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Monja Dobnik on May 28, 2021 • 4 minute read
Hey everyone, and welcome to another episode of Data Snacks. I’m Monja, product marketer here at Databox, and today we’re going to talk about return on ad spend by Facebook ads. Specifically how to track other metrics alongside ROAS in order to better understand why certain ads are more profitable than others.
In this episode of Data Snacks, I’m going to show you:
Let’s get into it.
Here’s what I want to see. I want to track return on ad spend by ad to pinpoint my most effective ones in terms of ROI. But I also want to include other custom metrics like cost per click, cost per thousand impressions, and click-through rate so that I have the ability to analyze and understand why certain ads might be more profitable than others.
To do this, I’m going to drag and drop the Advanced table visualization into my dashboard. From there, I’m going to select the metrics I need making sure all metrics include the ‘by Ad’ dimension for each column in my table.
I’m also going to select ROAS by Ad as the column that the entire table should be sorted by. I’m doing this because I want to order the ads from highest to lowest in terms of ROAS in my table, which makes it easier to analyze the rest of my cost metrics by my most or least profitable ads.
Once I’ve got my table put together, you can see that it’s very easy to interpret. I’ve got my ads ordered from highest return to lowest return, and I can also track the CPC, CPM, and CTR of each of these campaigns too. This will make it so much easier to dig into the why behind the performance of your ads.
Here are some things I’ll be looking for. First I’ll be checking for ads with a low ROAS and a higher CPM. A high CPM is typically a sign that the targeting you selected was too narrow. It was too small of an audience, therefore you had fewer overall impressions, which drove the price of your ad up. And typically if your CPM is high, your ROAS will be low. For these ads, you might want to look at adjusting your targeting in order to broaden the audience a bit, which will drive down the cost for impressions. An acceptable ROAS is influenced by profit margins, operating expenses, and the overall health of the business. Generally, an acceptable ROIs benchmark is a four to one ratio. So $4 revenue to $1 in ad spend.
I’ll also be looking at the ads with a high cost per click. In these cases, I’m specifically looking for ads that have a reasonable CPM, but a high CPC. Now this means that enough people are seeing my ad, but they are not clicking, which is driving my costs up yet resulting in a lesser return. It could be a targeting issue; so are the people seeing my ad the right audience? It could be an ad quality issue; is my copy engaging enough, is the ad creative enough to stop people from scrolling? Or it could be a placement issue; would this ad work better in the newsfeed or on the sidebar? Now digging into CPC in relation to CPM and ROAS will help me better understand the answers to these questions.
Finally, I’ll be looking for ads with a low click-through rate. We want our ads to have a low CPC, but a high CTR. If you’re not seeing that you can track CTR by ad to better understand which ads are actually resonating with the audience you are targeting.
There are certainly more insights you can pull from this visualization. These examples were just a few to get you started. At a high level, tracking your ROAS in this way will allow you to draw a correlation between impressions and clicks by ad and your overall return on your ad spend.
Want our help setting this report up? Start a chat with our dashboard experts and they’ll help build this report for you.
Just create your free Databox account and reach out to our team either via chat or email. See you next time.
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