Over the years, Facebook has remained a powerful advertising tool. Though you can track the social ROI of your Facebook advertising efforts by determining the clicks, likes, shares, etc., it’s time to go beyond this: how many Facebook users visited your website and made a purchase? How many new customers signed up? Is there any increase in the checkout conversions?
To understand the impact your Facebook ads drive, you need to know about the essential metrics that help you measure the ROI of your Facebook advertising efforts.
Here are six ways to measure your ROI on your Facebook ads:
Cost Per Thousand Impressions (CPM)
‘Impressions’ refers to how many times your Facebook ad was shown to your target audience. If you aim to increase brand awareness among your potential customers through your Facebook ads, you should ensure that your ad have higher impressions. However, there is a cost associated with placing your ad with higher number of impressions. That’s when you need to know about Cost Per Thousand Impressions (CPM) of your Facebook ads.
How to calculate CPM: CPM = cost of Facebook advertising x 1000 / number of ad impressions
How it helps measure Facebook Advertising ROI: If your CPM is low, you can expect a higher ROI.
Click-Through Rate (CTR)
The higher number of times your Facebook ad is clicked on, the higher is the probability that your potential customers will visit your website because they clicked on your Facebook ad. This is when you need to know the Click-Through Rate (CTR) of your ads.
How to calculate CTR: CTR = Number of clicks on ads / number of impressions
How it helps measure Facebook Advertising ROI: A higher CTR indicates that more people are interested in your ad and will likely make a purchase by visiting your website. If the CTR is high, you can expect a higher ROI.
Cost Per Click (CPC)
It’s used to measure the cost of each click. If you want to drive higher interest without spending a lot on your ads, then you need to ensure that you spend on Facebook ads that have lower CPCs.
How to calculate CPC: CPC = Total ad cost / Number of Clicks
How it helps measure Facebook Advertising ROI: If the CPC of your Facebook ad campaign is low, it will yield a higher ROI.
Conversions reveal the actions your potential customers take while they’re on your website. This may include adding your product to the cart, entering an email address, or even making the final purchase. Once you have calculated the conversion rate, you’ll be able to know the probability that your website’s visitors will take the action.
How to calculate conversion rate: Conversion rate = Number of conversions / Number of clicks
How it helps measure Facebook Advertising ROI: Before advertising, if you choose one of your products that has the highest conversion rate, there are higher chances that your ROI will be high.
Cost Per Action (CPA)
Many businesses use this metric to evaluate their Facebook advertising efforts as it enables them to know the cost associated with their potential customers’ actions on their website.
How to calculate CPA: CPA = Advertising cost / Number of conversions
How it helps measure Facebook Advertising ROI: If the CPA is low, this indicates that the ROI is high. Also, it shows that you’re getting a higher number of conversions without increasing your ad spend.
Return on Ad Spend (ROAS)
If you plan to drive immediate sales from Facebook advertising, then this is an ideal metric to measure your ROI.
How to calculate ROAS: ROAS = Revenue / Advertising Cost
How it helps measure Facebook Advertising ROI: If the Return on Ad Spend is higher, this indicates that your ROI is also high.