Achieving high ROAS on Facebook Ads: 10 tips & tactics to use for your client reporting
As the digital marketplace continues to swell, it’s more crucial than ever for agencies to maximize their clients’ ad spending—especially on established and widely-used platforms like Facebook. Yet, the question of an ideal ROAS (Return on Ad Spend) remains a mystery to many, particularly due to its fluctuating nature.
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In this article, digital marketing agencies can learn the secrets behind achieving a high ROAS on Facebook Ads through 10 actionable tips and tactics to optimize your clients’ reporting. Whether you’re a seasoned marketer seeking to refine your approach or a newly formed agency hunting for best practices, this resource will act as an invaluable guide when it comes to Facebook advertising.
Table of Contents
- What is a good ROAS for Facebook ads?
- How is measuring ROAS on Facebook different from Google Ads?
- How to calculate ROAS for Facebook Ads
- Tips and tactics for improving ROAS on Facebook Ads
- Frequently asked questions
What is a good ROAS for Facebook ads?
A good ROAS for Facebook ads at minimum would be anything from 4:1 or higher. A ROAS of 4:1 means that for every $1 invested in ads, the business is getting back $4 in revenue, indicating a positive return on investment.
However, this figure may vary depending on your client’s industry, its advertising goals, profit margins, and other factors within a particular campaign. In some cases, some marketers can achieve a ROAS on Facebook ads of 6X and 10X in their ad campaigns (Databox).
Whatever the case may be, you should always monitor and analyze your client’s Facebook ads performance regularly to determine the best ROAS for them within their specific goals and budgets.
How is measuring ROAS on Facebook different from Google Ads?
There are two distinct methods for calculating ROAS on Facebook and Google Ads and each one provides unique insights and challenges. It’s important to understand the difference between the two if you want to navigate these platforms effectively.
First, the audience interaction varies between the two. Google Ads responds to user search intent, showcasing ads to those who are actively in search of a specific product or services. On the contrary, Facebook Ads take an interruption-based approach, displaying ads based on user behavior and thus, interrupting their social media browsing. As a result of these differences, ROAS can vary naturally between the two.
Facebook’s attribution models and conversion tracking also operate differently than Google’s. Facebook uses view-through conversions, which count conversions if users see an ad whether they clicked it or not and converted into a paying customer within a specific timeframe. This holistic approach, while advantageous in capturing the full impact of an ad, can lead to discrepancies when comparing ROAS with Google Ad spend, which primarily calculates based on click-through conversions.
How to calculate ROAS for Facebook Ads
Calculating Facebook ROAS is a fundamental part of determining how successful your ad campaigns are. To calculate your ROAS, divide your total ad revenue by the total ad spend.
ROAS = Total Ad Revenue / Total Ad Spend
For example, if you’ve spent $1,000 on Facebook ads and earned $5,000, your ROAS is 5.
To ensure profitability, it’s crucial to compute your minimum ROAS, too. This is your break-even point for your ad campaign. Do this by dividing the cost of goods sold (COGS) by the average order value (AOV).
Facebook’s custom reporting feature can streamline ROAS calculations and reporting but for a more advanced approach, consider using advertising intelligence tools that offer more in-depth insights. These tools provide a more holistic view of your advertising performance and help you better optimize your campaigns for increased profitability.
Tips and tactics for improving ROAS on Facebook Ads
As we dive into the realm of Facebook Ads, the emphasis on improving ROAS becomes increasingly important. Navigating this advertising platform to maximize your ROAS can feel a bi like you’re charting unexplored territories. However, with the right tactics and a few helpful tips, you’ll be able to expertly guide your advertising strategy toward success.
This list uncovers strategies designed to improve your ROAS, streamline campaign performance, and bolster your client reporting. Let’s dive in.
1. Craft compelling ad creatives
It’s crucial to test different ad creative variations to pinpoint what will best resonate with your target audience and generate the highest ROAS. Implement A/B testing strategies (we’ll talk more about this below) to compare different creative aspects from the imagery and tone of voice to the headline and your call-to-action.
Your arsenal should include eye-catching visuals, engaging ad copy, and strong calls-to-action that entice the reader to visit your client’s website, sign up for their mailing list, or ultimately, make a purchase. The power of testing your ad creatives lie in their ability to provide actionable insights that allow for continues creative refinement, ultimately leading to better campaign performance and a healthier ROAS.
2. Explore different ad formats
Experimentation is key in advertising, especially when it comes to ad formats. The nature of your client’s business, the preferences of their target audience, and your overall campaign objectives should guide your selection.
By diversifying your ad format use, you can cater to different audience behaviors and consumption preferences, potentially increasing engagement and conversions and thereby amplifying your ROAS. Each ad format has its unique benefits and potential drawbacks so it's essential to test various formats on your target audience.
What Facebook ad formats are available?
Facebook offers a plethora of advertising options, including image, video, carousel, and collection ads. Carousel ads specifically can work wonders for e-commerce businesses showcasing various products, while short video ads are better for demonstrating a product in action.
Experience Ads
In addition to these basic ad format options, Facebook also offers immersive ad formats like Instant Experience Ads (formerly known as Canvas Ads), which allow for a full-screen, interactive ad experience. Interactive ads like these have been shown to foster higher engagement rates and often help businesses tell a more captivating story.
Slideshow Ads
Slideshow ads, on the other hand, are a cost-effective alternative to video ads that work well, even on slower internet connections. Furthermore, sponsored messages can enable direct communication with your audience and provide users with a personalized experience.
3. Leverage retargeting
A strong retargeting strategy regularly involves segmentation of your audience based on their interaction level. For example, you can group users who’ve visited a specific product page but haven’t made a purchase and target them with tailored ads promoting that product. You can also create a separate segment for users who’ve abandoned their shopping carts, sending them reminders or offering special deals to nudge them toward completion.
Retargeting is an effective post-purchase strategy, as well. It allows you to upsell or cross-sell to customers who’ve already made a purchase, enhancing customer lifetime value. These advanced retargeting strategies do require a granular approach, but they can have a significant effect on your conversion rates and ROAS, making the extra effort a worthwhile investment.
4. Know your audience
Understanding your audience is the cornerstone of any successful advertising endeavor. Gain a deep understanding of the needs, wants, and pain points of your customer is a vital step to take in optimizing your Facebook ROAS. By grasping the issues your audience faces, you can tailor your ads to offer solutions and make your products or services more attractive. This approach increases the likelihood of conversion by speaking directly to your audience’s needs and makes your advertising more effective, boosting your ROAS.
Utilize Facebook’s Audience Insights tool to gain a detailed understanding of your client’s current and potential customers. Also consider conducting surveys or hosting Q&A sessions to gather feedback directly from your audience. You can regularly monitor comments and messages to identify recurring questions or concerns to gather comprehensive data about your audience, as well.
5. Experiment with lookalike audiences
Leveraging lookalike audiences, created using Facebook Pixel or email list data, can supercharge your Facebook ROAS. Lookalike audiences are groups of Facebook users who share characteristics with your existing customers or audience, making them more likely to be interested in your offerings.
An added benefit of lookalike audiences is their scalability. Once you’ve identified a successful lookalike audience, you can scale your campaigns by expanding the percentage of similarity to your source audience. This means you can reach a larger audience while maintaining a level of similarity to your best performing customers.
However, it’s essential to monitor your performance closely as you scale to ensure that the broader audience is still converting at a rate that delivers a good ROAS. The balance between reach and relevance is the key to leveraging lookalike audiences effectively.
6. Implement a marketing funnel
Creating and implementing a marketing funnel is instrumental in increasing your Facebook ROAS. The marketing funnel stages—awareness, interest, desire, and action—each require different messaging and ad strategies. By mapping out these stages, you can ensure that you’re sending the right message at the right time and guiding prospects towards conversion in a more efficient way. This systematic approach ensures that no potential customer slips through the cracks, and that ultimately improves conversion and ROAS.
Furthermore, it’s crucial to understand that the marketing funnel isn’t a one-time journey. After a prospect has converted into a customer, the focus shifts to maintaining that relationship, fostering loyalty, and encouraging repeat purchases. Post-purchase stages like retention, advocacy, and loyalty play an important role in maximizing customer lifetime value, which significantly improves ROAS over time.
7. Prioritize lead generation
In certain scenarios, focusing on lead generation over immediate sales can improve your ROAS over time. By building an email list or generating leads for future follow-up, you’re creating opportunities for continual engagement. This prolonged interaction fosters trust and brand recognition, increasing the chances of conversion and improved ROAS.
Of course, prioritizing lead generation doesn’t mean neglecting sales. Instead, it means supplementing direct sales efforts with stronger focus on relationship building. An efficient way of generating leads is offering valuable content or resources in exchange for contact information. This could be in the form of an e-book, a discount coupon, or even a free trial. Once leads are acquired, nurture them through email marketing and targeted content to gradually build trust and influence purchase decisions.
A well-maintained lead database enables retargeting and lookalike audience creation, thereby further increasing your campaign’s efficiency and enhancing customer lifetime value.
8. Test your ads before they launch
Testing your advertising campaigns before they launch can prevent costly mistakes and foster a good Facebook ROAS. A/B testing is an effective way to optimize every element of your ads, from creatives to targeting. Through this, you can identify what works and what doesn’t before a full-scale campaign launch, ensuring that your budget is spent most effectively.
This proactive approach leads to improved campaign performance and a more attractive ROAS on Facebook.
9. Benchmark your ads against industry competitors
Benchmarks give you an idea of where your ads stand in comparison to your industry competitors. By understanding the average performance metrics in your industry, you can set realistic goals and gauge your ad performance metrics. If your clients’ ads are underperforming relative to their peers, it might be time to reevaluate your strategy. On the other hand, if they’re outperforming industry standards, you know your strategy is working.
When benchmarking, it’s important to consider metrics beyond ROAS. While ROAS is a primary indicator of ad performance, other metrics like click-through rate, cost per click, and conversion rate also provide useful insights into your ad campaign’s performance. By comparing these metrics with industry standard, you can identify areas where your campaign excels and where it falls short.
10. Lean on historical data
Historical data is an often overlooked but invaluable resource when it comes to improving ROAS. By analyzing past campaigns, you can identify what worked and what didn’t, informing future strategies and decision-making. Leveraging this data can lead to more effective and efficient campaigns, saving you valuable time and resources while boosting your ROAS.
Frequently asked questions
How does the ad objective or campaign goal impact the expected ROAS?
Ad objective or campaign goal significantly influences the expected ROAS. If your campaign goal is brand awareness or reach, you’re aiming for broad exposure rather than immediate sales, so a lower ROAS in the early stages can be expected. However, if the campaign objective is conversions or sales, the ads are specifically targeted to encourage immediate purchases, hence, a higher ROAS should be expected.
Are there any seasonal or temporal factors that influence the average ROAS on Facebook ads?
Seasonal or temporal factors can greatly influence the average ROAS on Facebook Ads. During peak shopping periods like Black Frida, Christmas, and other holiday seasons, competition for ad space increases and can potentially drive up the cost of advertising, possibly reducing your ROAS. However, these periods also typically see higher consumer spending and in the end, that can balance out increased costs.
