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Why Is CaliberMind ROAS or ROI Different Than My Ad Platform?

Advertising platforms and CaliberMind think of return on advertising spend very differently. It can be a bit of a shock to see what CaliberMind reports when you’re accustomed to a 20-30X return. We’ve found that the key to adopting and using CaliberMind with confidence is understanding why these numbers are expected to be different and how to think about these benchmarks going forward.

How Do Ad Platforms Calculate ROAS?

Advertising platforms operate in a vacuum. If you’re lucky, they connect to your CRM. But when they connect to your CRM and assign attribution, they aren’t factoring in other touchpoints when allocating opportunity value.

In other words, if they find an activity associated with an account that has an opportunity, 100% of that opportunity value is assigned to the campaign.

ad platform ROAS
It’s important to research whether your vendor will take the amount of time that has lapsed into effect. For example, if an activity on 1/21/22 associated with Account A and Account A had an opportunity on 2/21/22 and 1/31/23, will both opportunities be “credited” to that single touchpoint?

In addition to assigning 100% of the opportunity’s value to a touchpoint, ad platforms also tend to calculate ROAS based on all pipeline associated and not just Closed Won bookings.

It’s critical to research whether your platform is calculating ROAS based on 100% of the opportunity amount whether they’re open, lost, or won - or if ROAS is being calculated on weighted pipeline numbers.

How Does CaliberMind Calculate ROAS?

This applies to CaliberMind's Legacy Ad Performance by Platform dashboard in the original CaliberMind App.

Our Ad Platform Performance by Platform dashboard calculates the return on advertising spend by using whichever attribution model you select (for more on which attribution model to use when, click here) and then dividing the weighted pipeline by the total advertising spend. In other words:

(won + (open opportunity amount x stage probability)) / advertising spend = ROAS

If you’re using a multi-touch model, a “good” return is 4X or higher, although we consistently see LinkedIn performing at around 2X even in this view.

ad platform performance report

These calculations are not cohorted, which means they estimate how campaigns might perform based on data that occurred in the selected time frame. This means we’re looking at what is scheduled to close during the period that was previously associated with the platform, not pipeline associated with the platform activity that took place in the selected period.

Another way to illustrate this is to think of how cars are sold. We can compare how many cars were delivered to the lot this month to how many were sold this month, regardless of when they were delivered. That old Honda Accord we finally sold may have sat on the lot for a year before Wendy purchased it for a fraction of the bluebook price. But it is lumped in with what was sold this month vs. what was delivered this month for an estimate.

The other way we can look at car sales is the percentage of cars that were delivered to the lot more than six months ago. In this case, we’d see that 90% of those cars were sold in the first two months on the lot, and 100% were sold within 12 months. If we wanted to know our full return, we’d have to wait for two months for a solid estimate and a year for an exact calculation.

Cohorting is the difference between understanding an estimated return and an actual return, which is calculated in the Insights ROI report.

How Does CaliberMind Calculate ROI?

This applies to CaliberMind's Insights ROI dashboard.

The ROI dashboard respects the attribution model you select, and the results are tied to the campaign activity in the selected period. This dashboard is very helpful for understanding how individual campaigns within a platform perform. Clicking through the platform from this dashboard will also allow you to use early indicators to understand whether a campaign is trending in the right direction.

Because the ROI dashboard uses cohorted data, the ROI calculation will not be final until enough time has passed to allow those activities to mature into pipeline and bookings. For some organizations, this could take as long as a year from first touch to opportunity closed-won, although you should see pipeline start to accumulate in the first 60 days. The calculation looks something like this:

(won from campaign activity)/(spend on same campaigns)

Understanding your average sales cycle from first touch to last is critical to judge your return on investment. If you have an average sales cycle of 14 months, looking at last month’s campaign data will yield a meager return on investment (likely zero). If you look at campaign activity that ended a year ago, you’re much more likely to see a “real” return rate for your campaigns.

insights roi dashboard

A “good” return on bookings is anything north of 2X. This is lower than your advertising platform because we’re using closed bookings and a fraction of the opportunity’s value using multi-touch attribution.

How did we do?

Best Practices for Tracking Return-on-Ad-Spend (ROAS)

Campaign ROI Overview