In December of last year, Roistat conducted market research to compare the return on investment among popular advertising channels (search vs. display). Previously, we covered their findings on search ad returns and here we turn our attention to their research into content (display) ad ROI and Google and Yandex Performance.
ROI on content (display) sites: Yandex Advertising Network vs. Google Display Network
We used the following formula to calculate ROI:
ROI = ((revenue – costs – ad expenses ) / ad expenses) * 100%
At first glance, there appears to be a contradiction between the positive Yandex.Direct ROI calculated according to the formula and the negative median ROI. This is because many small advertisers do not break even on content ads, even though they bring in revenue on average.
Here are the ROI dynamics for display ads by month:
Yandex.Direct content ads netted greater returns for 71% of advertisers (as shown here by month):
Using the Last Click model, Yandex.Direct display ads straddle the line of profitability, but they result in a loss on Adwords. This is not to say that display ads do not serve an important purpose:
When we evaluate the effectiveness of content sites, we usually look at the sources that initiate a user’s chain of interactions with a site.
Content ads serve as constant reminders that strengthen brand knowledge and increase the number of direct clicks to the site.
Co-Founder and Marketing Director, ArtSkills personalized presents company
The most profitable approaches by size of business
We also calculated the ROI for advertisers with different budgets based on their monthly revenue.
From that, we saw that as advertisers’ revenues grow, their advertising ROI improves as well. This is probably because you have to optimize a lot of processes in order to grow your business, and this also relates to ad strategy. In other words, if you have a lot of ad campaigns, making sure they are optimally configured is very important.
Every business tracks a few main KPIs: cost per lead (CPL), cost per order (CPO), and return on investment (ROI). All ad channels can be set up to in line with these KPIs.
If a certain channel only achieves one of the KPIs when the budget is limited or bids are placed on certain keywords or creative, then we won’t raise our budget for that channel.
If a different channel brings in a lot of inexpensive leads and sales, however, there is a high chance that we will scale up. We will increase our ad budget for that channel until we reach the KPIs we set.
Sometimes there are channels that don’t net any leads. In that case, we will let our trial budget run out and switch over to another means of bringing in customers.
Co-founder and general director of the SalesArt ad agency
Distribution of advertisers by ROI
Here is the distribution of advertisers by ROI for search ads:
And for display ads:
As we see in the graphs, Yandex.Direct brought in more revenue for the advertisers that participated in the research.
Based on the fact that many advertisers had a negative ROI (despite the fact that the system’s average ROI was positive), we can conclude that advertisers with small budgets do not configure their ad channels as well.
ROI by city for different types of ads
We also analyzed the ROI from search and display ads in different regions of Russia.
As you can see, Moscow traffic yields the greatest return. However, this doesn’t mean that it’s not profitable to advertise in other regions. This data may reflect the fact that some advertisers don’t create distinct campaigns for Moscow, Saint Petersburg, and the other regions. This is a mistake, because bids for the same keywords may differ by region.
Search ads are more profitable than display ads in general. But display ads still have their advantages: you can increase your audience coverage and attract more targeted customers to your business.
As we’ve seen, advertisers do see a positive ROI on average. Based on our data, this return is greater for advertisers using Yandex for their Russian language ads.
It might be the case that Direct campaigns are better optimized thanks to the fact that Yandex staff attend very proactively to client accounts. Or maybe the customers advertisers find on Yandex just have thicker wallets.
In theory, ads should pay for themselves (and ideally bring in revenue). To find out for sure whether a given campaign is a good investment, you must measure the ROI for each ad channel. Any changes you make to your ad channel settings will affect your ROI, and it’s important for businesses to know what particular changes actually result in increased returns.
You can influence your ROI by setting up your ad channel correctly. By disabling ineffective keywords and adding keywords that relate semantically to effective ones, you will start attracting more targeted traffic.