Factors that impact your Facebook ROAS …
… and how to interpret them
As any good marketer knows, the satisfaction of a boss or a customer who is a little too stressed is ultimately down to very little. Maximising the return on investment, more commonly known as ROAS. This small indicator, when it is greater than 1, is the indisputable sign that the strategy put in place is profitable. The marketer’s job is to optimise this key metric in order to obtain a satisfactory return on investment according to his objectives.
The other metrics, although important for analysing a social commerce campaign and defining a strategy, are all ultimately used to maximise the Facebook ROAS: a good CTR means, for example, lower CPCs, hence more qualified traffic and more likely to increase the conversion rate, and therefore the ROAS. We detail here all the marketing performance indicators to follow for your campaigns. Lower CPMs allow you to reach more people for the same amount of money, so you have a better chance of converting, and ultimately improving your ROAS.
As you will have understood, if you have reached this point, the ROAS is the main indicator of the profitability of a Facebook campaign. So how do you maximise your ROAS on Facebook (and sleep soundly knowing that your clients or bosses are doing the same)?
Facebook ROAS: definition and calculation
ROAS is the ratio of total revenues generated to total expenses incurred:
ROAS = Total revenue / total expenses
A ROAS equal to 2, for example, means that each euro spent on the platform will have brought you 2. Simple, isn’t it?
As a good marketer, you should now ask yourself what level of ROAS is satisfactory. The answer is that there is no answer: it depends on your business objectives and the amount you choose to invest. For example, a ROAS of 6 per €10 invested will ultimately have much less impact on your turnover than a ROAS of 1.8 per €100k invested. The key is therefore to define a target ROAS that makes sense for your objectives and budgets.
Solutions to improve your Facebook ROAS
Now that you’re a little more familiar with this all-important metric, you probably want to know how to get a ROAS of 2,4,12 or even 200 (don’t dream too much!). Follow our tips to become the profitability expert your clients can’t live without!
Work on your acquisition funnel in a relevant way
The first key to improving your Facebook ROAS is to have a consistent full-funnel strategy. It can’t be repeated enough, but a good Facebook ads strategy lies in the optimisation of its customer touchpoints and the adaptation of its messaging according to the level of engagement of the targeted individual.
For example, a person who has never heard of the product or service you are promoting will not be addressed in the same way as a repeat visitor to the site. Communicating in a personalised way with ads adapted to each stage of the conversion funnel is fundamental if you hope to achieve a satisfactory return.
But how does this translate into concrete action on Facebook?
- Address the top of the funnel: run engagement, video view or traffic campaigns depending on your objectives, to bring cold audiences into your conversion funnel.
- Run conversion campaigns optimised for cold traffic: Target by affinity, or via the Facebook lookalike tool for example. Also trust the Facebook algorithm by targeting broad. At best you will be profitable with these campaigns, at worst it will feed your retargeting base with qualified potential buyers.
- Do retargeting! Retargeting allows you to target people who already know your brand or product, because they have for example visited your site, added to your cart, or engaged with your Instagram account. Re-target these people with the right messaging! It is very often with this type of audience that we find the best conversion rates and ROAS levels. However, be careful with the size of your audience, always make sure you feed the top of the funnel enough to avoid saturating your retargetting.
Optimising your ads = improving your Facebook ROAS
As a marketing expert, you should know that another element is extremely important to the success of an advertising campaign. This is, of course, the ads that you run! Improve the quality of your ads, to increase your CTR and lower your CPCs (which improves ROAS, remember?)
Work on your creations
Produce creative that is consistent with your corporate identity. Show your product, make your value proposition clear. Show people, it often works better! Monitor your CTR to judge the relevance of a creative to a target.
Test, test and test again!
There is no secret to knowing what works on which target: you have to try! Test several types of advertising formats, content, static, video, GIF, carousel … Vary the communication angles, mentioning your main USPs: are you cheaper than the competition? Do you have a more innovative technology? Do you offer free delivery? Find the angle that makes the most sense for your audience and maximize its distribution to the most receptive targets.
Work on your offer and your website
You now address all individuals according to the stage of the funnel they are at, with adapted messaging and creatives. That’s great! Your number of visitors is skyrocketing, but you can’t convert them. Maybe it’s because you haven’t optimised your offer or your customer journey on your website enough.
- Try to increase your average basket: As you know since you have obviously read the previous paragraphs assiduously, the ROAS depends on both your expenses and your income. Obviously, the best way to maximise it is to increase your income. To do this, you have two options: increase the number of units sold, or … increase your average basket. This is the lever on which you can act the most: you can, for example, set up a discount coupon, a bundle offer or a promotion with a product offered for the purchase of another product. These types of promotions often encourage people to buy more units and therefore increase your average basket.
- Vary and adapt your landing pages: Many studies prove that the more in tune a creative message is with the landing page it refers to, the higher the conversion rate. Define your LPs strategically to improve your conversion rates, and therefore … your profitability! If you bring in people via a specific business angle, make sure you have an associated LP so that you don’t “lose” your visitors.
- Identify potential blocking points: Put yourself in the customer’s shoes: you are interested in a product, the price suits you, and you decide to place an order. You add the product to the shopping cart with a view to initiating payment, and there you have it. Additional delivery charges are added! The price goes up a lot and dissuades you from making the purchase. Here you will have lost a sale because you were not transparent enough in your delivery charges. So, it is important to identify the potential reasons why a customer may abandon a purchase, and to work on them to avoid a high rate of loss. Here are some of the most common blocking points in e-commerce: delivery costs, a payment method not taken into account, a bug in the application of a promotion, a delivery time that is too long, etc.
Accepting a lower budget in certain cases
If as a marketer you have many cards in your hand to influence a bad trend on your Facebook ROAS, you have to keep in mind that you are not a wizard straight out of Hogwarts. There are factors outside of you and your involvement that can work against you. For example, some periods of the year are traditionally quieter (July/August!) while others see ROAS explode (hello end or beginning of month pay!)
- Study the market: If your ROAS is down, check whether there is an exogenous cause: school holidays? a promotional period on which you are not positioned? an upset geopolitical situation? Many everyday factors can impact your ROAS, and a good Facebook indicator to see this is the CPM. Often, your CPMs will increase or decrease depending on what is happening in the market.
- Accept to lower your budgets: This can be frustrating, especially when you manage to spread a budget over a long period, but sometimes it is important, even necessary, to lower your expenses in order to hope to see your ROAS increase. One of the indicators that can be interesting to look at before making the decision to lower the budget is the frequency of your ads: if this is too high over a long period of time, then your market may be saturated, you have reached all the potential people and spending more is no longer useful.
As you can see, there are a lot of levers you can play with to maximise your Facebook ROAS. Optimising your funnel, your ads and your website are all solutions that will allow you to improve your Facebook performance and become the number one expert on the profitability of your campaigns.
If you want to go even further, and understand everything about how the Facebook ads market works, we also recommend this article on the factors that can influence your CPM.
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