Throwing money at ads without tracking return is like playing darts blindfolded. That’s why marketers love tracking return on ad spend (ROAS), so they know exactly how many dollars they make for every dollar spent on advertising.
But here’s the thing: maximizing ROAS doesn’t mean pumping up your ad budget or chasing the latest platform trends. In a privacy-first digital world, it’s about using information you already have about your customers to create hypertargeted ad campaigns that convert.
Ahead, we’ll discuss six proven strategies that combine smart advertising practices with the power of first-party data to get more bang for your buck.
1. Setting ROAS goals
What is a good ROAS?
ROAS is not a one-size-fits-all number. What’s considered “good” really depends on your business and industry. But generally, a 4:1 ratio is considered a strong ROAS.
Insider Intelligence partnered with Perpetua in 2022 to benchmark ROAS by industry. The report found that for every dollar spent on digital ads, these industries returned the following:
- Appliances: $3.63
- Beauty and personal care: $3.01
- Clothing, shoes, and jewelry: $3.92
- Electronics: $3.93
- Grocery and gourmet food: $3.20
- Health and household: $2.59
- Home and kitchen: $4.05
- Pet supplies: $2.92
- Sports and outdoors: $4.98
- Tools and home improvement: $3.71
- Toys and games: $3.17
Set realistic goals based on your industry benchmark and advertising strategy. This is where unified commerce becomes an advantage. Instead of analyzing these factors in isolation, Shopify’s unified customer model combines all your data into a single source of truth. You can see exactly how customers move between marketing channels, how their purchase behavior evolves, and what drives profitability across segments.
For example, if you're a beauty brand acquiring customers through social media ads with a 3:1 ROAS, but your data shows these customers have 40% higher lifetime value through repeat purchases, you might accept a lower initial ROAS target in order to capture this valuable customer segment.
Identifying target ROAS for your niche
The above numbers are a good start for determining your ROAS goals. To get them more precise, analyze the following factors:
- Your margin structure and pricing strategy
- Industry vertical and competitive positioning
- Customer acquisition costs across channels
- Lifetime value projections by segment
- Channel mix and attribution models
Once you've gathered data on these factors, you can calculate your target ROAS by dividing your desired revenue by your maximum sustainable ad spend for each channel and segment. Analyze performance data from Shopify Analytics to understand customer behaviors and preferences, aligning campaign goals with niche-specific insights.
2. Ad campaign optimization
Digital advertising has changed dramatically in recent years. With the decline of third-party data and increasing competition for customer attention, many brands are seeing their customer acquisition costs rise while ROAS declines.
Here are a few ways to optimize your campaigns.
Improved targeting
The solution is not to just throw more money at ads: it’s to get those ads in front of the right people. One way to improve ROAS is to refine your targeting and ad creative.
This is where Shopify's targeting tools really shine. Shopify Audiences uses data from millions of shopping interactions to build super-targeted customer lists, which can cut your customer acquisition costs by up to 50%.
You can use these insights across all major ad platforms like Meta, Google, TikTok, and Pinterest. Some brands using Shopify Audiences have seen their retargeting conversions double compared to traditional targeting methods. Plus, you can exclude about 40% more existing customers from your campaigns, so you're not wasting money showing ads to people who already bought from you.
Or, take your paid campaigns in a new direction with creator collaborations. Shopify Collabs lets you team up with creators who vibe with your brand. Instead of guessing which influencers might work best, you can use your first-party data to find creators whose followers match your ideal customer profile.
The best part? You only pay when they influence actual sales, making it way more cost-effective than traditional influencer marketing.
💡 Home and garden brand Nathan James used Shopify Audiences to improve their DTC advertising, achieving 500+ new customers, 5.6x ROAS, and 52% lower acquisition costs while creating better-performing lookalike audiences.
Using high-quality creative
Even the best targeting won’t help if the ads look bad. Your creative is the first impression potential customers have of your brand, so it needs to be scroll-stopping good.
Start by testing different creative approaches to see what actually works with your audience. Maybe lifestyle photos outperform product shots, or maybe video ads crush it compared to static images. The only way to know is to test. Run A/B tests comparing different elements like headlines, visuals, ad copy, and calls to action.
Shopify's personalization tools let you take this testing to the next level. Instead of showing everyone the same ad, you can create tailored versions for different customer segments.
For example, you might show sustainability-focused creatives to environmentally conscious shoppers, while highlighting premium features for your luxury-oriented customers. This drives higher engagement and better ROAS since people are seeing ads that actually match their interests.
Optimizing Google Ads
Google Ads are one of the most effective ways to find new customers. The platform comes with its own set of optimization tools. Here’s what you can do:
- Filter out wasted spend with negative keywords and precise match types.
- Maximize visibility with ad extensions (price extensions, site links, promotion extensions).
- Start with manual CPC bidding to gather data, then transition to smart bidding strategies.
- Improve quality scores through better landing pages and ad relevance.
- Structure campaigns by product categories or search intent.
- Use remarketing lists for search ads (RLSA) to adjust bids for previous site visitors.
Shopify's segmentation tools take this optimization further by letting you create targeted audience segments based on your first-party customer data. This means you can bid more strategically on high-value segments while maintaining efficiency across campaigns.
We identified the segment in Shopify, created a discount, communicated with them in a way that was very personalized, and we saw about 30% of those people convert.
Retargeting campaigns
Your advertising campaigns don’t stop after someone becomes a customer. Now you can use first-party data to create retargeting ads that convert.
Some retargeting strategies you can try include:
- Creating custom audiences based on past purchase behavior
- Showing ads for complementary products to recent buyers
- Re-engaging cart abandoners with targeted reminders
- Adjusting ad timing based on typical purchase cycles
- Using dynamic product ads to showcase items similar to previous purchases
- Targeting based on browsing history and product interactions
Shopify's retargeting tools make this even more powerful by giving you deep insights into customer behavior. For example, brands using Shopify Audiences for retargeting have seen up to 2 times more orders for every dollar spent compared to standard retargeting approaches.
3. Fully optimized landing pages
A better ROAS starts with better landing pages, and personalization is key to maximizing their effectiveness. Consumers today expect tailored experiences, and only 19% of surveyed shoppers report their experiences with brands as “good.” Your landing pages need to speak directly to your target audience and align with your ad creative.
A good, personalized landing page starts with first-party data. Using Shopify’s unified customer data model, you can create personalized storefronts that adapt to different customer segments, delivering relevant content and messaging that resonates with each group.
Outside of personalized messaging, you’ll also want to guarantee your landing pages have:
- Fast page-load times
- Clear, enticing calls toaction
- Mobile-responsive design
- Social proof and trust indicators
This landing page from Beckett Simonon is a great example. After clicking a Google Shopping ad for “leather shoes,” you land on a clean, simple page without heavy elements. It loads quickly and the product images are high-quality.
The landing page also has:
- Prominent ADD TO CART button in contrasting dark green color
- 1,138 reviews prominently displayed with 5-star rating
- Clear policies for free shipping, returns, and exchanges
- Shop Pay integration showing payment flexibility
Monitor key metrics like bounce rate, time on page, and conversion rate while also gathering user feedback to understand the "why" behind the numbers. Regularly update your landing pages based on this performance data to better resonate with shoppers and improve ROAS.
4. Maximizing customer lifetime value (CLV)
Another way to increase your ROAS is by building long-term relationships with customers. When you look at ROAS through the CLV lens, spending $50 to acquire a customer who makes $200 in purchases over two years is better than spending $20 to acquire one who spends $50 only once.
First-party data becomes valuable here. Instead of blasting generic "20% off!" ads to everyone, you can create hypertargeted campaigns based on actual customer behavior. If someone bought a high-end coffee maker three months ago, you can show them ads for premium coffee beans or cleaning supplies right when they're probably running low.
Using Shopify's unified customer profile helps you implement this type of targeting. You can track what customers buy and how they interact with your brand across different channels.
So, when someone's browsing support articles about troubleshooting their product, you can serve them ads for complementary items that might solve their problem. Or if they've been loyal in the past but haven't engaged recently, you can create specific campaigns to bring them back with products similar to their past favorites.
5. Using data to refine your strategy
Get into the habit of regularly analyzing your ad performance. Maybe those flashy video ads you thought would be killer are actually getting destroyed by simple carousel ads in terms of conversion rate. Or maybe your ads are crushing it on Instagram but barely making a dent on Facebook, even though you're splitting your advertising budget evenly.
Shopify's analytics tools are particularly clutch here because they show the whole customer journey, not just the clicks. You can see how different ad campaigns influence not just immediate sales, but also things like email sign-ups, wishlist adds, and return customer rates.
Mac Duggal's team leveraged this comprehensive data to expand their retargeting audience by 2.3 times and achieve a 2:1 ROAS, getting their ads in front of way more potential buyers who were actually interested in their products.
Instead of increasing spend across the board when you see good results, you can get precise about it. This might mean testing different platforms (e.g., Mac Duggal is now expanding to TikTok based on their data insights), or adjusting your targeting based on what the numbers tell you about your highest-value customers.
6. A/B testing and experimenting with ad campaigns
If you want to continuously improve your ROAS, you need to tweak your campaigns as you go.
Take it from Firebelly Tea. When they were getting crushed by high acquisition costs, they didn't just keep running the same old plays. The brand tested Shop Campaigns against their other channels and discovered an ad platform that doubled their ROAS.
Maybe you start by testing two totally different ad creatives against each other, or experimenting with new channels like Firebelly did. The key is only testing one variable at a time so you know exactly what's moving the needle. When you run these tests through Shopify’s platform, you can go beyond just testing ad creative.
You can experiment with personalized shopping experiences once people click through. For Firebelly, this meant not just looking at immediate ROAS, but tracking how these new customers behaved long-term, which revealed that Shop Campaign customers were 2 times more likely to come back and buy again.
Layer in your insights. Maybe you discover, like Firebelly did, that some channels are eating up resources with hidden costs while others are more hands-off and profitable.
Each test builds on the last one, creating this snowball effect of better and better ROAS. Firebelly's team found they could actually cut their customer acquisition costs by over 50% by leaning into what the data was telling them.
[Shop Campaigns] is more of a 'set it, let it go, and tweak it' model, so it's not eating up hours of our day—which I love
Run better ad campaigns with Shopify
Achieving a better ROAS is about spending smarter. With Shopify, you can build and manage personalized ad campaigns that drive sales and create lasting customer relationships. If you’re looking to scale your ad strategy, Shopify will help you make every ad dollar work harder for your organization.
Increase ROAS FAQ
What is ROAS?
ROAS stands for return on ad spend, a key performance metric that measures the revenue generated for every dollar spent on advertising. It’s a crucial metric for advertisers to evaluate the effectiveness of their ad campaigns. ROAS helps businesses understand the return on their advertising efforts and make informed decisions about their ad spend.
How do you calculate ROAS?
The formula to calculate ROAS is: ROAS = (Revenue generated from ads / Cost of the ads) x 100. A higher ROAS percentage indicates better ad performance. ROAS can be calculated for specific ad campaigns, ad platforms, or overall advertising efforts. This figure can be expressed as a multiple or a ratio.
How can you increase ROAS?
Here are some strategies to increase ROAS:
- Set clear ROAS goals based on industry benchmarks.
- Optimize ad campaigns through better targeting and creative.
- Create fully optimized landing pages.
- Maximize customer lifetime value (CLV).
- Use data to refine your strategy.
- A/B test and experiment with ad campaigns.
What causes ROAS to increase?
ROAS increases when you effectively combine precise targeting, compelling creative, and optimized conversion paths to reach high-intent customers. Using first-party data to inform these decisions and create personalized experiences leads to better conversion rates and higher returns on ad spend.
How do you optimize ROAS?
Optimizing ROAS requires continuous monitoring of campaign performance metrics and making data-driven adjustments to targeting, creative, and landing pages. Success comes from testing different approaches, understanding customer behavior through analytics, and scaling what works while cutting underperforming initiatives.
