Monitoring and optimising key Facebook ad metrics is probably the most important factor when it comes to the success of any campaign. If you have just started advertising on Facebook, the plethora of numbers and different metrics available can be a bit daunting. However, there’s no need to despair as we’ve covered all you need to know about monitoring and optimising Facebook Ad Metrics.
Digital Marketing KPIs or Key Performance Indicators are quantifiable goals which help track and measure success. KPIs are a useful way for marketers to set expectations and prove that their work is having a positive impact.
There are many reasons why KPIs are important, but here are three that really stand out:
- KPIs are critical for performance management
- They support and influence business objectives
- They foster team and personal growth
To outsiders, the success of digital marketing activity can be seen as difficult to measure but that really isn’t the case. In fact, it’s normally easier to measure progress for a digital campaign than an offline one.
Facebook pixels are codes set up on your website to track marketing activities. Once set up correctly we can rest easy as leads, conversions, purchases, or anything else will be properly quantified. It is from these values that marketers and managers can calculate their return on adSpend (ROAS).
When it comes to setting and tracking your marketing KPIs, not all marketers and business owners are fully aware of the usual suspects. Choosing what to measure is as important (or maybe more important) as the numbers itself. You don’t really want to go wrong at this stage but don’t worry. It can be simple.
The importance of finding the right KPI for your campaign
Often KPIs are associated to a “conversion”. This can be defined as any valuable online interaction somebody has with your website. It’s up to you to define what to track as a conversion depending on what you’re looking to achieve. As a general rule, conversions should be specific (i.e. easy to define and measure) and of significant benefit to the business.
What you should measure:
- Quantifiable metrics which align with the goals of your company. These will often be sales or leads. If you work for a start-up it might be too soon to measure leads, but you can always measure reach and engagement.
What you shouldn’t measure:
- Things you can’t impact. If you can’t change it, there’s no point in it being a KPI.
What are the top 10 KPI for Facebook Marketing?
Facebook marketing done right communicates your brand’s core message and personality, attracts and engages users, and converts likes into customers. But too often, a business will jump onto Facebook without a plan or a clear idea of what success really means for them.
That is why the Campaign Objectives exists, to clarify what your goals are and what you want to achieve with your Facebook marketing efforts, the timeframe to reach them, the roadmap of how to achieve it and finally: DEFINE METRICS.
Just like Google maps shows you the best route to take, KPIs guide you towards a successful Facebook marketing campaign.
It is through your objective that you will choose your main KPIs. The list below shows you a broad view of KPIs across different objectives:
There are several other KPIs that you should be tracking in order to execute a more successful marketing campaign. No one wants to support a marketing activity that’s losing money. By tracking the right marketing KPIs, your company will be able to adjust various strategies and budgets.
Without the right ones, however, your company might be reporting and making decisions based on misleading information.
Now that you know what the most important metrics are, the next step is understanding what numbers you should be aiming for. That depends a lot on your product, your audience, and lifetime value of your customer. We will go through this in a minute, but first, let’s have a look at what the benchmarks are for each industry.
Facebook Benchmarks for each industry
“How do I stack up against my competitors?”
We hear this question all the time from our clients. The data-driven marketer doesn’t just want to know how her ad is doing; she wants to know how it’s doing against similar ads by her competitors.
We will now show you the data you need to truly benchmark your ads performance against your industry. After all, we know from experience that with great data comes great ad strategy.
Average Click Through Rate (CTR)
With an average click through rate (CTR) for Facebook Ads of 0.90%, across all industries, anything above 1% is understood as quite successful for the platform.
Industries that reach a higher benchmark are legal (1.61%), retail (1.59%), beauty (1.16%), apparel (1.24%) and fitness (1.01%). It is no surprise that these industries can use highly engaging and high-quality pictures, and therefore, performs particularly well on visual platforms such as Facebook and Instagram.
Average Cost Per Click (CPC) on Facebook
The average cost per click (CPC) across different industries is $1.72 USD, but this depends a lot on the sizes of audiences that brands are targeting. The more specific your audience is, higher your CPC will be.
Apparel is definitely the best industries to advertise on Facebook in terms of cost per click ($0.45 per click), followed by travel and hospitality ($0.63) and other retailers industries ($0.70). As I mentioned, these industries usually target the largest audiences and that is why we can see their average CPC well below one dollar.
Average Conversion Rates on Facebook
Conversion rates on Facebook usually reaches an average of 9.21%, which is considered high for digital marketing channels. Fitness (14.29%) and education (13.58%) are the most successful industries in terms of conversions rates. Employment (11.73%), healthcare (11%), real estate (10.68%) and B2B (10.63%), are not far behind though.
Average Cost Per Action on Facebook
Now, cost per action is very relative as it depends on your product, your cost and your lifetime customer value. The average CPA we see on Facebook is around $18, but again, this is a very tricky KPI to benchmark.
Education industry sees an average CPA of $7.85, while auto and tech services have around $45-50 CPA. Clearly, the lifetime value of a new client for these industries is much higher making the investment worthwhile after all.
How to find out the right KPIs for your ads
Here at Filed, we use our platform to find our KPIs but you can do it yourself through a few formulas on a spreadsheet.
It all starts by finding out your golden CPA! This reflects your customer’s lifetime value, and it should be a number that you are comfortable with paying per customer in order to get a return on the advertising investment.
Say you’re selling baseball hats online. For the ease of the example, we’ll say that every hat is $15.00. You work out your target CPA by figuring out how much you can afford to spend on marketing to sell a hat. Let’s say your cost breakdown looks like this:
$15 for the sale:
- 30% for the cost of the product ($4.50)
- 15% for the cost of shipping and inventory ($2.25)
- 10% for the administrative and marketing costs ($1.50)
This totals $8.25 in costs. If you need to make $2/hat sale to have a profitable business, it means you can only afford $4.75 as a CPA ($15 – $8.25 – $2.00 = $4.75). You have to spend less than $4.25 (on average) to build a profitable business.
Now, in order to understand more about your KPIs, you should follow the following methodology:
Let’s say you are selling luxury glasses and you have already calculated that your CPA should be around $20. The table below indicates that for every order (which means one conversion) you are willing to pay $20. Considering you have conversion rate of 1.7%, you will then need 59 clicks, at $0.34 each, to ensure a successful conversion.
The problem this marketer is facing then, is that the conversion rate and CPC don’t follow the average benchmark expected. Therefore, for this case, the advertiser needs to improve the Ads or Audience, in order to increase their conversion rate and be able to pay more for a click (as $0.34 is not realistic).
This study is very important for any marketeer to understand not only its KPIs, but also, if their expectations are realistic.
Another important factor to analyse is website performance. You need to understand the behaviour of your customer across your website. What is the path that are going through, where do they leave? How can you improve it?
Optimising KPIs is all about understand the performance of your campaigns, ad sets, ads, traffic and website behaviour. Keep this is mind always!
How this can change your campaigns on the long run
Knowing your KPIs will ensure success on your campaigns for the future. As we pointed out, you not only need to have realistic expectations but now understand how you can also apply these insights to your advantage.
You can now, with realistic values, bid with a Target CPA or use Bid cap on your campaigns, which ensures you stay on budget. In addition, you can better understand which audiences are working better for you, according to their conversion rate, CTR and CPC. Are you willing to pay more on CPC on audiences that brings less CPA? Maybe the answer is yes. It all comes down to your product.
Making use of these KPIs will help you to get a better understanding of how your company is performing. If you have access to such information, it becomes much easier to adjust your content to your users’ preferences. It is still important to figure out your company’s own KPIs, but the ones we have talked about above will give you a good base for improving your Facebook game.
Please always remember that the KPIs which you choose for your analysis should represent your very own goals. Benchmarks are here to help you stay in line, but it all comes out to your business value.
It’s important to emphasize that there is no ‘one-size-fits-all’ approach to digital marketing analytics, so always keep in mind that the perfect set of social media KPIs can only be identified on a case-by-case basis. Of course, we’re always here to help you find the right KPIs.