Facebook advertising metrics: What do they mean and what should you aim for?

by | Mar 11, 2021 | Facebook Ads: Getting Started, Facebook Ads: Prepping for success, Facebook Advertising | 0 comments

When the success of a Facebook advertising campaign depends on your ability to test and refine your ads, you’ve got to know how to read the dashboard. It’s not as complicated as it might seem at first, but the jargon certainly doesn’t help.

To help you get a handle on your Facebook advertising metrics, I’ve written a quick guide to what the key terms mean, with some benchmarks where appropriate.

I’ve worked with dozens of clients who own and manage online stores and most of them start out feeling overwhelmed by Facebook ads.

But, once they’ve got a grasp on the language and what each metric stands for, confidence quickly grows.

So let’s bust the jargon and put you in the driving seat. It’s time to get to the bottom of what those Facebook advertising metrics really mean.

 

Facebook advertising audiences and funnels

 

Before we cover those key advertising metrics, a quick breakdown of the terminology that informs social media advertising strategy.

I’ll use these terms when I explain what some of Facebook’s ad metrics mean, so it’s important that you understand them first.

 

1. Cold, warm and hot audiences

 

When we talk about a hot, warm or cold audience, we’re talking about the likelihood to buy. Is this particular group of potential customers aware of the brand or product? Are they considering it? Do they want it?

audience temperature

2. Top, middle and bottom of funnel

 

In Facebook advertising, we use a funnel approach to narrow down a cold audience into a smaller group that is more likely to buy.

Top of funnel (TOFU / TOF) = building awareness with a cold, unknown audience

Middle of funnel (MOFU / MOF) = generating interest with a warmer, targeted audience

Bottom of funnel (BOFU / BOF) = converting the sale with the hot, narrow audience

After purchase = increasing customer lifetime value with those who have already bought

Facebook ads funnel

Facebook advertising metrics, translated

 

Now for the detail behind the dashboard. Which Facebook advertising metrics should you be looking out for and what do they mean?

I’ve included some loose guidance on benchmarks or costs, but honestly — the only numbers that matter are your own.

Costs and targets vary by business, depending on the vertical, average order value (AOV) and costs to produce, sell and ship products.

Some business owners will need or want a much higher profit than others, and some will be investing more heavily in Facebook ads while others spread their spend across various marketing channels.

You should never compare your results and metrics with another business. Every business should approach their marketing and advertising in a way that is tailored to them — there’s no one size fits all here.

Your only aim should be to improve upon (or at the very least keep consistent) your own results.

5 key metrics for a successful Facebook advertising strategy

 

1. CPM – Cost per 1,000 impressions

How much will it cost to show your ad to the intended audience?

TOFU/cold audiences = lower cost

BOFU/warmer audiences = higher cost

Peak seasons = higher cost

Why? Because when there’s a smaller audience to reach or more competition, the cost of placement goes up.

Just like you’d pay more for a primetime TV spot or a page in an exclusive magazine, the cost of Facebook advertising goes up as the returns do (or as they are expected to, at least — there are a lot of factors at play).

 

Strong creative = lower cost

Why? Because the algorithms favour good content — ads included.

If your posts perform well organically and you have an engaged audience, you’ll see the benefit of that reflected in your advertising efforts.

 

 

2. CTR – Click-through rate and Outbound CTR

Of all the people who saw your ad, what percentage clicked?

TOFU: >1%

MOFU: higher percentage

BOFU: higher still

Why? Because the warmer the audience, the more likely they should be to click.

 

Under 1%? This may indicate that your creative isn’t working. This isn’t always the case — I’ve had ads with a click-through rate lower than 1% that still bring in a good return. So review it in combination with other metrics.

Either way, lower than 1% CTR and I would always suggest trying to improve on the creative/copy first and foremost.

Again, strong creative = lower cost

I would also review the audiences and try out some different segments to test and compare the results.

 

3. CPA – Cost per acquisition (or per purchase)

How much is each sale costing you?

In combination with ROAS (return on ad spend, below) this is the most important guiding metric on your Facebook ads dashboard.

Benchmark? I hate to say it, but it depends.

It depends on your average order value (AOV) and how much it costs you to produce, sell, pack and ship your product.

Gross profit = AOV — Costs to produce, sell, pack and ship that order

CPA target = Gross profit — Target net profit

(Target net profit is the desired profit you want to keep from each sale after advertising costs.)

 

 

4. ROAS – Return on advertising spend

For every £1 you spend on ads, how many £s are you getting back?

This is a crucial metric. The simplest way of saying it is that your ROAS measures how effectively you’re spending your Facebook advertising budget.

If your ROAS is 4:1, that means you’re making £4 for every £1 invested in ads.

ROAS = AOV / CPA target

Benchmark? Again, targets vary by business and will depend on a number of things.

 

 

5. Blended ROAS or MER – Marketing efficiency ratio

Your blended ROAS, sometimes referred to as marketing efficiency ratio (MER), is the return on all of your marketing spend across channels.

MER = (Revenue / marketing cost) x 100

I advise my clients to make blended ROAS their main target with Facebook advertising ROAS as a secondary.

Scale based on blended ROAS

Optimise audiences and creative based on Facebook advertising ROAS/CPA (and other metrics such as add to carts/cost per add to cart and click through rates)

 

Whether you’re advertising only on Facebook/Instagram or across multiple platforms, this is an important metric to keep track of for several reasons.

 

    1. The Facebook dashboard will not track every purchase. It only records purchases made within 7 days of someone clicking on an ad, and it can’t track all ad-prompted purchases because some people opt out of tracking and it’s not always the case that the person seeing the ad makes the purchase (this can especially be the case for higher value purchases such as furniture)
    2. There can be a delay in Facebook data hitting your dashboard. It’s not unheard of for Facebook data to be incorrect due to Facebook issues. Your revenue, on the other hand, will always be up to date and reliable in real-time.
    3. There can be an overlap between platforms. If you are advertising in multiple places they won’t be mutually exclusive (the same customer might click through from different places at different times, for example) and often multiple platforms will claim the sale.

There are more metrics you can track, of course, but these are the big ones to understand and keep a close eye on when you are getting started with Facebook ads.

I hope you feel clearer now and more confident the next time you visit your Facebook advertising dashboard. Don’t let the jargon knock you down — Facebook ads aren’t a dark art, it just takes time and a willingness to learn.

Still stuck? Ask me for help.

 

I work with independent retailers to manage Facebook advertising campaigns and I offer one-to-one consultations.

Book a POWER HOUR with me and we’ll dig into the data together. I can explain things in more detail or work with you to analyse some of your key metrics on a live campaign.

Email hello@carlystringer.com or call me on 07834 685 384 to book your troubleshooting session.

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