Want to know if your local display ads are making money? Start here. Measuring ROI (Return on Investment) tells you if your ad spend is paying off. Here’s what you need to know:
Bottom Line: Track ROI to know what works, cut what doesn’t, and make smarter ad decisions. Ready to dive deeper? Let’s explore how to make your local ads profitable.
Understanding the basics of ROI is essential for small businesses running local display ad campaigns. Advertisers often report ROI ratios ranging from 2:1 to 8:1 on their Google Ads investments [2]. Let’s break down how to calculate ROI and see how it differs from ROAS.
Here’s the formula for ROI:
ROI = [(Revenue - Total Ad Costs) / Total Ad Costs] × 100
To make this clearer, let’s look at an example. Imagine a fitness brand spends $200 on Facebook Ads to promote a one-month free trial. This campaign results in 100 signups, and 20 of those users become paying customers, each contributing $30 per month.
ROI = [((20 × $30) - $200) / $200] × 100 = 200%
To calculate ROI effectively, consider these key factors:
Now, let’s dive into how ROI compares to ROAS and why both metrics matter.
While ROI and ROAS are both critical metrics, they serve different purposes in evaluating ad performance. ROI focuses on overall profitability, while ROAS measures the efficiency of specific ad spend.
| Metric | Purpose | What It Measures | Best Used For |
|---|---|---|---|
| ROI | Overall profitability | Net profit after all costs | Long-term business decisions |
| ROAS | Ad campaign efficiency | Gross revenue generated from ad spend | Short-term campaign adjustments |
As Waseem Bashir, Founder & CEO of Apexure, explains:
"ROAS helps us pinpoint which advertising channels are most effective, while ROI across different demographics or locations informs our marketing focus. Additionally, integrating these metrics with Customer Lifetime Value (CLV) allows us to identify which sources deliver the highest value, guiding resource allocation for maximum impact." [4]
For small businesses, ROI offers a comprehensive view of how effective your advertising efforts are in driving growth and profitability. While ROAS helps fine-tune individual campaigns, ROI ensures your overall marketing strategy aligns with your business goals.
Getting conversion tracking right is crucial for understanding how well your local display ads perform. With potential customers needing anywhere from 1 to 50 interactions before making a purchase [5], having a reliable tracking system in place is key to measuring your return on investment (ROI).
Modern tools like geo-fencing, GPS, and beacons give businesses powerful ways to measure campaign performance by tracking customer movements and interactions.
| Tracking Method | Best Used For | Key Benefits |
|---|---|---|
| Geo-fencing | Tracking store visits | Activates ads when customers enter specific areas |
| GPS-Based | Real-time location targeting | Tracks precise customer movement patterns |
| Beacon-Based | In-store engagement | Monitors close-range interactions with customers |
| Local Actions | Google Maps engagement | Tracks actions like directions or calls to your business |
Google Ads provides several local action conversion options to measure customer engagement effectively:
While these tools are excellent for tracking online interactions, connecting them to offline sales is just as important.
Surprisingly, only 44% of small businesses track offline sales, even though linking online engagement to in-store purchases can give you a major advantage [7].
To bridge this gap, you can implement online-to-offline tracking by using unique identifiers, automating data collection tools like CallRail, and assigning specific values to different types of conversions.
| Conversion Type | Tracking Method | Value Assignment |
|---|---|---|
| Store Visits | Geo-tracking | Assign based on average purchase value |
| Phone Calls | Call tracking | Value determined by lead close rate |
| Direction Requests | Maps engagement | Estimate based on expected visit value |
"Conversion tracking empowers you to maximize profits and save money in Google Ads" [6].
To make informed budget decisions for your local display ads, it's crucial to focus on key metrics. A notable 63% of marketers view ROI as their leading performance indicator [9]. Among the most important metrics to evaluate are click-through rates (CTR) and local action costs.
Click-through rates (CTR) measure how effectively your local display ads connect with your target audience. While the average CTR for display ads is 0.1% [10], local businesses can often surpass this by fine-tuning their campaigns.
| Ad Platform | Average CTR | Target Value |
|---|---|---|
| Google Display Network | 0.46% | Industry standard |
| Facebook Newsfeed | 1.11% | Good performance |
| Instagram Feed | 0.22% | Platform average |
| Dynamic Feed Ads | 2.30% | Top performance |
To improve CTR, try strategies like behavioral prospecting, contextual targeting, and dynamic feed ads. In fact, dynamic feed ads have shown to boost CTR by as much as 117.5% in certain industries [10].
CTR is important, but understanding local action costs is equally essential for optimizing your ad spend. Here are some benchmarks to keep in mind:
| Action Type | Average Cost | Target Value |
|---|---|---|
| Cost Per Click (Search) | $2.69 | Across industries |
| Cost Per Click (Display) | $0.63 | Across industries |
| Cost Per Action (Search) | $48.96 | Across industries |
| Cost Per Action (Display) | $75.51 | Across industries |
Key local actions to track include:
It's worth noting that display ads typically have a conversion rate of 0.77%, whereas search ads perform significantly better with a 3.75% conversion rate [11]. By closely monitoring these metrics, you can adjust your budget and expectations accordingly, ensuring your strategy is aligned to maximize ROI.
To measure the performance of local display ads effectively, it's crucial to use tools that track both online and offline conversions. These insights help businesses understand how their campaigns are performing across different channels.
Google Ads and Facebook offer specific features designed to track the results of local campaigns. Here's a snapshot of their key capabilities:
| Platform | Key Features | Best For |
|---|---|---|
| Google Ads | Store visit measurement, Cross-device attribution | Search and display campaigns |
| Google Analytics | URL tagging, Local goal tracking | Website performance analysis |
| Facebook Insights | Custom local conversions, Offline event tracking | Social media campaigns |
To get the most out of these platforms:
For businesses looking to bridge the gap between online and offline sales, tools like GA Connector can integrate CRM data with Google Analytics. This provides a complete picture of campaign performance by linking offline conversion data [12].
For more customized insights, platforms like Humble Help go beyond standard tools. This AI-powered platform offers real-time monitoring and tailored analytics specifically for local businesses. Its features include:
Additionally, the Brand Boost Package provides free website performance monitoring and campaign analytics, making it a valuable option for businesses aiming to enhance their local ad strategies.
Here are some other tools that can enhance your ability to track and measure local ROI:
| Tool Name | Monthly Cost | Local ROI Features |
|---|---|---|
| SEOptimer | $19 | Local keyword performance, Geographic analysis |
| MyTelescope | $49 | Location-based reporting, Local conversion tracking |
| Mangools | $30–50 | Local competition insights, Area-specific metrics |
When choosing tools, focus on those that integrate seamlessly with your marketing stack and provide clear data on both online and offline conversions [12]. This ensures you get actionable insights to refine your campaigns and boost your ROI.
Let’s dive into practical ways to tweak campaigns using ROI metrics to maximize returns.
One effective strategy is to reallocate your local ad budget. Focus on areas where returns are strong and cut back on spending in regions or channels that underperform. For instance, a local dog food company invested $100 in newsletter ads and saw a return of $340, achieving a 240% ROI [16]. This success led them to shift more resources toward these high-performing channels. After reallocating, fine-tune ad elements to push ROI even further.
ROI insights can also guide updates to underperforming ad designs. Here are a few ways to approach this:
"It's best to incorporate text overlays with strong CTAs. Because display ads are notoriously low converting, try to mitigate this by being very clear within the CTA" [15].
"Make sure the landing page experience post-click is CRO optimized. Visually, you want the display ad and the landing page to have a lot of synergy to minimize confusion post-click" [15].
If you’re looking for tools to track and improve ROI, platforms like Humble Help can be game-changers. They use AI-powered analytics to pinpoint weak spots in your ads and suggest design tweaks tailored to your local market data.
Measuring ROI is a crucial step in ensuring your ad spend is working hard to fuel growth. With display advertising making up over 30% of digital ad spending [17], understanding its effectiveness is non-negotiable.
By focusing on the key ROI metrics and tracking techniques covered earlier, you can elevate your local display campaigns. Here are some tried-and-true strategies to guide your efforts:
These approaches emphasize how informed, data-backed decisions can significantly enhance the performance of your local display advertising.
Experts back up this approach:
"ROI can be the ultimate yardstick to measure the success of these various marketing efforts. By tracking ROI over time, you can identify the strategies that are working, optimize your approach, and deliver measurable results. It's data-driven decision-making at its finest." - Lakshmi Padmanaban, Content Marketing Specialist [1]
Additionally, platforms like Humble Help, as mentioned earlier, can fine-tune your strategy to maximize results.
To gauge how your local display ads are driving offline activity, there are several effective approaches you can take. One option is to use custom URLs or unique tracking codes. These let you pinpoint traffic that comes directly from your ads. Another method is to monitor shifts in organic search traffic or direct visits to your site during the campaign. These trends can shed light on how well your ads are resonating offline.
You can also leverage tools like call tracking services to keep tabs on phone inquiries generated by your ads. Additionally, analyzing location-specific upticks in customer activity can offer clues about how your ads are impacting foot traffic or in-store visits. By combining these strategies, you’ll get a clearer picture of how your campaign is performing beyond the digital space.
To improve the click-through rate (CTR) of your local display ads, focus on crafting ads that resonate with your audience and are visually compelling. Start by customizing your ads for specific groups based on factors like demographics, interests, or behaviors. Ads that feel relevant to your local community are much more likely to catch someone’s eye.
Use high-quality visuals that stand out and pair them with a clear, action-driven call-to-action (CTA). For example, a phrase like "Claim Your Local Discount Today!" can create a sense of urgency and motivate people to click. Don’t forget to experiment with different headlines, images, and formats. Regular testing and performance analysis will help you refine your approach and consistently improve your results.
Deciding between ROI (Return on Investment) and ROAS (Return on Advertising Spend) comes down to what you’re trying to achieve with your business. ROI provides a broader view of profitability by accounting for all expenses, making it a solid choice when you’re evaluating the overall success of your marketing efforts. On the flip side, ROAS hones in on how much revenue your ads generate compared to what you spend on them, making it ideal for analyzing individual campaign performance.
If your focus is on understanding the profitability of your entire marketing strategy, ROI is the metric to lean on. But if you’re looking to tweak your ad budget and get the most out of specific campaigns, ROAS will give you the insights you need. Knowing when to rely on each metric helps you make smarter choices about where to invest and how to improve your local advertising strategy.
Discover strategies to elevate your business.
