio) over a high ROAS to outcompete rivals in ad auctions and acquire more customers, even if it means a higher upfront customer acquisition cost (CAC).
What does this episode say about analytics & attribution?
Redefine "beating" last year's performance not just by a higher ROAS, but by achieving your overall profitability goals and increasing top-line revenue, which may involve a lower AMER.
What does this episode say about customer retention?
Invest heavily in customer retention and LTV to enable a lower AMER. Businesses with strong retention can afford to acquire customers at a higher initial cost, gaining a significant competitive advantage.
What does this episode say about finance & fundraising?
Don't silo your ad performance metrics; integrate them with a full profit & loss (P&L) view, considering all cost centers, LTV, and returning customer revenue to set realistic and effective AMER targets.
What does this episode say about paid acquisition?
Avoid rigid, set ad budgets and optimize for efficiency alone. Instead, allow for increased spend when creative unlocks or market opportunities arise, adjusting your AMER target based on overall business health and cash position.
