
Quiz Answer to:
2
Paid Channel Diversification
Q)
You’ve been relying heavily on paid Facebook and Google ads for customer acquisition, but the return on ad spend (ROAS) has been declining. How would you identify new acquisition channels to diversify your strategy and ensure continued growth without increasing the cost per acquisition (CPA)?
Short Answer:
To diversify acquisition channels after declining ROAS, first analyze current channels (Facebook, Google) and pinpoint why costs are rising. Consider experimenting with other paid channels like LinkedIn, TikTok, or programmatic advertising. Expand into organic channels such as SEO, content marketing, or email marketing for lower-cost, long-term growth. Test influencer partnerships, affiliates, or referral programs to broaden reach. A/B test new channels for performance while keeping an eye on customer acquisition costs (CAC) and the lifetime value (LTV) of leads. Track conversion rates, ROAS, and engagement from each new channel to measure their effectiveness.
Detailed Answer:
Key Steps to Investigate Declining ROAS
Audit Existing Paid Channels: Review historical performance data for Facebook and Google ads, segmenting by audience, ad copy, creative, and campaign type. Identify if specific factors, such as ad fatigue, audience saturation, or increasing competition, are contributing to declining ROAS. Conduct A/B testing to determine whether tweaking creative, targeting, or bidding strategies can improve performance before shifting budget to new channels.
Assess Audience Saturation: Analyze audience overlap and frequency on existing channels to assess saturation. High frequency and low engagement could indicate users are seeing the ads too often, reducing effectiveness. Determine if the same audiences are being targeted repeatedly or if there's an opportunity to refresh or expand audiences.
Evaluate Attribution Model: Reassess the attribution model to ensure that conversions are being accurately attributed across channels and touchpoints. This will help identify if other channels are undervalued in the current attribution model (e.g., email, organic, direct). Use multi-touch attribution to get a more accurate view of how different channels work together, which could reveal hidden value in existing efforts.