With Facebook having the second highest market share when it comes to digital ad spending, the question isn’t whether you should be advertising on there (yes, you should). But rather - how can you get the best bang for your buck?

It’s easy to start running Facebook ads, and if you’re not careful with your spending limits you can spend all your advertising budget in no time. However, simply running ads on the platform isn’t enough to guarantee that you’ll achieve your target ROAS (return on ad spend) for your Facebook advertising.

So, if you’re not 100% happy with your existing Facebook ROAS, here are some of the things to consider and apply to achieve better results moving forward.

 

How to Measure your Facebook ROAS

Before we go into detail around how you can calculate your Facebook ROAS, we want to make sure that you’re working with the right data. 

If you’re a retailer with an ecommerce store, you will be able to gather a plethora of data from Facebook regarding the performance of your campaigns, as well as unlock new targeting and campaign options if you’ve installed the Facebook pixel for enhanced tracking. 

If you’re not using the pixel yet, we strongly recommend that you enable it and implement it on your website ASAP. Creating the pixel is easy and implementation can be done in a variety of ways, from using Google Tag Manager to other integration options available with most major ecommerce platforms.

man in front of screen with a projection that could be for measuring Facebook ROAS over time for example

Calculating your Facebook ROAS

Once your Facebook pixel is implemented and working correctly, you’ll be able to track purchases from your Facebook campaigns directly in the Facebook Ads Manager. 

You can then easily calculate your Facebook ROAS with the formula ROAS = Revenue from your Facebook campaigns / Advertising spend. So, for example, if you’ve spent £100 on Facebook ads, and achieved £500 in revenue (purchase value) from the ads, then your ROAS is 5:1, or 500%, so you’re making £5 per £1 spend.

Bear in mind that your ROAS is different from ROI (return on investment) which also accounts for other costs associated with your campaigns. These could be the cost of managing them if you have an agency running them for you, or the cost to produce the assets needed for the campaign.

Taking into account Facebook attribution windows

Another thing to consider when calculating your ROAS using Facebook data is the attribution window you’re looking at. By default, Facebook’s attribution window looks at conversions completed within 1 day of someone viewing an ad or within 28 days of someone clicking on an ad. 

If you want to measure a stricter ROAS using a shorter attribution window, you can change this to 1-day click and 1-day view, so you’re only taking into account the value of conversions completed within 1 day of people interacting with your ads. 

Within the Ads Manager reporting interface you can also further split down this data to see exactly which conversions have click attribution and which ones have view attribution, as you might want to use different target ROAS figures for each type.

What is a Good ROAS for Facebook Ads?

woman thinking about what a good ROAS for Facebook Ads is

We’ve previously discussed some benchmark figures that we would expect to see when it comes to optimised Facebook advertising campaigns across CPC, CPM and more. 

However, when it comes to benchmarking a good Facebook ROAS, there’s several factors at play. As a rule of thumb, we tend to work with a baseline Facebook ROAS of 500% or 5:1 on the paid social campaigns we manage for our clients. But this is just a starting figure.

In some cases, where new customer acquisition and CLV (customer lifetime value) are more important than immediate gains, working with a lower ROAS figure is recommended. We’ve also worked with clients that have tight profit margins which require a baseline ROAS of at least 700% to be profitable. 

We’ve also run campaigns where the results of careful optimisation and higher average order values achieved a baseline Facebook ROAS that was consistently above 1500%, particularly in the fashion sector.

When benchmarking your own ROAS targets, we recommend considering the following:

  • What are your profit margins?
  • How much is a customer worth in the long-run (what customer lifetime value do you see)?
  • Do you need to improve your retention strategy, or grow your customer base aggressively?
  • What ROAS figures do you normally see from other advertising channels such as Paid Search

Improving your Facebook ROAS

Once you have all the data you need, you can make an informed decision and even set different targets for a baseline ROAS figure across your entire account, but having different parameters for acquisition vs retention campaigns, for example. Your ROAS targets might also fluctuate throughout the year, depending on your peak and off-peak periods and the performance you expect to achieve each month.

You’ve set up your Facebook pixel and ROAS targets. You’ve been running campaigns for a while now, and maybe you’re not hitting the original targets, or are wondering if you could drive ROAS even higher to make the most of your marketing efforts.

Regardless of the reason, here are some practical tips that can help you improve the ROAS of your Facebook advertising campaigns.

smiling man looking at his phone, working in a cafe

Optimise your audience targeting

When it comes to improving ROAS, make sure you’re utilising audience segments that are more likely to convert. 

This could be, for example, running dynamic ads served to basket abandoners which tend to see a very high ROAS, or experimenting with lookalike audiences modelled on your VIP buyers, or people who’ve converted in the past 30 days.

Review your landing pages

How compelling and relevant are your landing pages? Does the message of your ads match the information on your website? Are there any barriers to conversion? 

If your other advertising metrics such as CPC and ad relevance are positive, but you’re still not seeing the right return on ad spend, then it may be a case of the website failing to convert the traffic you’re sending its way through Facebook ads. 

In this case, why not run a Conversion Rate Optimisation audit to help you uncover and remove any obstacles to conversions? You can then make data-driven decisions that will help you improve your conversion rates across the board. This can result in better ROAS not just for your paid social campaigns, but for other marketing channels as well.

Choose the right campaign objective

This is one of the most important steps to follow when optimising your Facebook advertising campaigns. Facebook’s own optimisation process is intrinsically linked to the objective of each campaign that you’re running. 

So, if you want more sales, don’t run a Reach or Traffic campaign, but make sure you opt for Conversions and then optimise for Purchases (choosing the right conversion type is also important). This is where the Facebook pixel comes in handy again, as without it you won’t be able to run this type of campaign.

Experiment with different bidding options

If you have a strict ROAS baseline figure you need to work towards, it’s always worth experimenting with different bidding strategies to see which one works best. 

For example, opting for Facebook’s Value Optimisation with Minimum Return on Ad Spend (ROAS) bidding enables you to set a minimum ROAS figure that the platform can use to adjust bids and optimise your campaign in order to achieve your desired minimum ROAS figure.

Still need help?

the Head of Paid Social at Williams Commerce

If you’ve followed these steps, or if you’re not 100% sure on how to implement some of these changes, we can always give you a helping hand and work with you to achieve a higher ROAS for your Facebook campaigns.

Get in touch with Williams Commerce to discuss your digital marketing needs today.