Businesses that have mastered how to reach their target audience understand how to use Facebook ads to their advantage. Efficiently using Facebook Ads towards targeting results in increased conversions and better ROAS (return on ad spend).
But the critical question is how do you efficiently use Facebook ads and save up on money for testing? The trick is to maximize the execution and cost of every ad to provide the best results at a low cost. To achieve this, businesses should know their target audience to profit on large returns on investment.
When speaking about Facebook Ads in this article – it is inclusive of their entire audience network including Instagram, apps and affiliates. All managed via the Facebook Ads manager.
What is Facebook ROAS?
Facebook’s return on ad spend refers to the profits that your Facebook ad campaigns produce. You should not confuse that with the amount you put in; it is the results you receive from the amount you invest.
How Is Facebook ROAS Calculated?
You can determine your Facebook ROAS by dividing the revenue for your Facebook ad by the cost of your Facebook ads. The ROAS formula is:
ROAS = Ad revenue/Ad Cost
What’s Considered a Good Facebook ROAS?
Factors such as your marketing goal and industry influence a good Facebook ROAS. There is no absolute number that indicates a good ROAS. However, having an idea of the average ROAS is a great way to set a criterion for your business. What is the average ROAS to look out for? This is solely dependent on the type of industry and size of the business.
Some businesses can run a campaign with a target ROAS of 3.0 (300%) whereas others may need to reach a target of 18 (1,800%) for the campaign to be worthwhile.
Below you will find several proven tactics for increasing your ROAS on Facebook and Instagram.
Focus On Warm Audiences & Create Lookalike Audiences
Warm audiences refer to the audience that has previously interacted with your brand or business through page engagement, website visits, or online purchases. The important fact is that they are aware of you and have clearly expressed interest in what you offer. Targeting your warm audience is the best way to use your resources efficiently.
Cold audiences are the opposite of warm audiences. Though they may be more difficult to engage, you can reach this audience with cost-efficient ad campaigns. The success of using a cold audience depends on how effective your research is. You can attempt to direct traffic to your page once you identify an audience that responds to your marketing. This is to determine better the ones ready to purchase.
The biggest challenge with a warm audience is the insufficient sample size that hampers your ads’ growth. Therefore, it’s recommended you create lookalike audiences using the information from the samples to reach a larger number of potential customers who have shown the same interest.
With Facebook, you can create lookalikes to solve issues involved in wrong targeting. The accuracy of a lookalike audience increases based on the information used to create it. Customers who have already purchased your product provide the best, most accurate representation of your target demographic.
Effectively Retarget Your Audience
If you have a B2C product and have already identified retargeting customers who are likely to buy from you again, your product can yield high results. The “Rule of Seven” is an old principle often thrown around, while its origins are vague and predate the internet. The principle states a customer must see your ad seven times before making a purchase. While this can be taken with a pinch of salt, from running Facebook ads the average frequency can often vary from 3-10 impressions.
To effectively run your Facebook ad campaigns, you need to be aware of the audience interacting with your product and retarget them with separate campaigns that take them anywhere from unaware of your brand (top of funnel) to informed and ready to purchase (bottom of funnel).
Always Keep Testing
Developing effective advertising is dependent on how well you know and understand the preferences of your audience. This calls for a lot of time and discipline. Testing provides vital data, and constant testing helps to improve this collected data. Among the things, you can carry out continuous testing, including your ad copy, photo assets, video assets, product carousels, story vs feed, promotions, headlines, and audiences.
Understand The Best Ad Format for Your Audience
You can optimize conversions once you understand which ad format best suits your content. For instance, you can use collection ads when introducing various products. Carousels are ideal for communicating several.
To optimize your ROAS, you should consider testing different formats then keep tabs on the results. It is important also to examine your audience’s preferred Facebook ad format when researching your target audience and analyzing the performance of the ad campaigns.
Enhance Your Landing Page
An attractive, eye-catching landing page may lead to an increase in the conversion rate. Several varied platforms such as Clickfunnels and Leadpages assist in creating an exclusive landing page for your ads.
To attract customers and increase conversions, consider scheduled promotions with colourful visuals that motivate the customer to act instantly. To capture your audience’s attention, use bright and colourful background visuals, ideally with smiling humans.
The landing page can have a section that enables you to collect customer’s information such as names and contacts. This information is helpful in future targeting. Directing leads to immediate reaction is vital in maintaining the impact of your ad.
Use Facebook Pixels
It is important that you understand the market you wish to reach before taking up any Facebook advertising campaign. Facebook Pixel is a tool that you can embed into your website, and it allows you to recognize the customers who visit.
You do not need to have coding expertise to use this tool, as it is easily copied and pasted into your website’s header. However, to gain valuable, comprehensive data, you should fix the pixel on every page. The Facebook pixel works better than cookies in tracking conversions. They can trace a customer across devices or browsers.
Once you integrate the Facebook pixel into your site, Facebook will automatically recognize and distinguish users based on their actions. This then makes it easier to generate audiences who showed interest by visiting your site.
*The effectiveness of the Pixel will likely be impacted by the recent iOS 14 updates on Apple devices –as of writing this article the pixel remains a powerful tool that all businesses should use.
Retain The Profitable Ads Only
There is no economic gain in testing numerous ads when only one is successful. There is no need to continue testing if your ROAS is working. Instead, you should focus on what is working. To continue with tests is to take a risk though it would also yield higher results.
It is risky because you might lose some money in the initial testing phase, but you might discover a strategy that swiftly provides cheaper conversions if done right.
Establish Conversion Tracking
It is essential to set up conversion tracking for your business. First, you need to know your conversation rate from lead to customer. Armed with this information, you can now test different ads and audiences to identify which will produce the most ROAS. To enhance your ROAS, constantly test new ads against your goals and remove any low ads.
Optimize The Positive Feedback Score
Facebook will increase your visibility when your positive feedback score is great. You will consequently spend less to reach a larger audience which will bring down the conversion costs. This will eventually increase your ROAS.
Simultaneously Create a Conversion and A PPE
When your ad is successful, meaning it has converted a lead into a sale, Facebook shows it to more people. By running your Pay-Per-Engagement ad beside your conversion ad, you allow more customers to interact with your ad. The result of this is an increased positive feedback score, also known as the relevancy score.
It is important to use your “post ID” to develop your PPE advertising. This way, the likes, comments, and shares related to the post, go into your conversion ad.
Make use of Dayparting
Use Dayparting if you have any time-sensitive promotions or ads to optimize ROAS. For example, if you have an offer running between 10 am to 4 pm every day, there is no need to run the d 24/7. Most people tend to act on a time-sensitive offer that is in the near future. To therefore boost your ROAS, only run the ad when it is actually feasible.
Aim To Expand Your Target Worldwide
Facebook ads are all about testing efficiently, and the bigger the sample size, the more informative the data collected is. Once you identify which geographic locations are performing exceptionally well, you can duplicate your ad only to reach those locations.
If you cannot advertise in a specific area or country, probably because your products do not reach the said area, then focus your testing on the entire area you can cover.
Split Varied Test Combinations
To identify the most effective ad and save on money, you should split ads into 2 to 3 variations base on similar themes. Then, you can test the profitability of each variation and redirect resources to the one that performs best. Testing the variations will provide a better insight into the most effective media for your customers.
Go beyond testing the advertising medium and evaluate the reactivity of varied demographics. Do deeper in creating audiences targeting various ages, genders, and locations to discover the ideal group to target. Continuous split testing is always beneficial, especially in scenarios where the results extensively differ from what you expect.
Since Facebook’s algorithm cannot handle changes, you can duplicate the split test’s ad set.
Examine And Track Your Data
To optimize your Facebook ROAS, you should consistently examine and track your data. Monitoring and keeping track of your data allows you to delete poorly performing ads, enhance the okay ads and maximize the successful ads.
You should not only constantly monitor your data, but you should ensure its accuracy. For example, over the past two years, Facebook has enhanced its ability to recognize users most likely to convert. So, when you feed Facebook accurate information, it finds users with similar interests like the ones who’ve converted on your site.
It may seem like the eventual goal of using Facebook ads is to boost your ROAS but remember to provide an engaging experience to your current customers. The cost of obtaining a new customer is higher than retaining one. For this reason, make sure to continuously please your existing customer with a great product or service before investing money to acquire a new one.
Boosting ROAS is a very standard process. First, you should always have a concrete idea of your intended target audience and use pixel to collect information deciding on the type of audience. Then, fine-tune your ad sets based on how they perform against each other. Finally, ensure that every ad acts as a funnel to bring in leads to a landing page.
Effective digital marketing is relatively simple if you understand the fundamentals. Get in touch with Stacks today, and you will receive assistance setting up your ads account and maximizing your Facebook ROAS.
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