For entrepreneurs, Facebook ads can be an affordable yet incredibly powerful way to start marketing to the right audience.
One of the trickiest things about Facebook, though, is figuring out what metrics you should be tracking.
When it comes to paid advertising, measurement is crucial.
If you're not quantifying your results, you'll have a very hard time figuring out what's working and what isn't.
You'll end up wasting money on ads that just don't convert.
But which metrics should you actually measure?
Social media comes with more than its fair share of what you might call “vanity metrics.”
These are numbers that look impressive on paper, but aren't reliably correlated with actual sales, rendering them useless.
In a recent podcast and accompanying blog post from Social Media Examiner, the author interviews Facebook advertising specialist Zach Spuckler.
He explains that there are two discrete sets of advertising metrics you need to track.
You need to monitor two sets of Facebook advertising metrics. Start with the raw ad metrics, especially if you’re offering something for free. These metrics, such as conversion cost, click-through rate, and so on, are ones you can measure without doing any analysis.
First, make sure your ad is reaching people on Facebook. If Facebook isn’t pushing out your ad, your audience might be too small. Or Facebook’s frequent updates, which have lately been happening on weekends, can cause glitches in your ads. So if you set up an ad on the weekend and Facebook doesn’t pick it up, you may need to set up the ad again. When all else fails, reach out to Facebook support.
Next, see if people are clicking your ad. You want at least a 1% to 1.5% click-through rate. With a 1% click-through rate, 1 out of every 100 people who see your ad visit the landing page.
Finally, check your landing page conversion rate. On a free offer, make sure you’re converting between 30% and 40%.
When Zach begins looking at running a profitable campaign (instead of one for a free offer), he focuses on a different set of metrics.
First, keep an eye on cost per lead (CPL). Keep in mind that you won’t know what the CPL is until you start spending money to run your ads. Every industry is different, and generally speaking, B2B leads cost more to acquire than B2C leads.
Second is earnings per lead. You need to know the value of your leads. If your product or service costs $500 and converts at 2%, that means for every 100 leads, you sell two and make $1,000. When you crunch the numbers (that is, $1,000/100 leads), you see that you earn $10 for every lead. As long as your CPL is lower than the value of your lead, you’ll make money.
Zach emphasizes that it’s okay to feel ecstatic or have knots in your stomach or however you feel about your ad performance. But don’t use those feelings to make decisions about your ads.
Instead, focus on the CPL and lead value metrics. For example, Zach ran a ton of Facebook ads for a recent affiliate launch. They spent more money than any of the affiliates in the promo and placed in the top three. However, Zach did very little work compared to the other participants; instead, he watched and trusted his metrics.
Although these metrics aren’t perfect, they’re still a sound basis for making business decisions. Most people get caught up in how much they spend per lead.
When you look at the internal cost and earning metrics, you shift from the solopreneur mindset of “I need to spend $10 and make as much as I can” to the business mindset of “I’m not looking at spending money; I’m looking at lead acquisition cost and customer acquisition value.” These hardcore numbers are the ones that matter in a brick-and-mortar or Fortune 500 company, although the metrics are adjusted for the online marketing space.
You can check out the full podcast over at Social Media Examiner.
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