Bounce Rate Impact on ROAS

If your bounce rate, shown on Google Analytics, is higher than 60%, that means only 40% of people visiting your website find what they actually search for. The rest just got confused and closed the browser window or clicked back. By the way, this is how Google Search Algorithm determines if people are leaving your website fast and if it’s worth showing it to other people.

Vygandas Pliasas
by Vygandas Pliasas, 7 months ago, November 22nd, 2021
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If you’re already here, then you’re probably aware of the fact that a high bounce rate in your eCommerce store wastes a significant share of your annual marketing budget. Moreover, you should also know that bounce rate prevents reaching the maximal potential of all SEO efforts and lowers the return on ad spend, otherwise known as ROAS.

Before we go further, let’s find out what is the meaning behind the term Bounce Rate. Bounce rate is considered to be the percentage of visitors to a particular website who navigate away from the site after viewing only one page. Some marketing people configure Google Analytics to not consider the visitor as part of the bounce rate if he spends more than a minute on the page or scrolls to a certain percentage.

A good bounce rate can be considered to be 40% or lower. The lower the bounce rate, the better it is. To make it super simple, think about it like this – if your bounce rate, shown on Google Analytics, is higher than 60%, that means only 40% of people visiting your website find what they actually search for. The rest just got confused and closed the browser window or clicked back. By the way, this is how Google Search Algorithm determines if people are leaving your website fast and if it’s worth showing it to other people.

If you are into marketing, you might have heard about ROAS. It’s an abbreviation for Return On Ad Spend. Many sources online state that a decent ROAS amount is 400% or 4x in simple terms. In other words, for every €1 invested in the ads, you should expect to get €4 back in the form of revenue. However, you should keep in mind that this rate should not be considered as a final aim but more as an average number with space for improvement. For example, some businesses need to have a 10x ROAS to stay profitable, but the others are fine on dwelling with 2x. The goal for ROAS, same as with many other marketing measurements, also depends on the individual aspects of a business, so the rule of 4x should be understood more as a benchmark and not something to swear by.

There are a few more things you need to know about ROAS before we head further. You should have in mind there are ads that don’t impact ROAS that much, as they are not oriented to increasing direct sales. Such ads might be oriented to building a brand or accumulating a base of followers for social reasons.

However, it doesn’t really matter how you got the visitor if your bounce rate is high. Let’s check this in the following illustrative case study that has some mathematics for explaining all of the above.

Key numbers to perceive the example below:

  • CPC €0.5 (ad click cost)
  • Clicks received 10.000
  • The total cost of clicks €5.000
  • Bounce rate 50%
  • Wasted marketing budget €2.500

Let’s say you have an ad budget size of €5.000 and you only buy PPC-type ads, such as Google Text Search ads for a keyword that matches the product you are selling. The average click price is €0.5 per click of your ad. For this budget and CPC price, you could expect roughly 10.000 visitors coming to your product page on your e-commerce site.

10k visitors sounds exciting and optimistic at first. If the conversion rate of your website is 20%, you could assume that 2.000 visitors will buy your product. Sorry to tell you, but that usually won’t be the case. This assumption is a bit naive, as such factors as UX (User Experience) also affects the sales, so, unless your website interface is unquestionably perfect, you will lose some of your visitors almost immediately because of interface reasons. And, let’s be real, having something unquestionably perfect is not a possible option, especially when it comes to design decisions, as there is always some space for improvements.

Having a 50% bounce rate (and that is considered to be average, but usually is even a higher number) implies that you automatically remove 5.000 visitors from your equation, which means that instead of 2.000 buying visitors you now can only expect 1.000 at most. So, because of the bounce rate, half of your ad budget was wasted and could have been used more efficiently instead if the right decisions were made and the right tools installed. In this case, your wasted marketing budget would be equivalent to €2.500.

Let’s try to measure approximate sales revenue changes due to the bounce rate as well. Considering you have your ads sorted out fine by having ROAS equal to 400% and 1.000 visitors that convert, then our expected sales revenue should be around €10.000. However, if your shop didn’t lose half of the traffic due to the 50% bounce rate mentioned before, then your sales revenue would be higher by a double, e.g. €20.000.

What if you paid more attention to UX, visual and textual content, and ad copy to reduce your bounce rate, let’s say, by 10%? In such a scenario, a 10% reduction of bounce rate would mean less wasted budget by a sum of €500, meaning that an effectively used budget would be equal to €3.000! Saving €500 of ad spend in ROAS means that you boost your sales revenue by at least €2.000. Of course, this number usually more or less deviates, but that does not change the fact it’s not worth doing.

Hopefully, this case study article explains the importance of bounce rate reduction and its’ tremendous impact on sales revenue.

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