What’s the first thing you look at when you open your Facebook Business Manager in the morning? How are my campaigns performing? It puts a smile on my face when I see all my campaigns performing with a really solid ROAS. A great start to the workday! It’s an amazing feeling knowing we’re doubling or tripling our clients' money, right? But eventually, the moment comes... the ROAS drops. But hey, you don’t have to stop the campaign and start a new one right away. Now is the time to stay focused and get that campaign back on track.
A. You want to boost your ROAS again
1. Fresh content:
Naturally, your visuals will wear out over time. That’s why swapping out underperforming content is often a surefire way to succeed.
2. Cost/ROAS capping:
To ensure profitability, it usually helps to adjust your bidding strategy intelligently.
3. New target audiences:
Of course, audiences wear out too. New or untapped target groups can breathe fresh life into your campaign. Targeting is everything. After all, you don’t want to overlook any potential audience.
B. Your ROAS never really got off the ground
KPIs – The right benchmark for greater performance marketing success
Without KPIs, you wouldn’t know where you stand. And if you don’t know where you stand, you can’t improve anything. So now is the time to take a closer look.
When KPIs are clearly defined from the start, everyone knows where the priorities lie and can work toward achieving those goals to drive the company forward. Most importantly, these metrics give us the insight to act quickly, identify potential problems, and, of course, fix them. Depending on your company’s goals, the priority of different KPIs will vary. Only by setting clear goals can you identify and analyze the metrics that truly matter to you.
In my opinion, no KPI has to hit a specific threshold.
“Your CTR must be at least 5%! Your CPC must be under €1!”
“Your video must be watched at least halfway through!”
Yes, these are all metrics we can use as a guide. But at the end of the day, we all want to produce profitable ads, and we measure those solely by "Return on Ad Spend."
But as mentioned before, there will eventually come a moment when you see that your ROAS is no longer profitable.
That threshold should be clear beforehand, as profitability can vary significantly depending on the product and the company. For one product, the lower limit might be 1.6, while for others, it might be below 1.
But what now? What should I be looking at, and which KPIs are important right now?
- Is the CPA/CPO too high?
- Is the CTR too low and the CPC too high?
- Is the frequency too high?
- Is your reach large enough?
- Is your ad actually relevant?
When looking at CPA/CPO, it’s important to note that it’s not just your ads that are decisive, but above all your website conversions. The value should be viewed differently depending on the product or service (meaning that with a low retail price, the CPO must naturally be significantly lower than with a very high retail price).
To really react and boost your ROAS, we need further metrics. If we add click-through rate (CTR) and cost per click (CPC) to the mix, we know more...
Are people actually clicking?
Your click-through rate (CTR) indicates the percentage of people reached by your ad who actually click on it. Your cost per click (CPC) is strongly influenced by your CTR. If many people click on your ads, your CTR increases and your CPC decreases. The ad appears to be successful because it is achieving its goal. If you are paying too much per purchase or lead despite good CTR and CPC values, you most likely have a conversion problem.
Lower the budget
If your frequency is relatively high, you might want to dial back the budget a bit, as you can quickly overwhelm your target audience. If your ad has been running for several weeks, your audience may simply lose interest. It’s no wonder your ROAS drops. However, there are two points you can check and address here.
- Swap out your content. Changing the image often works wonders!
- Is your reach actually large enough?
Because Facebook loves large target audiences!
Check your targeting to see if there is room for improvement and if you can reach other groups with your ad to increase your number of conversions and lower your CPO.
Is your target audience simply not interested?
The relevance score is a confusing metric for many, but it often provides a useful point of orientation. Of course, if it’s very high, it means the content is engaging and well-received by your target audience. At the same time, your ROAS can be extremely high and profitable even with a very low relevance score. The problem is that Facebook only counts interactions (likes, hearts, comments, shares, etc.) for the relevance score and does not take sales into account. That is why it is so important to ignore this value if the ad is highly profitable.
Metrics express your success or failure.
Without metrics, you wouldn't know where you stand. And if you don't know where you stand, you can't improve anything. Of course, there are other ways to react and drive your ROAS back up. But the most important thing is to stay on top of it and react quickly. If you apply these tips, I am sure you will soon experience another "ROAS high" and be able to smile again when you open your laptop at work!
Sidenote:
The return rate – an often forgotten KPI. Sometimes the ROAS can be great and the conversion value extremely high. However, if the return rate exceeds all of that, you obviously need to work on a completely different area. Here, too, the rule is: react quickly and optimize!
