In this simple guide to various facebook ad metrics, you’ll know about:
- Importance of facebook metrics
- Ad Impressions and CPM for Overall Cost
- Link Clicks, Click-through Rate (CTR) & Cost per Click (CPC)
- Results & Cost per Result
- ROAS (Return on Ad Spend)
- Good CTR But Bad Conversion Rate?
Have you tried to run Facebook Ads before, looked at the dashboard and thought, “God! So many metrics! Which metric am I supposed to improve and what is each one for”. You don’t have to worry as today we’ll break those metrics down in simple points for you.
As we had shared earlier in one of our blogs on social media advertising, it’s important to not just create ads but also to analyse them as that’s how you can improve their performance further. Once you are running multiple campaigns and ads, you can look at the metrics which will further help you decide which ad or campaign type is working best for you. With so many metrics and numbers in place, you might feel overwhelmed as to which metric matters most than others. We’ll define top metrics for you and why you need to give attention to these numbers.
1. Ad Impressions and CPM for Overall Cost
Impressions tell the number of times your ad was on the screen of people. Now, seeing its high number may make you feel happy, but not just yet. Impressions doesn’t necessarily mean that all these people will recall seeing your ad or brand. With the ever-increasing scrolling speed of people on their screens in search of eye-catchy content, you’ll notice that only a small percentage of them will click on your ad.
Cost per Marketing (CPM) is calculated per 1000 impressions and can be represented as:
2 factors which define its value are:
a. Audience: If your targeting is specific, CPM will be relatively higher as compared to broad targeting. This doesn’t mean that you start targeting broader audiences because if you do that, you’ll be spending your marketing budget in showing ads to people who are in no need of it or have no interest in your product or service.
b. Competition: If you have many competitors & they are targeting the same audience as you, CPM will be higher.
At times, increased costs for your results may be simply because of higher CPM. Same ad that you run for different audiences will have different CPM (depending on 2 factors mentioned above).
2. Link Clicks, Click-through Rate (CTR) & Cost per Click (CPC)
After a person sees your ad, the next action you’d want them to do is click on the ad so as to convert. Link clicks along with CTR defines the engagement of your ad. CTR, as a metric, is quite popular with online advertisers as it tells how appealing or relevant people find that ad.
If your CTR is low, your costs are bound to rise. A bad CTR indicates either one of those 2 things:
a. Bad Ad
b. Bad Targeting
You can calculate CTR as:
In the above example, since CTR isn’t very good campaign 4 onwards, you might want to pause it. However, look closely and you’ll find that a lot of impressions are not received for campaign 4,5 and 6 and a good advertiser will wait for it to have significant impressions before deciding on the fate of the campaign.
Combining cost and engagement together in a metric would make things so much easier for you, right? Cost per Click does this job for you! CTR and CPC go hand in hand. Higher CTR means lesser CPC and vice-versa. It is defined as the cost that each click (or link click) is costing you. If the engagement of the audience is higher with your ad, i.e higher CTR, this cost would come down automatically. With respect to link clicks, you can calculate this cost as:
3. Results & Cost per Result
When you create a campaign on facebook, you have the option of selecting any one objective out of many that are available as shown in the image below.
For each marketing objective, there are multiple options available for you as per your business needs. In case you feel confused about it, you can simply place the cursor on the tool tip (available at the corner of the objective type box) and a small description will appear.
The result of the campaign will vary as per the objective and that’s how facebook will optimize your campaign. Say, if it is Lead-generation, focus will be on collecting maximum leads possible, for Conversion, focus stays on the purchase from the website or any other event as opted by you.
Cost per Result is one of the important metrics that advertisers use for knowing how successful their campaign is and can be defined as:
While running campaigns, your motive shouldn’t be just to get a higher number of results but to get them at reduced cost. This cost can be checked by you through the CPR metric.
4. ROAS (Return on Ad Spend)/ ROI (Return on Investment)
How do you define if you are actually profitable or not running the marketing campaigns? It is this very metric. If your ROAS is very low, it should be a cause of concern. ROAS means the value you are getting in return for the amount that you are spending on marketing and can be defined as:
If you’ve selected conversions as your campaign objective and are selling your product through your website, you can know if you are actually running in financial profit or not through marketing.
a. ROAS of more than 1 signifies you are generating more revenue than you are spending on the marketing of your ads.
b. ROAS of less than 1 signifies you are generating lesser revenue than you are spending on the marketing of your ads.
Frequency implies the number of times a person has seen your ad. If the objective of your campaign is spreading brand awareness, you can aim for a higher frequency for better ad recall, i.e ability of an average person to remember the brand. However, you also need to remember that higher frequency leads to higher cost per click and henceforth higher cost per result. Especially for conversion campaigns, higher frequency isn’t really preferred as any potential viewer would’ve already visited your website and taken the required action. If not, there’s no use showing the same ad to the viewer multiple times as it may also start to annoy them.
Generally it is advised to pause the ad once it reaches a frequency of 2, 3 or higher. To keep frequency low, you can:
a. Create new audience
b. Create new ads
Good CTR But Bad Conversion Rate?
It is quite possible that the CTR of your ads is good as per the industry standard but the conversion rate, i.e. number of people who are converting, is less. Good CTR implies that the ad is good or engaging and somehow, people are losing interest after they click on the ad. This may be due to various factors such as:
a. Bad landing page experience
b. Missing information in ad
c. Product not being price-competitive
d. Bad market conditions
Now you know that each ad that you run on facebook has a variety of metrics available to help you track performance of your ads. This data can reveal the areas of opportunitywhich will further help you to make decisions about how to run your future campaigns. This was all you needed to know about various important metrics in facebook. Hope your doubts have been cleared and the next time you look into the ads manager, you’ll know exactly the metric you need to improve for having better ads every time!