How to Analyze Your Facebook Ad Results: 7 Metrics to Track
Calculating your social media success from your ad spend is a little more complex than measuring the number of likes or follows. There are a few terms that are important such as purchase conversion rate, cost per purchase, earnings per lead, cost per lead or click, and the click-through rate. These are the metrics you will be using in your ad campaigns.
1. Return on Ad Spend (ROAS) is the revenue you receive for every dollar spent on ad spend. This metric will help you understand the results of your social media campaigns making sure that you are getting enough money back for what you are spending. To calculate ROAS just take the revenue and divide by the ad spend. When you do this calculation and have a result of more than $1 you are making money, less and you are losing money. ROI may be a more realistic calculation because it includes all the costs associated with a campaign and not just the ad spend.
2. Purchase conversion value. Facebook has conversion metrics that easily and quickly track how many sales are made from your advertising efforts. Instead of manually calculating the number of sales going into your account you can just install Facebook Pixel. If you want to do it manually all you need to do is multiply the items sold by their purchase price. Obviously, if your purchase conversion value is above 1$ you are making money, below zero and your campaign is making nothing or in fact, losing money.
3. Cost per purchase (CPA) is a good way to find out how much ad spend is required to sell one unit and allows you to quickly determine what your profit is on a single product. With Facebook Pixel this is automatically calculated under cost per purchase in Ads Manager. You can use the purchase conversion value and divide it by the cost per purchase to get your ROAS. If your product costs are less than the value you are receiving you are making money. When your profit margin is negative you are losing money.
4. Leads. A lead is when a potential customer is identified, who expresses some interest in your products and services. This could be people querying something via your website, a person who signs up for your newsletters, or new followers to your social media accounts. With e-commerce converting leads to sales happens automatically and is easy to track, therefore the leads element is canceled out.
5. Earnings per lead. You could calculate the amount of revenue you are earning per lead or click depending on which metric you prefer. Earning per lead (EPL) is total revenue divided by the number of leads acquired to generate the revenue, and earnings per click (EPC) is the total revenue earned by the number of clicks on your website. How your revenue is generated will determine which method you use. Purchase conversion value divided by the leads or clicks is your earnings per lead or click. This will help you be more scientific about the money you spend.
6. Cost per lead. CPL/CPC are two acronyms you may have used often in your business and can be used for any costs associated with making a sale. To calculate your CPC or CPL just use the amount of ad spend for Facebook and divide it by the amount you spent on ads to the cost per lead or cost per click. You can use this figure to estimate your future spending, revenue, and profit.
7. Click through rate is another metric to determine how well your sales process is performing. Your click-through rate shows how engaging your content is and whether your chosen audience is responding favorably to your ads. The standard you should be aiming for must be higher than 1.5% to show real success, if you aren’t getting that ratio you need to revisit your content and find out what is affecting it. This is a good time to test whether your content resonates with the right audience. In Facebook terms, the click-through rate is your engagement rate and can be calculated as engagement + impressions.
Do you know now how to calculate your social media success from your ad spend?