Despite the explosion of social media platforms over the last decade, Facebook has maintained its place as marketers’ favourite place to connect with customers. But, with more than 6 million advertisers on the platform, how do you know your ads are really reaching people?
Too often, marketers make the mistake of using vanity metrics, such as likes and theoretical reach, as indicators of success. These might look good, but they tell us little. Let’s take a look at how to best conduct Facebook ads analytics and the 4 key metrics for judging the performance of your Facebook ad campaigns.
Facebook ads today
First, here’s a quick look at what Facebook looks like today:
- 1.62 billion users visit Facebook daily
- A whopping 94% of Facebook ads revenue is now from mobile
- Mobile Facebook ad placements outperform desktop by over 45%
- 26% of people who click on ads say that they made a purchase
- The top 3 most commonly used CTAs on Facebook ads are: Learn More, Shop Now, and Sign Up
- US marketers will spend $32.6 billion on Facebook ads in 2020
Let’s dive into the 4 key Facebook ads metrics.
Cost per click (CPC) is a classic Facebook ads metric. It’s a percentage that tells you how many people click from your ad onto your website. It’s calculated by taking the amount spent on ads, divided by the number of link clicks. It’s a basic Facebook ads metric that lets you know if the amount you’re investing in paid advertising on Facebook is paying off. The lower the CPC, the more effective your ads are, and vice versa.
The average CPC on Facebook ads is around $0.97. But a ‘good’ CPC varies by industry and the cost of service. For example, financial services has an average high CPC of $3.77, but services in this industry can run up to the thousands so their return on investment (ROI) is still extremely high. By comparison, apparel is an industry with tight profit margins and consequently has a much lower CPC of $0.45, which is necessary to cover their costs. Check out your industry’s Facebook ads benchmarks to know how well your Facebook ad campaigns are performing.
If you do have a much higher CPC than expected, try checking the click through rate (CTR) of your ads. If this is also low, it means your Facebook ad campaigns are not as engaging as you hoped and need further exploring. If it’s not an issue with the CTR, try checking your Facebook ads or website for any technical issues stopping people from finding their way to your landing page.
You can track your campaign’s CPC in Facebook analytics.
READ MORE: The 4 best LinkedIn metrics
2. Conversion rate
As a marketer, conversion rate is perhaps the most important Facebook ads metric for you to report to your company leaders, because it shows how much of your marketing efforts are translating into cold, hard cash for the business. But you have to decide what a conversion is for you and your company based on what you’re trying to encourage potential customers to do and the funnels you are employing. Conversions could be:
- The number of sales as a result of a Facebook ad. To measure this, look at the number of customer journeys that started in an ad and ended with a sale
- The leads you got. This means measuring what you consider to be a lead (e.g number of emails, tool sign ups)
- Website traffic generated from the Facebook ads campaign
You can discover these metrics by installing a Facebook ads pixel that will help you pinpoint your exact conversion rate in Facebook analytics. Learn how in Facebook’s simple guide to setting up a Facebook pixel.
Revenue is an extremely relevant business metric that can shine a light on how effective marketing is. However, on its own, revenue isn’t a helpful way of understanding marketing. This is because revenue can come from both organic and paid marketing, as well as any other way people found the business (which may be completely unrelated to marketing). This is why return on ad spend (ROAS) is a helpful Facebook ads metric, especially for online retailers who are running multiple campaigns at once. It’s a KPI which shows how well your ads are performing through their exact impact on revenue.
ROAS is calculated by dividing the total revenue generated from your Facebook ads by the total ad spend. So, if you spent $40,000 on ads, and got $160,000 in new business, that’s a 4X ROAS. And if you spent $40,000 and only got $20,000, however, you’d know immediately that there’s an issue with your Facebook ad campaigns that needs investigating.
If you’re working with a large ads budget, then frequency is an often-overlooked Facebook ads metric that you absolutely should be tracking. It tells you how often an ad has been served up to an average user.
Customers seeing your ads repeatedly can be really helpful at keeping you top-of-mind. After all, on average, people take action on your ad after seeing it three times. If you show them it ten times, however, they’ll probably start experiencing banner blindness. Or worse, they’ll get angry at your ad and leave negative comments or submit negative feedback on Facebook that will hurt your relevance score. And you’ll have gained a brand-hater for life.
This is why knowing how many times a user is seeing an ad is incredibly important to make your Facebook ad campaigns as effective as possible. You can see the frequency of your ads in Facebook analytics. The metric is calculated by dividing impressions by reach.
Facebook ads metrics: The takeaways
It’s natural to want to report on the Facebook ads KPIs that put your marketing efforts in the best light. This is why metrics like impressions, reach or likes can be tempting to include in KPI reports. However, like with other key marketing metrics, KPIs that make you look good but give you no insight into what’s working in your marketing and what’s not are vanity metrics. When it comes to paid advertising on Facebook, the metrics that let you know exactly what’s pushing conversions and resulting in the highest revenue for the lowest cost are always going to be the most helpful at letting you know what marketing messaging to use and how to build the best marketing funnels.
We know that keeping up with so many metrics can be extremely difficult, especially when you’re running hundreds of metrics across so many campaigns. As humans, we’re simply not designed to scan through multiple datasets, day in day out. But this is exactly where machine learning thrives and can step in to analyse your KPIs for you. Read about how autonomously monitoring your KPIs saves you time, money and resources while improving your view into the metrics that matter.