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How To Optimize Your Facebook Ads ROAS (Return On Ad Spend)

By November 13, 2020No Comments

If your business isn’t on Facebook, you’re missing out, and you’re missing out big. I’ll be the first to admit that for the last few years, I have not been a fan of social as a way to spend ad budget, for those who have a budget to work with. I’ve always been a fan of search marketing as I strongly believe intent marketing is your best chance to convert. That is, until I really started to understand the power of creating funneled content, and of course, really started to understand and dig deep into Facebook ads. For those who live under a rock, the Facebook ads platform does serve as the Instagram ads platform.

The issue, as I see it today, on the landscape of Facebook and Instagram ads is not that businesses aren’t advertising on the platform, it’s moreso the fact that the business that enter, do not have enough budget to withstand the testing period to optimize for ROAS.

Depending on what your business goals are, you may fall into one of the following categories:

  1. ROAS doesn’t matter as the goal of the business is top of funnel marekting initiatives.
  2. ROAS matters and haven’t been able to get a return, maybe even a negative return so the business dropped the channel.
  3. ROAS is positive but needs to be higher to scale on the channel.

THE FACEBOOK PIXEL IS KEY

Many marketers soley depend on GA (Google Analytics) for key data on return, etc. Make sure you install the Facebook pixel on your site to track this data. This is key to build LOOKALIKE audiences which we’ll touch on soon which if you’re not doing, will change the game for you.

CALCULATING FACEBOOK ROAS

In my last post titled, “What Is Considered A ‘GOOD’ Return On Ad Spend (ROAS): An Analysis For E-Commerce Businesses,” I touched on the formula and how you calculate ROAS.

REVENUE / ADVERTISING COST = ROAS

The key for Facebook is that you make sure you calculate ROAS on the ad group level and not campaign level. I’ve made this mistake in the past and it’s a mistake that can really cost you to scale your ads profitably.

LESSONS I’VE LEARND IN OPTIMIZING FACEBOOK ADS FOR HIGHER ROAS

Here are things I’ve really learned that are key to optimizing Facebook ROAS:

  1. When creating a campaign, make sure you create a good variation of ad groups to test different audiences as you never know what group will perform better than others when targeting.
  2. As lesson #1, different copy from title to description will make a big difference on performance. YOU NEED TO TEST all these elements as there will be a winner, and there will be plenty of losers.
  3. Like lesson #1 and #2, images are key. Don’t think because you like a picture with your ad, it will work. Continuous testing of images will optimize to see what works.
  4. Because 1-3 are all optimization tests that are a must to ensure finding profitable ads, it’s important that you do not just pause campaigns with various ad groups before digging into the ROAS of EACH ad group. I’ve made the mistake of pausing campaigns and when I’ve looked at all the ad sets, there were actually some winners in there that performed well enough to drive growth and sales.
  5. Give Facebook a chance to let it’s algorithm do what it needs to do to optimize depending on the campaign goal.
  6. Creating lookalike audiences and retargeting campaigns are key to higher ROAS campaigns. Lookalike audiences really work, it’s AWESOME.
  7. Conversion campaigns have much higher ROAS than traffic campaigns, just ensure you have solid landing pages to get the job done. Many times, negative ROAS is due to poor ad quality, landing pages, etc. Give yourself the best chance at doing your part so the Facebook algo can do its part.

SETTING UP LOOKALIKE AUDIENCES

See how to set up lookalike audiences and more! This is a great tutorial and worth your time.

Pablo Palatnik

Pablo Palatnik

Pablo Palatnik is an industry veteran in e-commerce & digital marketing with over 20 years experience. He successfully built and sold businesses; he now serves as the VP of Global E-Commerce for cosmetic dermatology brand DS Laboratories. Pablo is the Founder of Etrend.com.

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