When it comes to metrics that evaluate results, some are far more important than others. The likes, shares, and clicks that your Facebook ad generates, the conversions that occur from that ad, leads generated from that ad: are all important to evaluate the overall success of your advertising campaign.
Here are 5 important metrics that you need to know in order to determine if your ad campaigns are helping your business grow or if you are just throwing your money out the window.
This is defined as the number of times your ad is shown. The more impressions you have, the more brand awareness you can create. If your main goal is to get attention for your new product or for you as a brand, impression metrics is an important one for you.
You should look at the cost per thousand impressions (CPM) of your ads.
Here is how you calculate CPM:
Cost per thousand impressions (CPM) = ad cost x 1,000 / # of impressions
With limited ad budgets, CPM metrics can help you decide where to spend your money in order to maximize your ad impressions and reach more people.
This is the number of times your ad is clicked on. Clicks are a way to measure customer engagement and level of interest. You can go further to compare the clicks in Google Analytics and see which sites the users visited, if they purchased, or entered your sales funnel.
This called click through rate (CTR).
Here is how you measure CTR:
Click through rate (CTR) = # of clicks / # of impressions
There is another important metrics with clicks, the cost per click (CPC) of your ads. If you have a lower budget, you want to spend more on ads with lowers CPC.
Here is how you measure CPC:
Cost per click (CPC) = ad cost / # of clicks
If you run video ad campaigns, another metric that can be interesting for you is video views. But the problem is that Facebook counts 3 seconds or more as a view, which is sometimes not enough to create any kind of brand awareness, let alone clicks and purchases.
You’re advertising on Facebook for one reason, and that’s to make money.
Return on ad spend (ROAS) is defined as revenue divided by advertising spend.
If you don’t have a sales funnel, and sell immediately after people clicked on your ad, you should measure ROAS. The higher the return on ad spend, the better.
But as some people doesn’t buy at the first time, but buy later on, if you look at lifetime value, you can afford to have a lower ROAS target.
If the goal of your campaign is only to build brand awareness or drive engagement, and not direct sales, ROAS should not be your primary metric.
How you measure ROAS:
Return on Ad Spend (ROAS) = revenue / ad cost
ROI stands for Return on Investment and measures the profit generated by ads relative to the cost of those ads.
How to measure ROI:
Return on Investment (ROI) = Revenue – Cost
Cost per action (CPA)
As a business owner or marketer, your ultimate goal is to get your target audience to take action. It can be:
- sharing, liking, or commenting
- subscribing to your email list
- watching a video
- click through to your website
- downloading your PDF
- make a purchase.
The metric you choose to use will depend on your marketing objective and goals.
- Lead generation: The total number of people who sign up for your offer on your landing page, or inside Facebook (if you run lead ads).
- Generating sales: Number of purchases people make after clicking your ad.
- Getting traffic to your website: Number of individual visits to your website.
Frequency is the average number of times your ad was served to each person. Reach is a value that you can get from your Facebook ad data.
To measure frequency:
Frequency = Impressions / Reach
If they see too little they might not pay attention. If they see too much, you will annoy them. If you keep showing the same ad to the same person, they will get bored and might hide your ad in their Facebook settings.
And if a user was interested in your ad, then you probably don’t need to show him the same offer 10 times.
If you’ve got an advertising budget of a few dollars per day, then this metric won’t be too interesting.
But, if you’re spending hundreds of dollars on Facebook ads every month, then you need to track this metric to be sure you are getting the most of your advertising dollars.
You can also choose Daily Unique Reach as an ad objective to ensure that your ads are served once per day to unique users.
Checking these metrics regularly will give you an idea of how well your campaigns are doing.
Determining the proper metrics to evaluate your campaign allows you to optimize your Facebook ads strategy.
Because always remember that at the end of the day, you’re marketing to sell.