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Even though Facebook Ads can be an excellent revenue source for businesses, using it can be a bit tricky for those unfamiliar with the platform.
And with the constant changes Meta has been making recently, even those that are familiar with the platform seem to be struggling.
One of the biggest problems comes down to understanding how Facebook ROAS (return on ad spend) works.
Just the other day, we got this question from a company founder:
“I run an SMB, and we’ve been trying to better leverage Facebook Ads to drive sales. Our Purchase ROAS is lower than the average, and we’d like to improve if we can. Curious what companies seeing ROAS above 1.5 are doing.”
“I run an SMB, and we’ve been trying to better leverage Facebook Ads to drive sales. Our Purchase ROAS is lower than the average, and we’d like to improve if we can. Curious what companies seeing ROAS above 1.5 are doing.”
So, how do you actually optimize your ad spend and maximize performance on Facebook Ads?
Read on as we cover everything you need to know about Facebook ROAS. You’ll learn how to calculate it, what you can expect, and the best practices for getting the most out of your Facebook ads campaigns.
A good ROAS for Facebook ads depends on various factors, including your marketing goal, industry, competitive landscape, and other business specifics.
And while there’s no one-right-ROAS to rule them all, it’s still worth examining how everyone else is doing and drawing conclusions from there.
To gain additional insights into what is good ROAS for FB ads, we surveyed 38 respondents.
Our respondents are:
Most of our respondents are experienced in using Facebook ads for their businesses, while only 5.41% of the respondents stated that they don’t use Facebook ads.
Now, according to the companies we surveyed, the goal SMBs should strive for when it comes to ROAS is at least 3x.
If you’re having trouble determining your business’s ideal ROAS goal, Natasha Rei of Explainerd gives out some insight:
“It is important to note that the ideal ROAS goal will vary depending on factors such as the industry, profit margins, customer acquisition costs, and overall business objectives.
In our case, we have a profit margin of 40%. Achieving a ROAS of 3x means that for every dollar spent on advertising, the business generates $3 in revenue and $1.20 in profit (40% of $3). This level of profitability allows the business to cover advertising costs and have a healthy margin left for other expenses and growth.”
But while most are striving for these numbers, the actual numbers advertisers are seeing are a bit different, according to the data from our Facebook Ads Benchmark Groups.
Specifically, the median ROAS for Facebook ads is 1.64, according to Facebook Ads Benchmarks for SMBs.
When it comes to B2B companies, the median ROAS value is 1.79 out of a sample of 675 contributors.
You will be pleased to know that if you’re a B2B company that runs FB Ads, you can join our benchmark group for free.
The B2B data isn’t much different compared to what we’re seeing from B2C companies.
According to the data from this B2C benchmark group (free to join), the median value for ROAS is 1.8, according to the data from 636 companies.
The only group with ROAS that breaks the 2.0 ceiling is eCommerce.
The median ROAS value for the sample of 192 contributors in our Ecommerce Facebook Ads Performance Benchmarks group is 2.25.
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ROAS goal is a bid strategy option you can set up in Facebook Ads to tell it how to bid in the ad auction.
When you set your ROAS goal, Facebook’s algorithm will try to deliver against that over the campaign’s lifetime, and it will use dynamic bidding to maximize results.
Entering a ROAS goal tells Facebook to aim to get the most purchase value and attempt to keep ROAS around the amount you entered.
Just how important is the Facebook Ads ROAS goal option, and should advertisers prioritize it when setting up their campaigns?
According to our survey, it’s not the most important parameter.
When planning their Facebook ad campaigns, our respondents prioritize Engagement (how people interact with the ads) or Conversion rate (how often ad interactions lead to purchase) the most (27.03% of the respondents voted for each).
The ROAS goal is the third most important thing they focus on in a campaign.
That said, how can you actually set the right Facebook Ads ROAS goal for your campaign?
Here are some of the best practices you can follow to find the ideal ROAS goal for your specific business:
The best way to set realistic ROAS expectations is to take a look at what the rest of your industry is doing and adjust accordingly.
And since it’s highly unlikely you’ll be an immediate outlier from the get-go, it’s important to moderate your expectations here.
Some products have higher potential profit margins, and just because you set your expected ROAS goal to 500 doesn’t mean you’ll be able to achieve it if 1.1 is the most commonly expected value. The overall amount you get heavily depends on your business, your product/service, and its purchase value.
Fortunately, you can use Databox Benchmarks to see exactly how companies similar (in size, revenue, industry, etc.) to yours are doing and set your goals with that in mind.
Another factor you should check out is your average ROAS for similar conversion campaigns. You can use this historical data to raise/lower the amount based on performance.
A good practice is to add a ROAS column to Ads Manager reports on previous campaigns to find historical ROAS data.
Additionally, you can integrate Facebook with Databox in order to be able to pull all the data you need in a simple, easy-to-use dashboard.
This is a good way to grow your brand awareness and increase customer engagement.
It’s the equivalent of getting a 100% return on ad spend, where spending $100 will net you $100 back in purchase value. The advertising campaign will cover its own costs, and it won’t be a drain on your business’ finances.
Additionally, it’s a good way to test the effectiveness of your advertising efforts without losing any money. From there, you can work on optimizing future campaigns in order to generate a positive ROI and increase ROAS.
Related: 8 Ways to Choose the Right Facebook Ad Objectives for Your Agency or SME
It’s basic math — if you want to make a profit, you need to get back more than you invest.
For example, setting a Facebook ROAS goal of 1.2 means you’ll earn back 120% of the money you’ve spent on the ad campaign. For every $100 spent, you’ll make $120, netting you $20 in profit.
Related: Cost Cap vs. Bid Cap: Which One Will Supercharge Your Facebook Ad Campaign?
While you can use Facebook Ads Manager to track your performance, it’s not the most user-friendly of platforms.
Even those who are familiar with the Manager have trouble with the confusing navigation and redundant menu options.
A much simpler way to go about it is to connect Facebook Ads Account with Databox and use it to generate clear and simple-to-use dashboards.
To connect a Facebook Ads Account with Databox, first, you have to go to Data Manager and click +New connection in the upper right corner. Then, type Facebook Ads in the search bar and click the green Connect button that appears when you hover over the Facebook Ads icon.
After that, you’ll see the Activation window. This is where you’ll get a prompt to enter your login credentials for Facebook Ads and authorize the Databox app.
After you’ve done this, you can create a databoard to track your ROAS or pick one of the existing ones from our template gallery.
To create your own databoard, click on Databoards and select the + Create New Databoard followed by the Start Blank option.
Click on the Metric Library icon on the left-hand side of the Designer, click on the All data sources button, and select Facebook Ads from the drop-down menu.
Pick ROAS from the list of pre-build Facebook Ads Datablocks in the Metrics Library and drag-and-drop it onto your Databoard.
If you’d rather use a pre-built template, navigate to Databoards and select Public Templates. Pick Facebook Ads from the Data Source drop-down list.
From there, you can preview templates populated with dummy data or pull them into your account and re-populate them with your own Facebook Ads data.
Want a step-by-step video as well to help you set up Facebook ROAS tracking? Here’s one below.
You can find more about using Facebook Ads with Databox here.
Now that we have the actual tracking process covered, there’s one more important question to tackle here – how often should you actually evaluate your Facebook Ads performance?
According to our survey, most respondents evaluate their Facebook ad performance metrics (including ROAS) at least on a weekly basis.
If there’s one thing universal among all Facebook Ads advertisers, regardless of their business model or industry, it’s that everyone wants to see better ROAS.
And if you’re wondering which factors have the biggest influence on Facebook Ads ROAS, here’s what we found out in our survey.
When asked what had the greatest impact on improving their Facebook Ads ROAS, 42.31% of our respondents voted for crafting compelling ad content and another 34.62% for identifying the right target audience.
But those aren’t the only tactics you can use.
Let’s go through some of the main expert strategies our respondents suggested you use to improve Facebook Ads ROAS:
In the first three seconds of coming across your ad, the prospect must be clear on the fact that it can solve their problem.
There are a lot of different frameworks you can follow to call out their pain points, but make sure you get to the point fast. This is especially important on social media platforms like Facebook, where users aren’t actively looking for solutions.
Sam Wright of Blink SEO adds that “the vast majority of campaigns fail because they focus on telling their audience about a product or service, rather than helping them solve a problem. No amount of audience targeting or clever delivery can make up for bad positioning.”
Want to make sure your Facebook ads are performing and trending in the right direction? There are several types of metrics you should track, from costs to campaign engagement to ad-level engagement, and so on.
Here are a few we’d recommend focusing on.
Tracking these metrics in Facebook Ads Manager can be overwhelming since the tool is not easy to navigate and the visualizations are quite limiting. It’s also a bit time-consuming to combine all the metrics you need in one view.
We’ve made this easier by building a plug-and-play Facebook Ads dashboard that takes your data and automatically visualizes the right metrics to give you an in-depth analysis of your ad performance.
With this Facebook Ads dashboard, you can quickly discover your most popular ads and see which campaigns have the highest ROI, including details such as:
You can easily set it up in just a few clicks – no coding required.
To set up the dashboard, follow these 3 simple steps:
Step 1: Get the template
Step 2: Connect your Facebook Ads account with Databox.
Step 3: Watch your dashboard populate in seconds.
The predisposition to effective marketing always comes down to how well you understand your audience.
Until you know their pain points, what motivates them, what desires they have, and how they think overall, your campaigns won’t hit the mark.
But once you know exactly who you’re talking to, you can use Facebook Ads specific targeting capabilities to reach ready-to-buy audiences.
Jordan Brannon of Coalition Technologies says that they always start with “refining audience targeting, as well as A/B testing with different sets of audience mapping and variations of ad content to have a better understanding of what performs and what does not.”
“For prospecting, narrowed-down audiences along with users’ behaviors/interests/demographics give better results compared to keeping broader audiences. This may differ depending on the account, so we test broader audiences in one ad set and narrowed down audiences in another. We run these simultaneously.
Lookalike is another solid audience type that we run. For retargeting, we build custom audiences based on users’ behaviors, including engaged audiences, product/categories page viewers, newsletter subscribers, etc. We target them separately in different ad sets.”
Ben Arndt from DUNK Basketball is a great example of how well this strategy works:
“We know through analytics and sales data that our key market is 18-49 males who like basketball and are located within a set of 5 of Australia’s capital cities.”
“When we run a campaign on Facebook, we’ll specifically target this group and nobody else. This laser focus ensures optimal spend on ad spend and generally generates a minimum 5x return.”
Dynamic Product Ads (DPA) are a type of Facebook advertising format that allows you to promote relevant products from your catalog to individual users based on their browsing behavior and interests.
DPAs automatically generate personalized ads using information from your product catalog, such as images, titles, descriptions, and prices, to deliver highly targeted and tailored ads to potential customers.
Rajat Chauhan of Ace Infoway is one of our respondents that use Dynamic Product Ads and says that it “proved to be a powerful tactic to drive better results.”
“DPA allowed me to automatically promote relevant products/services to people who have shown interest in them on our website. Implementing a retargeting strategy with personalized ads showcasing the very products and services users have previously shown interest in has yielded remarkable results.
Over the past year, we have witnessed a significant increase in conversions, with a notable surge of 20%. The positive momentum continued into the first quarter of 2023, where we maintained an impressive conversion rate of approximately 15%. Encouraged by these outstanding outcomes, we have extended this highly effective approach to some of our esteemed clients, and it has undeniably become a treasure trove of success for all parties involved.
The power of personalized retargeting ads is undeniable, as they captivate users with tailored content that resonates deeply, ultimately driving them to complete desired actions and delivering exceptional ROI.”
Outlining the goal you want to achieve with your ad can greatly help when optimizing your ROAS.
With clear objectives, you can tailor your targeting, messaging, and ad creative to the desired outcomes, improving both relevance and engagement.
According to Derek Flanzraich of Ness, “many businesses focus on identifying their target audience but do not spend enough time outlining their goals for each of their marketing efforts.”
“This is why we found it critical to define our campaign target to improve our Facebook Ads ROAS. A business that fails to identify what the intention of each ad is will end up getting lost in the metrics leading to a watered-down campaign that returns few results.
Therefore, decide the intent of your ad whether it is to generate leads, acquire thousands of shares, or create a pathway to your landing page, before you design your ad. By identifying the intent of our ads through creating campaign targets, we were able to increase its effectiveness and better enhance our ROAS.”
Lookalike Audiences help you expand your reach to users who resemble your best customers, improving targeting precision and ad relevance.
With this feature, you have a greater likelihood of driving conversions since you can effectively target a larger pool of potential customers who are more likely to engage with your ads.
Meara McNitt of Digital Marketing Miami says that “by using a Facebook Pixel or email list to create lookalike audiences (ideally 3%), you essentially create a perfectly developed buyer persona rather than trying to create one yourself using demographic and behavior details.”
“You should use those details to further refine this lookalike audience based on any specific targeting, such as parents or online shoppers.”
Alan Jones of Locklizard Limited says he saw big success with lookalike audiences and that he used it to “identify users with similar interests and behaviors, resulting in better ad targeting. Alongside this, we optimized our bidding strategy and other creative elements which further improved ROAS by 20%.
Overall, these changes boosted leads and sales for our business or client significantly, ensuring maximum returns from ad campaigns.”
The vast majority of customers appreciate the little details companies do to make them feel special and appreciated.
And one of the things you can do to that effect is send your customers a Thank-You email.
Colin Little of Social Launch Marketing shares that this is one of the tactics she uses to maximize ROAS:
“I personally have my e-commerce clients shoot a short thank you video from the owner to use as a post-purchase retargeting ad”.
“Also, add a nice message in your welcome email from customers and let them know about a secret deal only 1st-time customers get. This will help you snag a few extra orders to boost revenue per customer.”
Are you keeping constant track of your data?
To truly understand all the elements that impact your Facebook ROAS and pinpoint strategies that will have the highest success rate, you need to continuously stay on top of your data.
This also means checking other key metrics in conjunction with Facebook ROAS to get the full performance picture.
Mary Batchelder of Triblio suggests “looking at all the settings at a glance, then unless anything looks glaringly bad, dive deeper on the landing page conversion rate, CTR on different creatives, and targeting.”
It really all depends on their other metrics. If nothing else but ROAS is below benchmarks, then honing in on the post-click experience, but if everything is bad, then… you have a lot of places to check.”
“Looking at all the settings at a glance, then unless anything looks glaringly bad, dive deeper on the landing page conversion rate, CTR on different creatives, and targeting. It really all depends on their other metrics, if nothing else but ROAS is below benchmarks, then honing in on the post-click experience, but if everything is bad then… you have a lot of places to check”
Sr. Digital Marketing Manager at Triblio
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Dayparting is the Facebook Ads feature that allows you to schedule ads to run during specific times of the day when your target audience is most active.
It helps optimize Facebook Ads ROAS by maximizing ad exposure during high-engagement periods.
James Pollard of The Advisor Coach LLC says that this strategy is “particularly effective if you’re running any time-sensitive offers.”
“For example, I’ve seen a lot of people run webinar ads 24/7 even though their webinars are only available during the day.”
“People are much more likely to take advantage of a time-sensitive offer if it’s in the near future. So, if a webinar is running at 11:00 a.m. and 4 p.m. every day, you can get a big boost in ROAS by only showing the ad during the day,” Pollard concludes.
Optimizing a campaign for a conversion-based goal is another useful ROAS-improving strategy.
It allows you to target high-value users who are more likely to convert, which increases the efficiency of your ad spend.
ClickThrough’s Lachlan Kirkwood explains that “selecting a frequently occurring conversion event allows Facebook’s ad algorithm to quickly optimize and deliver the best results.”
“For example – if you’re a relatively new e-commerce store, your conversion objective should be an ‘add to cart event’ as it will acquire more conversions than a ‘purchase’ event. The faster an ad set trains through the learning period, the better ROAS it will produce.”
Use these free social media dashboard examples to see if your campaigns end up driving as many conversions as you desire.
Setting up conversion tracking helps you optimize ROAS and other performance metrics since it provides accurate measurement and attribution of conversions.
By analyzing key conversion metrics (e.g. conversion rates and cost per conversion), you can identify top-performing strategies and better allocate your budget.
Daniella Pozzolungo of PupDigital recommends this strategy and adds that you need to “know exactly what a lead is worth to you and your conversion rate from lead to customer/client.”
“Once you know these numbers, you can test various audiences and ads to see which will eventually generate the most ROAS for you. To optimize, remove any low ROAS ads or ad sets, and always test new ads or ad sets to see how they perform against your goals.”
Meta is constantly making new changes to its platforms and algorithms, and while they are doing it to try and improve user experience, it’s difficult to stay on top of the new updates constantly.
Just when you think you got the hang of it, a new update comes along, and you’re back at square one.
But what are the biggest challenges for SMBs trying to improve their Facebook Ads ROAS?
We asked this in our survey and found that targeting difficulties is the biggest challenge that SMBs encounter when trying to improve Facebook ROAS for about a third of our respondents.
Of course, it’s not the only one. Let’s look at some of these biggest challenges and what our respondents had to say about them.
Even though targeting might seem like a fairly straightforward process on Facebook Ads at first, even the best media buyers in the world can experience difficulties with it.
There are many variables involved and many different things you need to experiment with until you find the jackpot strategy to reach your ideal prospects.
Marcus Arcabascio of Property Search adds that “target audiences are also prone to changing with time.”
“This makes it difficult for us to improve our Facebook ROAS. Finances and effort go to waste if ads don’t connect with our target audience. So now, we run ads on a trial basis to know whether they are working. We then formally run ads based on the results we get during the trials.”
Limited budgets are a common issue and they result in reduced reach and exposure, making it harder for businesses to generate sufficient ad impressions.
Furthermore, with budget constraints, businesses may struggle to allocate sufficient budget to campaigns that drive the highest returns, which leads to missed opportunities.
Hannah P of Eastside Co says that her team has “experienced budget constraints as a challenge for multiple SMB clients who are just starting their Meta advertising, either from scratch or after a period of ad account dormancy.”
“Following the iOS update, it has become more challenging to drive both sales and revenue on Meta platforms. Due to a decrease in remarketing audience data for many clients, we have found that allocating a suitable level of budget to activity designed for growth is extremely important. The challenge is largely in generating a suitable level of conversion activity for each client on a consistent basis, whilst using a good level of limited spending on long-term growth activity also.
We have found that fluctuating the budget across conversion and growth activity where possible is the best method to ensure we can generate both the results the client wants and the results the ad account needs to achieve to develop and market more efficiently in the future.”
This challenge is associated with budget constraints since you do need sufficient funds to get good copywriters for your page, SEO specialists to optimize things like page loading time, designers to give it a professional appearance, and enough resources to test different options.
Donnie Rand of the American Association of Owner Operations, LLC says that “having a small business comes with budget restraints, which makes it difficult to allocate budget for every marketing method.”
“Optimization needs SEO, and for this, you need to buy tools to implement SEO practices. I had difficulty optimizing my website due to a lack of tools.”
Are you putting enough effort into creating quality ads?
Keep in mind that ad quality issues can be harmful on both sides – Facebook will mark them as “low-quality” and may choose not to display them, while users will be less likely to engage with it even if they come across your ad.
When assessing the quality of your ads, keep an eye on all the relevant elements, from the ad copy to visuals and messaging.
Tim Connon of ParamountQuote says that his team immediately “disables any low-performing ads and assesses potential quality issues.”
He mentions that in his case, emojis played a huge role:
“We have noticed ads that did not have as many emojis in them got less attention than the ads we ran that did. This is when we disabled them and looked at the ad copy and added emojis in the future. We revamped the ad copy and added emojis for our next campaign. The ads performed much better after that.”
Demand variations during peak and slow seasons can also significantly impact Facebook ad performance.
Shifting consumer behavior requires businesses to adjust targeting, messaging, and offers to stay relevant. Monitoring performance closely, making data-driven optimizations, and adapting campaigns to align with these changing market conditions is essential.
Additionally, businesses should plan in advance for any seasonal trends to both take advantage of opportunities and mitigate challenges.
Jonathan Aufray of Growth Hackers says that “when improving Facebook ROAS, the most difficult is to fight against seasonality or market fluctuations because this is something you don’t have control over.”
“Improving your target audience, your ad copy, visual or landing page is quite easy, but you can hardly beat a downward market trend.”
“When improving Facebook ROAS, the most difficult is to fight against seasonality or market fluctuations because this is something you don’t have control over. Improving your target audience, your ad copy, visual or landing page is quite easy but you can hardly beat a downward market trend.”
CEO at Growth Hackers
Data-related issues are also quite common.
Incomplete or inaccurate data can lead to misguided decision-making, while a lack of attribution insights can make it difficult to determine which ads are driving conversions.
This issue is something a lot of advertisers deal with when using Facebook Ads Manager due to its complex interface and navigation options.
And when you don’t have proper data on your hands, finding what works and what doesn’t gets that much harder.
Lastly, how much experience you have with media buying and running ads on platforms like Facebook does impact ROAS.
Taking care of the fundamentals is relatively simple, but there are a lot of advanced factors and nuances that can help drastically improve ROAS that only come with experience.
If you want to maximize the return on investment of your Facebook advertising campaigns, you need to keep track of the return on ad spend.
But there’s a lot to keep track of, and you need to get as many of the details right as possible. It takes more than simply knowing how to calculate ROAS for Facebook ads. You need to monitor a variety of metrics and understand how they interact between various ad campaigns and affect your bottom line.
This is where Databox comes in.
It offers over 70 integrations that allow you to connect and automatically pull data from any data source and build eye-catching visualizations that will make understanding your Facebook ROAS and other relevant metrics easy to understand.
With Databox’s dashboards, you can easily track key metrics such as ad spend, conversions, and return on ad spend in real time. You can also set up alerts to notify you of any changes.
The platform’s robust reporting capabilities allow you to create customizable reports to share with your team and stakeholders, providing a clear overview of your campaign performance.
Finally, with Databox’s Benchmark Groups, you can compare your campaign performance to industry averages, helping you identify areas for improvement and allowing you to stay ahead of the competition.
The whole thing is incredibly simple to set up, use, and customize. You can even get help from our customer support team if you’re having any trouble.
Just create your free Databox account and make monitoring, reporting, and benchmarking easier than ever.
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