ROAS for Manufacturers: Stop Flying Blind on Your Marketing Spend

Many industrial companies are seeing orders from existing customers drop noticeably, and in a downturn, new business isn’t filling the gap. In that situation, it pays to know exactly which channels and campaigns have the biggest impact. Companies that know this can invest with confidence while their competitors are more or less guessing.

Behind that confidence is a metric most machine builders think doesn’t apply to them: ROAS.

What is ROAS, and why does it apply to machine builders too?

ROAS stands for “return on ad spend.” Put simply: how many euros of revenue does one euro of advertising bring in?

We hear the same objection all the time: “We’re machine builders, we don’t sell anything online, there’s no way we can calculate that.” Many companies have grown for years through referrals and existing customers and have, in practice, invested little in winning new ones. Budgets were often spread across the board, a bit of trade show here, a bit of website there, in the hope that something would come of it in the end.

Today, that’s no longer enough. The bare minimum is knowing whether an inquiry came through your website. That doesn’t take perfect ad tracking: record it in your CRM or inquiry log, for example by asking every new contact how they found you. With a little effort, that’s not hard at all.

The example: €50,000 in ad spend becomes €1.25 million in revenue

The math itself is simple. You compare how much you spent in total this year on Google Ads with what it ultimately brought in as inquiries and revenue.

Say you sell systems that cost €250,000 on average. Over the year, you invest €50,000 in targeted Google Ads campaigns and win five new customers from them, each buying one system.

So you put in €50,000 and got five times €250,000 out, which is €1.25 million in revenue. Your ROAS in this case is 25x: every euro you invested turned into €25 in revenue. With this simple math, you stop flying blind right away. The same logic works for SEO, where it’s usually called marketing ROI.

Customer lifetime value (CLV) beats the margin on the first order

You may be thinking: once I subtract ad spend, sales and production costs, the margin on the first order gets squeezed hard, or there’s nothing left at all. That’s an important point, and it’s where we need to look closely at your specific niche.

In contract manufacturing and other businesses built on repeat orders, companies often deliberately budget the very first order from an online inquiry to break even, because the advertising costs initially eat up the entire margin. They do this because the business relies heavily on repeat customers, and this way they’re effectively buying a long-term customer relationship at a reasonable cost, one that generates profit for years.

The mistake is believing the business ends when the machine ships. After that come service business, maintenance contracts and spare parts, which often carry much better margins. The concept that matters here is customer lifetime value (CLV). If a customer pays back the advertising costs many times over in the long run, it hardly matters whether the first order squeezes the margin a little.

Long sales cycles? How to measure success right away

Of course, there’s a catch in manufacturing: long sales cycles. It can take months for a website lead to actually turn into revenue. But you can’t wait nine months to decide whether your campaign is working.

The solution is constant communication between sales and marketing. When a lead comes in through the website, your sales team assesses its quality right away and checks whether it fits your ideal customer profile and is a qualified inquiry.

If it is, we know the campaign works long before the contract is signed. Companies that measure and track this develop a feel for lead quality very quickly.

Conclusion: stop flying blind and start scaling

In our experience, companies that know their ROAS keep raising their budget, because they know it pays to put in one more euro. That lets you invest far more confidently and aggressively, and run campaigns your competitors can’t keep up with, because they don’t have a handle on their own numbers.

So track your inquiries properly and calculate your ROAS, even if it’s only a rough projection to start with. Above all, it’s a mindset you need to adopt: find out what works, then deliberately put more money behind it.

If you’d like help setting up the numbers and the campaigns behind them, book a free consultation with us.