If you advertise online, you’re probably familiar with the term “return on advertising spend” (ROAS). It’s a simple formula:
ROAS = revenue / cost
If you spend $100 on a campaign with a ROAS of 5, you can expect $500 in sales, right? In theory, yes. In practice, not necessarily. You may get $50, $200 or $2,000. Why?
Platforms know exactly how much you spend but they have no way of knowing how much of your revenue they are responsible for. And because they’re in the business of selling ads, they’re incentivized to show you how well your ads work, not to provide the most accurate representation of reality.
In this paper, I’ll explain why platforms take credit for sales that they shouldn’t, don’t take credit for sales that they should, and how marketing teams can access more accurate insights to get more revenue for every dollar they invest in online ads.
Why Platforms Don’t Take Credit When They Should
Platforms track sales and leads using pixels. These are third-party cookies that advertisers install on their websites to report back to the platforms every time a conversion takes place.
However, it’s estimated that pixels are unable to track one-third of conversions in 2024, and that’s expected to be more than half of all conversions by 2025.
What prevents pixels from tracking sales? Ad blockers (42% of Internet users), browsers that block pixels by default like Safari (23% of Internet users) and Firefox (4% of Internet users), and devices that block pixels by default like the iPhone (29% of global market and 57% of US market.) Google Chrome, which accounts for 62% of the global market, announced they’ll join the list in early 2025.
As users demand more privacy, it’s becoming nearly impossible for marketers to track everything they do, on every channel and every device.
Even when users opt-in to be tracked, there are many sales that pixels just can’t track. Pixels only track sales on your webstore, not Amazon, TikTok shops or retail stores. Pixels can’t track word-of-mouth either. Pixels can’t track a woman named Amy asking her husband to get her for Christmas the dress she saw advertised on Instagram, or the additional sales the advertiser will get when she shows all her friends her amazing new dress.
And even when pixels fire, platforms use attribution rules that give credit to the wrong ads and prevent ads from getting any credit at all. Consider this typical customer journey:
Platforms credit conversion to the last ad clicked or viewed. Because Google owns YouTube, the credit in this case would go to the Google brand ad. However, Amy decided to buy the dress after seeing how great it looked on the YouTube influencer, and the sale would have happened whether Amy had clicked on the sponsored listing or the organic one. And because Facebook owns Instagram, the Facebook remarketing ad would get all the credit even though Amy would have never known about the company in the first place.
Another big issue is attribution windows. Most platforms have a default attribution window of 7-day click + 1-day view. That means that they only track sales from customers who buy in the seven days after clicking an ad or in the 24 hours after viewing it. And although most platforms allow marketers to extend attribution windows to 30 days, these are arbitrary numbers and it’s a bad idea to ignore the channels that introduced your customers to your brand.
Why Platforms Take Credit When They Shouldn’t
Platforms can’t see how customers interact with other platforms. Facebook doesn’t know you’re advertising on YouTube, and Google doesn’t know you’re emailing your customers on Klaviyo. Platforms take 100% of the credit even if they only did part of the work.
In our example, Google, Klaviyo and Facebook will claim $100 each. But you received $100, not $300. That’s why the numbers never add up.
Platforms also take credit for all sales, whether or not they influenced the purchase decision. When someone sees your ad, there are three possible scenarios:
- They didn’t convert
- They converted and wouldn’t have converted if they hadn’t seen the ad
- They converted and would’ve converted anyway if they hadn’t seen the ad
Platforms take credit for #2 and #3. However, if the last group would have purchased whether or not they saw your ad, the ad didn’t provide any value. Just because your customer saw an ad, it doesn’t mean that the ad got you that customer.
This is why bottom-of-funnel campaigns like remarketing and brand search report substantially inflated performance, and why top-of-funnel campaigns that feed them get constantly undervalued. No wonder why brands struggle to acquire new customers!
You need to evaluate advertising performance based on the incremental sales they deliver, not the total number of sales. Let’s go back to our example and compare Google brand vs YouTube. Let’s say that we get 100 orders a day and decide to invest $1,000 on each.
On Google, our $1,000 investment delivered 10 additional sales. At an average order value of $100, that’s $1,000 in revenue and a ROAS of 1. On YouTube, we got 40 additional sales, $4,000 in revenue and a ROAS of 4. That makes YouTube’s performance much better than Google’s, even if 80 customers clicked the Google ad and only 60 the YouTube one.
Now, consider the implications of making decisions based on the sales the platform reports and the sales it actually drives.
Based on what Google reports, any smart marketer would choose to invest more in Google brand ads rather than YouTube. After all, why settle for a ROAS of 6 when you can get a ROAS of 8? But, by doing that, they’d be getting an actual ROAS of 1, resulting in a loss after paying for the cost of the dress and payment processing fees.
This shows that no matter how smart the marketer is, the quality of their decisions can be only as good as the accuracy of the data that guides them.
Conclusion
Advertising platforms are unable to accurately measure how much money they put in your bank. Their pixels only work half the time, undervalue top-of-funnel ads and overvalue bottom-of-funnel ones. Different platforms claim the same sales and the math never adds up. They want you to feel good about the money you give them so you can give them even more, so they take credit for all the sales they touch, even the ones you were going to get anyway.
You wouldn’t ask students to grade their own homework, so don’t ask platforms to grade their own performance. You need an unbiased third-party solution that cares more about providing accurate data than making performance look good.
An attribution platform gets revenue and conversion data from your source of truth (ecommerce platform, Amazon, CRM). Because it has access to all your marketing platforms, it can determine much more accurately what’s driving your sales so you can invest in the right channels and campaigns and get the best return possible for every dollar you invest in ads.
Get in Touch
If you’re disappointed in your current attribution platform or don’t even have one, let’s talk!
A 30-minute call is a great way for us to answer your questions, learn about your business, and show you what Data Speaks can do for your business.
Book your call or email us at hello@dataspeaks.ai
Tony Tomassini CMO, Incrediwear