Lots of times clients don’t know what is the realistic KPI they need to follow when they are observing FB ads.
They are still comparing results to what was happening in their account 1 or 2 years ago.
And they want the same performance no matter what TODAY.
But the issue here is:
1 – FB is more expensive than it was 6 months ago, 12 months, or 2 years ago
2 – Lots of conversions is not visible after iOS14 changes in FB analytics, so maybe 10-50% of sales are missing
3 – There are a lot more competitors nowadays who are fighting for the clicks
4 – Buyers today are not like they were 1 or 2 years ago. They are more aware of how the ads are working so it’s harder and harder to make them buy
5 – Product offers are in average made bad, so clients get very bad conversions on their website
Now, as many clients don’t know all this and how it affects the performance for which we (Media Buyers) are responsible, there is a lack of ‘communication’ between us.
And this communication is the foundation for the expectation on both sides.
When I am analyzing the new accounts or the accounts that are not working, I first calculate the average % conversion from clicks to purchases in their ad account for the last 30 days.
If I see more than 1000 clicks to their website, then I can already see a little of what is going on and my analysis can already tell me what can be the possible cause of the performance.
Is it the creativity, the offer, the audience, or something else?
I will give you an example here:
One of our clients wants the CPA at $25-30 for the product that costs $50 on their website.
Based on lots of campaign tests, we see that the average CPA we can get no matter what type of ad creatives and formats we test is $56 on average.
The average CPC is $1.56.
When I calculate the % of conversion compared to clicks, I see it is 2.8%.
How do I calculate this?
I sum the number of conversions by 100 and divide by the number of clicks sent to the offer.
So it means for 100 link clicks less than 3 people will buy their product.
So $158 divided by 3 people is $56, and that is what they see as the average CPA in their account.
Now to make their offer to work under their KPI, their average CPA needs to be 2x cheaper. 🙂
So how to achieve this?
As their creatives are very engaging (lots of likes and comments), we know the creatives are not the issue.
As their targeted country is the US, we know that CPC $15.6 on average is very standard and that it is hard to get any lower for this type of audience.
So creatives and audiences are out.
What is still in?
The offer and the data that is missing in FB analytics.
As we see in their website that around 20% of conversions are missing and FB is their main traffic source, we know that we need to get 30% better conversion on their landing page to help this client to be profitable.
So the first step is to explain to the customer that 20% of data on average is missing so he/she knows that the actual CPA is lower than what they see in the FB manager.
The second step is to suggest to them to work on a better offer and a better product page.
And that is crucial!
Usually, this is the breaker in our performance and then we can say how good we are!
And what should they do?
We suggest they create a bundle offer that can increase the AOV so that they can pay more for the cost of FB. (Mark will be very happy when they read this right?)
If their offer was one product for the $50 sale price, we suggest then making a specific landing page where they present buy 2 and get 1 free package for $99.
With this, they can maybe then afford to have $56 CPA in FB, and with 20% data missing that would be around $40-45.
Can this be profitable for them?
I guess still no, but if they increase the conversion on their website by 1-2%, this can be a huge spike.
Their average conversion will then drop to around $20-25.
And this will probably be very profitable for them, especially if they add on top of that some custom add-on, like a product upsell or cross-sale.
I hope you see the thinking behind this so you understand how important it is to know the right KPI you’re following in your FB manager.
At the end of the day, the metrics don’t lie.
And you need to know exactly how to calculate your metrics and measure them correctly.
It will help you to sell more at the right costs of Facebook ads, so you can achieve the profitability you deserve. 🙂