Increase Your Facebook Ads ROAS With targeting ideas, and secondary metrics

 You can grow your business like crazy if you know how to increase your Return-On-Ad-Spend with Facebook Ads.

Why?

Facebook is the biggest social networking platform in the entire world, with a staggering 2.07 billion users. It also has one of the best advertising platforms in the world that boasts one of the strongest targeting options.

The hardest thing with Facebook Advertising is to keep up with the trend and to know what is working. That’s what we’ll talk about.

My experience

What I learned is that it’s not so much about following what other brands are doing. It’s about understanding your customers and creating advertising that makes them buy. I know this sounds cliché, but everyone hears “videos are the best,” “images are the best,” “it’s all about retargeting,” and, I’m sorry to say, but it’s not about that.

Facebook is a tool, videos and images are tools, and the strength really lies in knowing what makes your customer avatar tick—and want to pull out their credit card. If you haven’t yet figured that out, I recommend doing that first or else Facebook will eat up a lot of your money.

Don’t worry, I’ll help. Here are ten strategies you can use to improve your ROAS with Facebook Ads.

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1) Use Lookalike Audiences Instead of Cold Targeting

This is a big game changer. Once, we worked with a company that was spending $10k per month (we have a case study here) on Facebook Advertising and they hired us to improve their results.

I looked at their ad account and, without even working on their creatives, we took the highest performing ad (which wasn’t profitable) and started testing 150–200 different lookalike audiences. After two weeks, we made their advertising profitable for the first time in six years!

If you don’t know what lookalikes are, they are audiences created by Facebook based on people who took an action on your ad.

The first thing I look at is if our clients are using lookalikes. It has a huge impact on results, more than you could think.

With Facebook ads, you need to focus on two things: your targeting and your creative. Lookalikes solve the problems you might have in targeting the wrong people.

For example, if 1,000 people purchased your product from your Facebook ad, we could group these people into an audience. We could then ask Facebook to find similar people to the people who purchased your product and decide to target them.

Now, on rare occasions where it isn’t the most profitable audience, the rule is ABT: Always Be Testing with Facebook. But 95% of the time it has ended up being more profitable for us.

Try it out.

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2) Target Worldwide

This is huge. I see a lot of people splitting the countries they target, but they have to understand that Facebook ads are about testing, yes, but testing efficiently. On multiple occasions, we end up being surprised to know which countries were the most profitable.

When you find your top-performing countries or even cities, you can create duplicates of your ad to only target those locations. You can trust Facebook to find that for you. It’s way cheaper and most efficient this way (Thank me later).

Now, be careful with South America, Africa, and Asia. They tend to have more fraudulent customers, but they could also be good. From our experience, those countries were never really worth it—but always be testing.

On a side note, it always surprises our clients how much testing we do. Truth is, if you think you are testing enough, you probably aren’t testing enough.

IMPORTANT: if you can’t advertise in other countries because you can only serve those in a certain area, then target the entire area you can cover, no harm done.

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3) Test All Placements

I heard so many people telling me to never target the “right-hand side” or only target the “news feed”. To be honest with you, every type of business and advertising is different. Now, there are some placements that “tend” to be better for certain type of businesses, but if everybody is doing the same thing then you are in a red ocean and you better go in the blue ocean fast.

By testing all placements, you let Facebook optimize for you and you can then see which placements are the most profitable for you to keep spending on. Create duplicates and you’re in business (or maybe you already were?).

Facebook Placements

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4) Test All Ages & Genders

If you want to increase your ROAS, you need to test all ages and genders—except if your advertising is clearly geared towards a certain gender or age group.

For example, if you sell bikinis, your average 35-year-old male will probably not be interested (I learned this the hard way).

I know this is contradicting what the common Facebook advertising blogger says. They all try to make you target something “laser-focused,” like having the smallest audience possible.

Listen, Facebook has a really strong AI and ad placement optimization, and trust me: you can leverage it.

By having small audiences, you drastically reduce the possibilities of testing for Facebook AI and thus don’t leverage it as much.

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5) Start a Conversion and a PPE Ad at the Same Time

Facebook decides to show your ad to more people if people have had a positive experience with it. By running a Pay-Per-Engagement ad alongside your actual conversion ad, you make more people interact with your ad thus increase your positive feedback score, also called relevancy score.

VERY IMPORTANT: you need take your “post ID” and use it to create your PPE advertising so that the likes, comments, and shares will also go into the version of your ad that is currently being used as a conversion ad.

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6) Improve Your “Positive Feedback” Score

Well, I could definitely write an entire article on this topic. Essentially, the better your “positive feedback” score, the more Facebook increases your visibility. This means you’ll pay less to reach more people. It will decrease the cost of your conversions, which will increase your ROAS.

Does that make sense? I made it complicated for no reason. To put it simply: you give more content to Facebook that their users like and they will reward you with more money in your pocket. Isn’t that how business works? Win-win situations.

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7) Only Keep the Profitable Ads

That almost seems too stupid to be said, but it isn’t. When you test, you always have this thing going in your head: when should I turn off this ad? Have I spent enough?

When should you turn off your ad? Well, unless you have $5M to spend per month on Facebook ads (call me if you do), there is no point in spending your money on ten different ads if one is more successful.

The question is: are you satisfied with your ROAS? If yes, then you should scale and focus on what’s working. If you want better results and are ready to take the risk then keep testing.

I’m saying risk because if you test new creatives, you will lose more money at the beginning, but if you do it right, you should find something that gives you cheaper conversions fast enough.

The reality is you could also never find something as profitable as your best converting creative and lose $5,000 in testing. Just be smart, okay? I trust you.

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8) Create Stronger Retargeting

Retargeting is my area of expertise. I love retargeting and you probably know why. It just gives such amazing results. We usually get eight times better results from retargeting than from cold ads. Now, everyone flatters themselves with their eight-fold returns, but what if I told you they were actually missing out on a big opportunity?

You have to see Facebook as a big machine where you spend money to acquire audiences. Most companies don’t make money targeting cold audiences, meaning audiences that haven’t seen them before. They make money by retargeting those who have engaged with their brands.

Now, the cool part with Facebook is you have so many options to create audiences. You can even retarget the people who have visited your website in the past seven days, 7–14 days, 14–28 days, etc. It’s based on time and action taken, which means this article can’t even begin explaining how deep I went into the subject of creating well crafted retargeting campaigns.

One word of advice, if you are getting 8–9x results, you can do better. Never settle! Okay? Never ever ever ever settle for less than what you can accomplish. I’m kidding, you can sometimes, I won’t judge you.

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9) Improve Your Landing Page Design

Again, we’re not going to write another article inside an article (article-ception), but I’ll give you a few pointers as to how you can increase the conversion rate of your landing page.

First thing is to make it beautiful. I know, I know, not the most precise advice, but 99% of websites and landing pages lack design.

My advice: try to have a congruent style that people can follow throughout the website. Second thing: test and track data. Set up Google Analytics and track the changes you made to your website (this is one of my favorite activities—I love knowing what works best).

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10) Understand the ABT of Facebook Ads

Facebook Advertising is essentially just a platform that enables you to test your marketing creatives. As you’ll realize, your ability to create good advertising depends on your ability to know what your audience likes and that, my friend, takes time and discipline.

ABT stands for Always Be Testing because tests give you data and that’s the best way to keep improving what you’ve already found. So the more you spend, the better your advertising will be.

If I had $120,000 to spend on Facebook Ads within a year, I would spend $7,000 a month and test consistently, but I would also wait until I find something that gives me satisfying (profitable) results to spend the rest.

I see a lot of commonalities between Facebook Advertising and the stock market. There are times to buy, times to hold, times to sell out. If your results aren’t too great for two to three months, why not stop and change strategy entirely before getting back into it?

A big game with Facebook is managing your budget, which is a topic for another article. To know when to spend and when to not spend is the ultimate philosophical question of Facebook ads.

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Final Words on Improving Your ROAS

While increasing your ROAS seems like it’s the ultimate goal of using Facebook Advertising, don’t forget to deliver an amazing experience to your customers.

The cost to acquire a customer will always be bigger than keeping a customer. I’ve heard that too many times, but I’ve also made the mistake too many times.

Focusing on acquisition rather than retention is literally like working all day on meeting new people but not taking care of your close friends. If you’re not making new friends, you have none.

It’s us humans, always wanting more, but the biggest businesses spend 95% of their time on their customers and 5% on acquisition. That is definitely saying something.

Hope this helped, and let us know if you know other ways that weren’t mentioned above that could increase our own ROAS in the future.

Penny the Pirate| OPSM

The first children’s story that’s also an eye test

Another powerful campaign consistently noted for its originality, Penny the Pirate has won 35 major international and national awards and was named the world’s best marketing campaign of 2016 in the annual Warc rankings.

Based on the discovery that “one in six kids have a vision problem and for many it’s undetected”, research uncovered by Saatchi & Saatchi revealed the reasons behind this statistic amounted to children’s’ fear of optometrists or the fact that many live in remote areas, far from reach.

To tackle this issue, the idea for Penny the Pirate was born, leading to the world’s first medical tool that tests children’s eye health as you read to them. Made available for free as a book and interactive app, this innovative campaign not only helped to address the growing issue at its core, but successfully positioned OPSM as a global brand committed to eye health.

On track to providing 300,000 children with an eye test, Penny has reportedly led to a huge increase in children’s’ eyewear sales.

Melinda Spencer, VP of Marketing for OPSM says: “We passionately wanted to create a useful tool that helps time poor parents to screen their children’s vision from the comfort of their own home, either through the book or through the app in a fun way and are overjoyed that it has been recognised internationally.”

Saatchi &Saatchi commented:

One in six kids have a vision problem and for many it’s undetected. This is because children don’t like coming into scary optometrists, or they live in remote areas, far from reach. As a brand that’s committed to eye health across Australia and New Zealand, eyecare provider OPSM needed to address this growing issue.

We took the eye test to children by creating Penny the Pirate, available for free as a book and interactive app, it’s the first medical tool to test children’s eye health as you a read a story to them. There wasn’t a standard eye screening tool for children, so we had to start from scratch.

We collaborated with illustrator/author Kevin Waldron, and the Department of Vision Sciences at Melbourne University, to identify three critical tests that would detect the most common vision problems for children, and then integrated them into a story. This resulted in a Therapeutic Goods Administration approved screening tool in the form of an interactive storybook. When books were finished with, parents could share their copy via a “Pass It On” program.

OneSight, a not-for-profit organization, is also using Penny to reach children across remote regions of Australia, helping them test more eyes than ever, because it’s more efficient, accurate and engaging than previous methods.

Penny is on track to give 300,000 children an eye test, which has already seen a huge increase in kids eyewear sales since launch. The app has also reached number one Health & Fitness App in the App Store

How to Measure Those Three Little Words: Return on Investment by Jim Bergeson

In this article, you'll learn...

• The basics of calculating marketing ROI
• A more nuanced and comprehensive way to calculate ROI

Sure, marketers like to hear those familiar three little words: "I love you." But, let's face it, no three words are more beautiful and pulse-racing to hear while on the job than "return on investment" (ROI).

Marketers are on the hook. Measuring ROI on each marketing activity is critical to proving our effectiveness and competing for scarce resources. Evidence that supports that notion: Nearly two-thirds of surveyed CMOs (63%) think ROI will be the primary measure of their effectiveness by 2015.

But what was profoundly revealing was that 56% of surveyed CMOs said they feel inadequately prepared to manage ROI. That means the pressure is on to calculate ROI in ways that yield accurate, supportable numbers, particularly pertaining to marketing expenditures.

CMOs who understand financial and statistical analysis are putting themselves on a level playing field with their brethren in other corporate departments, because those CMOs are using the same measuring stick to prove effectiveness.

Measuring ROI effectively will help marketers add value to their organizations and attract their fair share of resources.

Basic ROI Calculation

The math is basic, but the components aren't always easy to figure out. Any solid ROI calculation should measure revenue generated by the marketing campaign, profit margin on the items sold, and marketing-related expenses. Yes, profit margin can be difficult for organizations to quantify because it incorporates the cost of operations, but it's a necessary ingredient to calculate ROI accurately.

Keep in mind that to be able to quantify revenue generated "by the marketing campaign," those campaigns need to have been designed to capture responses in the form of revenue from sales.

In its simplest form, the calculation looks like this:

ROI = Campaign Revenue X Profit Margin / Cost of Campaign

That simple ROI calculation is a solid metric for getting a quick "temperature check" on campaign performance. The basic calculation works for basic comparisons, such as "Campaign 1 is doing better than Campaign 2" or "we improved this month over last month."

That formula is also useful for measuring pilot marketing campaigns, since those efforts are often launched with one-time investment costs or temporary extraordinary expenses that wouldn't apply once project efficiencies are captured in a full-blown campaign.

Though that basic ROI calculation is a good starting point and it keeps things reasonably simple, it lacks several key enhancements. The calculation sometimes doesn't factor in all of the costs associated with the campaign, and it doesn't consider the impact of control groups. Both of those are required to evaluate the actual revenue generated by a campaign.

The Advanced Version

Marketing will need to take a more advanced approach to ROI calculation if it wants to play in the same ballpark as the other departments in your company—and if it wants to be evaluated by similar financial measures.

Advanced ROI calculations should include all of the costs associated with having a marketing department: salaries, benefits, office space, computers, software, Marketing's share of the bills (heat, electricity, etc.), plus all of the direct campaign costs. All of those costs added together would give you the "cost of campaign" figure in the formula.

Also important in advanced approaches to calculating ROI is to factor in dollars generated and purchases generated from both the target group and a control group. Doing so will help you answer important questions, such as whether the average purchase dollar amount was higher from the target group or the control group... or whether the target group purchased at a higher rate than the control group.

If the average number of purchases generated from the control group and the target group is the same, consider the difference in the average dollars generated. Similarly, if the average dollar amount spent is the same between both groups, the most important factor is the difference in average number of purchases generated.

First, determine the number of sales from the target group that would have taken place without the marketing campaign by measuring the average number of purchases generated in the control group. Now, multiply that number by the average purchase amount ($) from the control group. Subtract that number from the total target group revenue to determine accurate campaign revenue. The equation looks like this:

Campaign Revenue = Total Target Group Revenue – (Average Amount of Control Group Purchases X Number of Transactions That Would Have Occurred Anyway)

That calculation factors out the transactions that would have occurred without the new marketing campaign, leaving the incremental revenue gain from the higher average transaction amount of the target group. Taken further, such calculations could enable a marketer to compute statistical tests of significance for the target and control group differences.

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Hopefully, this article will help you apply the tools to excavate the important numbers that improve marketing ROI, and, coincidentally, reveal ways that you can get closer to the customer.

Jim Bergeson is president and CEO of Bridgz Marketing Group in Minneapolis, a BI WORLDWIDE company and member of ICOM, the 50-nation network of independent marketing communications organizations.