Lately, have you noticed your Andromeda ROAS taking a nosedive? It's a common headache for many businesses, and often, the numbers you see in your ad platforms don't tell the whole story. This article is all about figuring out why these Andromeda ROAS drops happen and, more importantly, how to fix them. We'll look beyond the surface-level data to find the real reasons behind performance dips and explore smarter ways to manage your ad spend.

Key Takeaways

• Attributed ROAS can be misleading; it often doesn't show the true impact of your ad spend on actual business results.

• Traditional attribution models, like click-based or even multi-touch, can paint an inaccurate picture, leading to poor budget decisions.

• Incrementality testing is vital for understanding what truly drives sales, by comparing what happens with ads versus without them.

• Channels with high attributed ROAS, like branded search, might not be the most incremental and could be a place to find savings.

• Focusing on metrics like contribution margin and new customer acquisition provides a clearer view of long-term business health than short-term ROAS.

Understanding Andromeda ROAS Drops

So, Andromeda's ROAS has taken a nosedive. It happens. You're looking at your dashboards, and the numbers just aren't what they used to be. It's easy to panic, but let's take a breath and figure out what's really going on.

The Pitfalls of Relying Solely on Attributed ROAS

We've all been there. You see a campaign with a killer ROAS, and you think, 'Great, let's pour more money into this!' But here's the thing: attributed ROAS, the kind you see directly in your ad platform, can be a bit of a trickster. It tells you what it thinks it did, but it doesn't always tell the whole story. This focus on immediate, attributed returns can blind us to the bigger picture of true profitability and growth.

Think about it. If you're only looking at what the platform says it delivered, you might be missing out on channels that are actually driving sales but aren't getting the full credit. Or worse, you might be over-investing in something that looks good on paper but isn't truly moving the needle for your business.

When Higher ROAS Hides Declining Profitability

This sounds counterintuitive, right? How can a higher ROAS mean less profit? Well, it's all about what's behind that number. Sometimes, a high ROAS can be a sign that you're spending too little, or that you're only capturing the lowest-hanging fruit – the customers who would have bought anyway. You might be seeing a great return on ad spend, but if you're not acquiring new customers or if your contribution margin is shrinking, that high ROAS isn't actually making your business healthier.

It's like seeing a great price on a product, but not checking the quality. It might seem like a win, but if it falls apart quickly, you've wasted your money. We need to look beyond just the immediate return and consider the long-term impact on our bottom line.

Identifying the Root Causes of Performance Dips

So, how do we get to the bottom of these ROAS drops? It's not usually just one thing. We need to look at a few key areas:

• Platform Changes: Ad platforms like Meta are constantly updating their algorithms and how they measure success. The Andromeda update, for instance, changed how performance is evaluated. What worked yesterday might not work today, and you need to understand these shifts to adapt.

• Market Dynamics: Competitors might be changing their strategies, or consumer behavior could be shifting. Maybe there's a new trend, or perhaps economic factors are influencing spending habits.

• Creative Fatigue: Your ads might just be getting old. People see them too many times, and they stop paying attention, or worse, they start to annoy potential customers.

• Tracking Issues: Sometimes, the problem isn't with your ads at all, but with how you're tracking conversions. Are your pixels firing correctly? Is your attribution window set up right?

Digging into these potential causes requires looking beyond the surface-level metrics. It means asking tough questions about how your campaigns are structured, what your creative is actually saying, and whether your measurement tools are giving you a true picture of what's happening.

Understanding these underlying issues is the first step to fixing those frustrating ROAS drops and getting your campaigns back on track. It's about getting a clearer view of what's actually working, not just what the platform tells you is working.

The Limitations of Traditional Attribution Models

It's easy to get caught up in the numbers platforms give us, right? We see a ROAS figure and think, 'Great, this channel is working!' But here's the thing: those numbers often don't tell the whole story. Traditional attribution models, like the ones built into ad platforms, have some serious blind spots.

Why Click-Based Data Can Be Misleading

Think about how most platforms track success. They often rely heavily on clicks or last impressions. If someone clicks an ad and then buys, that ad gets the credit. Simple enough. But what about all the other things that might have influenced that purchase? Maybe they saw a social media post, read a review, or even just remembered seeing a TV ad weeks ago. Click-based attribution tends to overvalue the final interaction and ignore everything that came before it. It's like saying the person who opened the door was solely responsible for the party inside, ignoring the invitations, the planning, and the guests who arrived earlier.

The Problem with Multi-Touch Attribution (MTA)

Multi-touch attribution (MTA) tries to fix this by looking at the whole customer journey, assigning credit to different touchpoints. Sounds better, right? In theory, yes. But in practice, MTA often struggles. Tracking users across different devices and platforms is getting harder, especially with privacy changes. Many MTA tools end up being incomplete, giving a skewed view. Sometimes, they still lean heavily on clicks, or the data they collect just isn't granular enough to truly understand what drove the sale. Building and maintaining these systems can also be a huge drain on time and resources for businesses.

Many brands try to build their own MTA systems, only to find they're a massive time and resource sink. When you compare the MTA view to a simple last-click view, you often find that a huge percentage of customers only had one touchpoint anyway. This makes the complex MTA model feel less valuable.

How Platform Metrics Can Lead to Poor Decisions

When we rely too much on these imperfect metrics, we can make some pretty bad calls. For instance, a channel might show a sky-high ROAS in the platform report, making it look like a winner. But if that channel is mostly capturing demand that would have happened anyway (like people searching for your brand name), then its true incremental impact is low. Cutting budgets from channels that seem to have a lower ROAS but are actually driving new customers could be a mistake. It's about understanding the causal impact of your ads, not just the attributed sales. For example, effective retargeting campaigns can look great on paper, but without understanding their true lift, you might be over-investing.

Here's a quick look at why these models fall short:

• Last-Click Bias: Overvalues the final interaction, ignoring earlier influences.

• Tracking Limitations: Privacy changes and cross-device tracking issues make comprehensive tracking difficult.

• Resource Intensive: MTA systems can be complex and costly to implement and manage.

• Misleading Insights: Can lead to over-investing in high-ROAS, low-incrementality channels and under-investing in others.

Introducing Incrementality Testing for Accurate Measurement

So, we've talked about how relying just on what platforms tell us can be a bit of a trap. It's like looking at a report card where only the A's are shown, and you miss all the areas that need work. That's where incrementality testing comes in. It's a way to figure out what marketing efforts are actually making a difference, beyond what would have happened anyway.

What is Incrementality and Why Does It Matter?

At its core, incrementality is about measuring the true impact of an action. Think about it: if you run an ad campaign and sales go up, how much of that increase was because of the ad, and how much would have happened naturally? Incrementality testing helps answer that by creating a control group – a group that doesn't see the ad – and comparing their results to the group that does. This comparison shows you the actual lift, or the incremental gain, your marketing spend is generating. It's the difference between what happened with your marketing and what would have happened without it. This is super important because it helps you understand the real return on your investment, not just what the ad platform reports.

Designing Effective Geo-Holdout Incrementality Tests

One common way to test incrementality is through geo-holdout tests. This involves picking two similar geographic areas. Historically, these areas should have similar sales patterns and customer behavior. Then, you run your marketing campaign in one area (the test group) but pause it in the other (the control group). By comparing the sales or conversion data between these two matched markets, you can see the impact of your marketing. For example, if you pause ads in Atlanta but keep them running in Memphis, and Atlanta's sales drop significantly compared to Memphis, you've got a strong indicator that your ads were driving those sales. It's a bit like a scientific experiment, but for marketing. You need to make sure the markets are truly comparable and that no other major external factors are skewing the results for one market over the other.

Leveraging Conversion Lift Studies for User-Level Insights

Platforms like Meta and Google offer conversion lift studies, which are another form of incrementality testing. These studies work at the user level. They randomly assign users into two groups: one that sees your ads and one that doesn't. The platform then tracks the behavior of both groups. This is powerful because it can see what happens even if users don't click on the ad. It gives you a direct look at how exposure to your ads influences purchasing decisions across their user base. This kind of user-level data can be really insightful for understanding the true impact of your campaigns, especially when you're trying to get beyond just the last click.

Traditional attribution models often tell a story based on who clicked or who was last exposed. Incrementality testing, however, focuses on causality – what actually caused the sale to happen, compared to a world where that marketing effort didn't exist. It's about finding the true incremental value.

Applying Incrementality to Fix Andromeda ROAS Drops

So, your Andromeda ROAS numbers are looking a bit shaky. It happens. Relying solely on what the ad platforms tell you can paint a pretty rosy picture, but sometimes, that picture isn't quite the whole story. This is where incrementality testing comes in, helping us see the real impact of our ad spend.

Analyzing Branded Search: A Case Study in Misleading ROAS

Let's talk about branded search. It often looks like a ROAS superstar, right? People are already searching for your brand, so getting them to convert seems like a no-brainer. But here's the catch: a lot of those conversions might have happened anyway, even without you bidding on those exact terms. You're essentially paying for traffic that was already coming your way. This can inflate your overall ROAS, making it look like everything's golden when, in reality, you might be overspending on a channel that isn't bringing in as much new business as you think.

When you see a high ROAS on branded search, it's easy to feel good. But the real question is, how much of that revenue was truly added by your ad spend? If someone is already typing your brand name into Google, they're likely already aware of you and intending to buy. Paying for that click might just be a cost, not a driver of incremental growth.

Reallocating Budgets Based on True Incremental Impact

This is where incrementality testing really shines. Instead of just looking at attributed sales, we want to know what additional sales our ads are generating. Geo-holdout tests, for example, can be super useful here. We might pause ads in one city (the test group) while keeping them running in a similar city (the control group). By comparing the sales in both locations, we can get a much clearer picture of the ads' actual impact. If sales in the test city drop significantly compared to the control, we know those ads were doing real work. If they stay pretty much the same, well, maybe that budget could be better spent elsewhere.

Here's a simplified look at how that might play out:

This kind of analysis helps us move beyond vanity metrics and focus on what actually moves the needle for the business. It’s about finding those channels that are truly driving new revenue, not just claiming credit for sales that were already in the bag. For agencies looking to prove their worth, demonstrating this incremental lift is key, and understanding how to increase ad spend without tanking ROAS is a constant goal.

Moving Beyond Platform Data for Smarter Budget Allocation

Platform metrics are a starting point, but they're not the whole story. Incrementality testing gives us a more honest view. It helps us understand the true value of each channel, especially when looking at things like branded search campaigns. By identifying which campaigns are truly incremental and which are just capturing existing demand, we can make smarter decisions about where to put our ad dollars. This means shifting budget away from channels that look good on paper but don't add much extra value, and investing more in those that demonstrably drive new customers and revenue. It's about making sure your ad spend is working as hard as possible to grow the business, not just make the platform reports look pretty. A starting monthly ad budget of $3,000 is often recommended to gather enough data for these kinds of effective optimizations.

Strategic Budget Adjustments During Performance Fluctuations

When Andromeda's ROAS starts acting like a rollercoaster, it's tempting to just slash budgets across the board. But that's usually not the smartest move. Instead, we need to get strategic about where we're putting our money, especially when things get a bit shaky. It’s about figuring out which campaigns are actually driving growth and which ones are just looking good on paper.

Identifying Which Campaigns to Scale or Cut

First off, let's look at what's really working. We need to move past just the attributed ROAS and think about the true impact. This means digging into data that shows what's bringing in new customers and what's contributing to the bottom line, not just what looks efficient in the short term. Sometimes, campaigns that have a lower attributed ROAS might actually be bringing in more valuable customers or have a higher incremental lift. On the flip side, campaigns with a seemingly great ROAS might be over-claiming credit for sales that would have happened anyway.

Here’s a quick way to think about it:

• High Attributed ROAS, Low Incremental Impact: These are often the first to consider for budget reallocation. They might be capturing existing demand or brand searches that don't need as much paid support.

• Moderate Attributed ROAS, High Incremental Impact: These are your golden children. If they're driving real, new business, consider scaling them up, even if their ROAS isn't the absolute highest.

• Low Attributed ROAS, High Incremental Impact: This is where things get tricky. These channels might be crucial for acquiring new customers or reaching audiences that are harder to attribute directly. Cutting them could hurt long-term growth.

• Low Attributed ROAS, Low Incremental Impact: These are candidates for significant cuts or complete elimination.

The Danger of Cutting Low-Attributed, High-Incremental Channels

This is a big one. Imagine a channel that doesn't get a lot of direct credit in your reporting (low attributed ROAS) but is actually responsible for a significant chunk of new customer acquisition or overall business growth (high incremental impact). If you cut this channel based solely on its attributed performance, you could be shooting yourself in the foot. You might see your overall ROAS numbers improve temporarily, but your actual business revenue and profit could take a hit. It’s like cutting off a vital support beam because it doesn’t look as pretty as the decorative ones.

We often see brands get caught in a trap where they focus too much on optimizing for metrics like ROAS within the ad platform. This can lead to decisions that feel good in the short term but actually reduce the overall contribution margin and the true incremental impact of marketing spend. It's a cycle that can slowly erode profitability, even as revenue appears to be growing.

Finding Savings Without Sacrificing Growth

So, how do we find savings without hurting growth? One common area to examine is branded search. If people are already searching for your brand, you might not need to spend as much to capture those clicks. Running a simple market test here can often reveal that reducing spend on branded search has little to no negative impact on overall sales, freeing up budget. This saved money can then be reinvested into channels that have a proven, higher incremental impact, like non-branded search or other growth-focused initiatives. A starting ad budget of around $3,000 per month is often recommended to gather enough data for effective optimization in new campaigns [3f9d]. This approach allows you to be more efficient with your spending and reallocate funds to where they'll do the most good for the business.

Beyond ROAS: Focusing on True Business Impact

ROAS is a handy metric, no doubt. It tells you how much money you're getting back for every dollar you spend on ads. But sometimes, chasing a high ROAS can actually hurt your business in the long run. It's like focusing only on how fast your car is going without checking if you're running out of gas or heading towards a cliff.

The Importance of Contribution Margin

When we talk about true business impact, we really need to look at the money left over after you've paid for the stuff you sold. This is called contribution margin. It's the profit that actually goes towards covering your fixed costs and, you know, making actual money for the company. If your ROAS is high but your contribution margin is dropping, it means you're spending more to get sales, but those sales aren't as profitable as they used to be. This can happen when you're discounting heavily or competing too much on price. Ultimately, we want to make more money than we would had we just been sticking to bottom funnel demand capture.

Measuring New Customer Acquisition

Another big piece of the puzzle is bringing in new customers. Are your marketing efforts actually attracting people who have never bought from you before? Or are you just getting existing customers to buy again, maybe even at a discount? Relying too much on metrics that don't separate new from returning customers can make your ROAS look good, but it might not be growing your customer base. True growth comes from acquiring new people who will hopefully become loyal customers over time. It's about building a sustainable customer base, not just getting repeat purchases from the same old crowd.

Long-Term Health vs. Short-Term Metrics

It's easy to get caught up in the day-to-day numbers, especially when things feel a bit shaky. But focusing solely on short-term metrics like ROAS can lead you down the wrong path. Think about it: if you cut spending on channels that bring in new customers just because their immediate ROAS isn't the highest, you might be sacrificing future growth. Instead, consider metrics that reflect the overall health of your business, like Customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC). These give you a better picture of how your marketing is contributing to long-term success. For instance, a channel might have a lower attributed ROAS but bring in customers with a much higher LTV, making it a more valuable investment in the long run. Understanding these deeper business metrics helps you make smarter decisions, especially when performance dips.

When you're looking at your marketing spend, it's easy to get fixated on ROAS. But if that ROAS comes at the expense of your overall profit dollars or if it's driven by customers who would have bought anyway, you're not really growing. The real goal is to increase the actual cash flowing through the business, not just make your ad account look good.

Here's a look at how different metrics paint a broader picture:

• Contribution Margin: The profit left after direct costs of goods sold.

• Customer Lifetime Value (LTV): The total revenue a customer is expected to generate.

• Customer Acquisition Cost (CAC): The cost to acquire a new customer.

• Marketing Efficiency Ratio (MER): A broader measure of marketing effectiveness across all channels.

By looking at these key performance indicators, you get a much clearer view of your marketing's actual contribution to the business's bottom line, not just its short-term ad performance.

Don't just look at how much money your ads make back. Think about the real difference they make for your business. We help you see the bigger picture and make smarter choices. Ready to boost your business's success? Visit our website to learn more!

Wrapping It Up: Beyond the ROAS Hype

So, we've talked a lot about how focusing only on ROAS can sometimes lead us down the wrong path, making us think we're doing great when, in reality, we might be leaving money on the table or even losing it. It's easy to get caught up in those platform numbers, but they don't always tell the whole story. Remember, the goal isn't just to look good on paper; it's about actually growing the business. By looking at incrementality, we get a clearer picture of what's truly driving sales and where our ad spend is actually making a difference. It's about being smarter with our money, not just spending less. So, next time your ROAS dips, don't panic. Instead, think about what's really happening behind the numbers and how you can use testing to find out what's actually working.

Frequently Asked Questions

What does ROAS mean, and why is it sometimes tricky?

ROAS stands for Return on Ad Spend. It's like checking how much money you make back for every dollar you spend on ads. It sounds great, but sometimes, a high ROAS number might hide the fact that you're not actually making as much real profit as you think. This can happen if you're counting sales that would have happened anyway, or if you're spending too much to get those sales.

Why is just looking at ad platform numbers not enough?

Ad platforms, like Google or Facebook, show you numbers based on their own rules. These numbers might not tell the whole story. For example, they might give all the credit to the last ad someone clicked, even if other ads helped too. This can make you think some ads are working better than they really are, leading you to spend money in the wrong places.

What is 'incrementality testing' and how does it help?

Incrementality testing is a way to find out if your ads are *actually causing* people to buy something they wouldn't have bought otherwise. It's like running a science experiment. You compare a group that sees your ads with a similar group that doesn't. The difference in sales between these two groups shows you the real impact, or 'lift,' your ads are providing.

How can incrementality testing fix problems with ROAS drops?

When your ROAS drops, it might be because you're spending money on ads that aren't bringing in many *new* sales. Incrementality testing helps you see which ads are truly driving extra sales. You can then shift your money away from ads that aren't working hard enough and put it into the ones that are actually making a difference, even if their 'attributed' ROAS looks lower at first.

Is it always bad to cut ads with low ROAS?

Not necessarily, but you have to be careful. Sometimes, ads that have a lower ROAS in the reports might still be bringing in a lot of new customers or sales that wouldn't have happened otherwise. For example, ads for your own brand name might look like they have a super high ROAS, but people were probably going to search for your brand anyway. Cutting these might not help as much as you think, and could even hurt.

What's more important than just ROAS?

While ROAS is a useful number, focusing only on it can be misleading. It's often better to look at things like 'contribution margin,' which is how much money is left after paying for the cost of making and selling a product. Also, measuring how many *new* customers you're getting is super important for long-term growth. These numbers give a clearer picture of your business's real health.