A 2.02x return on ad spend in one month, for a second telehealth brand in the US

This is the second telehealth brand in the United States for which we did the same two jobs: we developed its website and rolled out its performance ad campaigns. The figures here cover one full month, 1 to 31 August.

In that month, about $3,926 of ad spend brought in $7,929.71 in purchases, a return of 2.02x. Put simply, the ads paid for themselves within the month and then earned roughly the same amount again. Below we explain the market, what we did and how any health brand can read a number like 2.02x.

At a glance

The client

Our client is another US telehealth brand. Telehealth delivers healthcare online, so the brand has no front door for patients to walk through. Its website is the place where a patient learns what is offered, decides whether to trust it and pays.

For this brand we took on both halves of the work. We built the website, and we launched the performance ad campaigns that send people to it. Performance campaigns are judged on the purchases they bring in.

The buying journey in telehealth is short on the screen but long in the mind. A patient may see several providers in the same week, read about each and come back more than once before paying. Health is personal, and people rarely rush the choice of who will look after them.

The challenge

The brand competes in the same crowded digital healthcare market as our first telehealth client in the USA, where customers are costly to win. A patient choosing an online provider is placing trust in a brand they cannot visit, often after seeing several rivals in a short space of time. That trust has to be earned on a screen, first by the ad and then by the website.

There is also a common pattern in markets like this. At the start, ad spend often runs ahead of revenue while the campaigns learn who is ready to buy. Many brands lose heart at this stage, or judge the ads on early clicks and sign-ups that do not tell the full story.

So the first question for any brand here is a plain one: can paid ads bring in more money than they cost, and by how much? That was the question this month had to answer.

What we did

A website built alongside the ads

We developed the brand's website as the destination for the ads we were also running. For an online health brand, the site is where people decide whether to buy.

Building the site and the ads together means the promise in the ad and the welcome on the page are planned at the same time. A visitor who clicks an ad should land on a page that picks up exactly where the ad left off, answers the questions they are likely to have and makes the next step easy to take.

Campaigns launched for sales

We took the performance ad campaigns live. Over the month, ad spend came to about $3,926.

Launch is the moment a plan meets real buyers and starts spending real money. Up to that point, everything is an educated guess. Once the campaigns are live, the market begins to answer, and the job becomes watching what people actually buy rather than what they click.

The results

Return on ad spend, often shortened to ROAS, is purchase revenue divided by ad spend. Here, $7,929.71 set against about $3,926 gives 2.02x. Each dollar spent on ads brought back just over two dollars in purchases.

Another way to put it: within the month, the ads covered their own cost and then earned that much again. Had the figure been below 1x, the ads would have cost more than they brought in.

A ROAS figure is a starting point, not the final answer. Anyone weighing paid ads for a health brand can read it in three steps. First, check that revenue is above the cost of the ads; if it is, the ads are paying for themselves. Next, take away the cost of delivering the service, because revenue is not profit. Then ask what a customer is worth over time. In much of telehealth, a first purchase leads to follow-ups, so a modest first return can grow. Only your own figures can answer that last step.

Why it worked

A modest budget still paid its way. About $3,926 of ads brought in $7,929.71 in purchases within the month. A brand does not need a huge budget to find out whether paid ads can work for it.

Revenue was counted at the purchase. Clicks, visits and sign-ups can all look healthy while sales stay flat. Judging the campaigns on what customers actually paid meant the result could not flatter itself.

A full month gave careful buyers time. People often think over a health purchase for days rather than minutes. Measuring across a whole month let those slower buyers return and buy before the result was judged, so the figure was not cut short by an early deadline. It also took in the quiet days as well as the busy ones.

Judge ads by what people pay, over a period long enough to be fair.

How to apply this to your business

• Decide before launch which number you will judge the ads on, and make it purchases rather than clicks or sign-ups.
• Give a new campaign a full month before you draw conclusions, so careful buyers have time to come back.
• Work out your ROAS by dividing purchase revenue by ad spend, and keep the calculation the same every month.
• Subtract your delivery costs from revenue to see what the ads really earned.
• Estimate how often a first-time patient comes back, because repeat purchases change what a fair first return looks like.
• Build or review your website with your ads in mind, so the page continues the conversation the ad started.

Questions business owners ask

How do you calculate return on ad spend?

Divide the revenue from purchases by what you spent on ads. In this case, $7,929.71 in purchases against about $3,926 of ad spend gives a return of 2.02x, meaning just over two dollars back for every dollar spent.

Is 2.02x a good return on ad spend?

It means the ads more than paid for themselves within the month. Whether it is good for your business depends on your costs of delivering the service and on how much a customer is worth over time. A return above 1x covers the cost of the ads; your margins and repeat purchases decide the rest.

How long should a health brand run ads before judging them?

Long enough to be fair to careful buyers. People often take days to decide on a health purchase, so a very short test can cut off sales that were on their way. This brand's figures cover one full month, which also evens out quiet days and busy ones.

Is return on ad spend the same as profit?

No. ROAS compares purchase revenue with ad spend only. To see profit, you also need to take away the cost of providing the service and running the business.

Weighing paid ads for a health brand? Book a 20-minute call.