What is a Good ROAS for Facebook Ads?
What is a good ROAS for Facebook Ads?
This is a question that every advertiser should ask themselves before launching a campaign. Simply put, your return on ad spend (ROAS) is the amount of money you make back from each dollar you spend on advertising.
In order to determine what is a good ROAS for Facebook Ads, you need to consider your advertising goals and objectives. At Growth Hackers we guided a fashion to achieve a 4.7X ROAS in just 3 months on Facebook Ads by aligning campaigns with clear objectives and careful spend optimization.
If your goal is simply to generate awareness or increase brand visibility, then a lower Return On Ad Spend may be acceptable. However, if your goal is to generate sales or leads, then you will need to ensure that your ROAS is high enough to cover the cost of your ad spend and still leave you with a profit.
How Do You Calculate Facebook ROAS?
To calculate your Return On Ad Spend, simply divide your total revenue by your total ad spend. For example, if you spent $100 on ads and generated $200 in sales, then your ROAS would be 2 ($200/$100).
What is Considered a Good Facebook ROAS?
Now that you know how to calculate your ROAS, you need to decide what is a good ROAS for Facebook Ads. This will vary depending on your advertising goals, but generally speaking, a standard ROAS benchmark for Facebook Ads is anything above 1.5.
This means that for every $1 you spend on advertising, you will make back $1.50 in sales. Anything below 1.5 is considered to be average, while anything below 1 is considered to be poor.
If you consider the various types of businesses in the industry, we can categorize them into two broad sections:
1. eCommerce brands and companies that earn revenue directly
Calculating the return on ad spending for eCommerce brands is straightforward enough. Simply divide the average of the product value ordered by the total value spent on advertising to get the target ROAS. At Growth Hackers, we treat ROAS calculation like balancing a scale: every dollar spent must weigh against the revenue it generates to keep your business profitable.
2. Businesses dependent on lead generation and sales
For such businesses, the ROAS depends on multiple factors like conversion rates and lead value. Moreover, the end ROAS also depends on the product being sold.
However, it is clear that generating sales through ROAS relies heavily on three elements: The return margins, total revenue, and the operating costs.
A benchmark to stand by is to at least aim for a ROAS that’s twice your advertising investment. When one of our B2B clients struggled to hit profitable ROAS, Growth Hackers analyzed their lead value, conversion metrics, and costs, guiding them to campaigns that consistently returned twice their ad investment.
Do you want to maximize your ROAS on Facebook Ads?
Contact Growth Hackers
What You Should Expect When Dealing with ROAS
It’s important to keep in mind that your ROAS will fluctuate over time. Seasonal changes, changes in your target audience, and even changes in the algorithm can all affect your ROAS.
As such, it is important to regularly monitor your ROAS and adjust your ad campaigns accordingly. At Growth Hackers we view ROAS like a weather forecast: knowing it will fluctuate lets you plan your campaigns strategically, adjusting spend and bids to stay on track.
It is also worth noting that your ad spend will likely increase. This is because you’ll need to bid more for keywords in order to get the higher placement necessary to drive conversions. Additionally, you may need to adjust your budget frequently as keyword prices can fluctuate quite a bit.
This is when using a ROAS calculator can come handy. By understanding how much revenue you make per ad spend, you can understand your cost per acquisition and define whether you’re making enough sales for the amount your spend.
Finally, it’s important to have realistic expectations when it comes to results. A high Return On Ad Spend doesn’t always mean that you’ll see a huge return on investment right away. Instead, focus on long-term goals and consider ROAS one of many factors that contribute to success.
If you’re thinking about implementing ROAS advertising campaigns, or if you’re already running one, keep these things in mind and you’ll be on your way to success.
Why Should You Track ROAS for Facebook Ad Campaigns?
There are a few key reasons why tracking your ROAS for Facebook ads is important:
- It allows you to see how much revenue you’re generating for every dollar you’re spending on Facebook advertising. This is important because it allows you to gauge the effectiveness of your advertising campaign and make adjustments accordingly.
- It provides valuable insights into which ad campaigns are performing well and which ones aren’t. This information can be used to fine-tune your ad strategy and improve your overall results.
- It gives you a goal to strive for. By setting and tracking your return on ad spend goals, you can ensure that you’re always working towards improving your results and well within your advertising budget.
- It can help you justify your ad spend to yourself or to your boss. If you’re able to show a positive ROAS on your profit margins, it’s easier to argue that your ad spend is worth it.
- Finally, tracking your money spent can simply make you feel good about the progress you’re making with your Facebook campaigns. Seeing a positive return on your investment is always a good feeling!
Before Growth Hackers introduced systematic ROAS tracking for one of our SaaS clients, they often wasted ad dollars on underperforming campaigns; after monitoring returns, we helped them fine-tune strategy, improve profitability, and gain clear insight into what works.
What Can You Do to Increase Your Facebook Ads ROAS? Top 8 Tips and Tricks
Contrary to popular belief, Facebook advertising is far from being outdated.
Even today FB serves as a popular social media platform, with 2 billion+ active users. Moreover, running a Facebook ad campaign is more cost-effective than doing the same on other similar platforms, with an average click-through rate of $1.35.
However, with competition increasing for paid ad frequency and the market getting saturated with multiple businesses cropping up on the online platform, ad targeting without proper execution will cost you heavily.
So, how do you effectively streamline your marketing funnel by running Facebook ads and thus increase Facebook ROAS? Keep reading to find out.
1. Be Practical
Before you start planning your ad campaign, it’s important to take a step back and set some goals. What are you hoping to achieve with your ad campaign? Are you looking to boost brand awareness or drive sales?
Once you have a clear understanding of your goals, you can start creating ad copy that is designed to achieve those specific objectives. It’s also important to keep your target audience in mind when creating ad copy.
What kind of language will resonate with them? What kind of messaging will speak to their needs and interests?
By taking the time to understand your target people, you’ll be able to create ad copy that is more likely to resonate with them and drive results.
When one of our beauty clients struggled with low-performing ads, Growth Hackers refocused their strategy on clear objectives and audience-centric messaging, producing campaigns that delivered both awareness and conversions.
2. Create Effective Ads
There are a few factors that determine ad quality and there are a several things you can do to optimize ads for maximum impact. First, make sure your Facebook posts are relevant and interesting to your target audience. Detailed targeting ensures that your ads are being seen by people who are most likely to be interested in what you’re selling.
Second, take advantage of Facebook’s extensive options for ad customization. You can specify the age, gender, location, and interests of the people you want to reach with your ads. Employ Facebook Pixel to monitor your website visitor’s actions.
You can also choose the placement of your ads, so they appear in the news feed, right column, or on mobile devices. Growth Hackers has helped an eCommerce client improve ad performance by 57% by creating highly targeted, customized Facebook ads and using A/B testing to optimize every element.
Finally, don’t forget to A/B split test your ads. Try different images, headlines, and call-to-action buttons to see what works best with your audience. By testing different versions of your ad, you’ll be able to fine-tune your campaign for maximum impact.
3. Track your Results
Facebook ads are powerful for driving results, but only if they’re properly managed. One of the most important aspects of Facebook ads management is tracking results. By tracking your Facebook ad results, you can identify areas for improvement and make changes that will boost your ROAS (return on ad spend).
Additionally, by using the right FB tools, you will be able to track results accurately, which will help you understand the buying process and pinpoint where customers drop off. As a result, tracking Facebook ad results is essential for any business that wants to get the most out of their Facebook advertising.
When one of our B2C clients couldn’t pinpoint why conversions were dropping, Growth Hackers implemented precise Facebook tracking tools (Supermetrics, Agency Analytics and Hyros), revealing bottlenecks and enabling changes that boosted ROAS and engagement.
Are you ready to increase and strengthen your Facebook Ads’ ROAS?
Work with Growth Hackers
4. Employ Custom Audiences
When potential customers see relevant ads from businesses they already know and trust, they’re more likely to convert. That’s where custom audiences come in.
At Growth Hackers we see custom audiences like a VIP guest list: showing your ads to people who already care increases the chances of conversions.
A custom audience is a group of people who have already interacted with your business in some way. They might be people who have visited your website, signed up for your newsletter, or used your app.
By targeting your ads to a custom audience, you can boost your Facebook Ads ROAS. And the best part is that it’s easy to set up. All you need is a list of potential customers and Facebook will take care of the rest.
So if you’re looking for a way to improve your Facebook Ads performance, consider using custom audiences. It could be just the thing you need to boost your ROAS and reach your marketing goals.
5. Consider Adding Long-Tail Keywords
As the landscape of online marketing changes, so too must the strategies that businesses use to reach their target audiences. One shift that has taken place in recent years is the move from general keywords to long-tail keywords.
Long-tail keywords are specific phrases that are much more likely to be used by quality prospects who are further along in the buying cycle. As a result, businesses that focus on long-tail keywords can see a significant boost in their return on investment (ROI).
There are a number of reasons why long-tail keywords are so effective.
- First, they allow businesses to target specific audiences with laser precision. By targeting specific demographics, businesses can be sure that they are reaching the right people with their message.
- Second, long-tail keywords tend to result in less competition and lower costs per click (CPC). This means that businesses can get more bang for their buck when they invest in long-tail keywords.
- Finally, long-tail keywords tend to result in higher conversion rates. This is because prospects who use long-tail keywords are generally further along in the buying cycle and therefore more likely to convert into paying customers.
For businesses looking to boost their Facebook ROAS, investing in long-tail keywords is a smart business decision.
6. Invest in Facebook Ads Manager
When it comes to Facebook ads, the key to success is finding the right balance between reach and conversions. That’s where Facebook Ads Manager comes in.
By investing in Ads Manager, you can create specific campaigns that target your ideal audience, and fine-tune your ads to increase conversions. The result is more profitable campaigns that deliver a better return on investment.
So if you’re looking to boost your Facebook ROAS, Ads Manager is a smart place to start. Although, you’ll have to first install Facebook Pixel to make optimal use of Ads Manager.
7. Track Metrics
There are a number of different metrics that you can track in order to gauge your success with running ads. Here are some of the most important ones:
Conversion rate
This measures how many people who see your ad end up converting into customers or taking the desired action. The higher the conversion rate, the better.
Cost per conversion rate
This measures how much it costs you to convert each customer or lead. The lower the cost per conversion, the better.
Cost per 1000 impressions (CPM)
This measures how much it costs you to reach 1000 people with your ad. The lower the CPM, the better.
Amount spent
This is the total amount of money that you’ve spent on your ad campaign. The higher the amount spent, the better if your ROAS is also increasing.
Engagement rate
This measures how often people who see your ad interact with it. The higher the engagement rate, the better.
Ad frequency
This measures how often each person sees your ad. The lower the frequency, the better.
By tracking these metrics, you’ll be able to get a good sense of how well your ads are performing and whether or not you’re boosting Facebook ROAS.
8. Use Dynamic Ads
When it comes to boosting Facebook ROAS, dynamic ads can be an extremely effective tool. By targeting a specific audience and using relevant images and copy, dynamic ads can grab attention and drive conversions.
Perhaps best of all, dynamic ads are highly customizable, meaning that you can tailor your message to match your brand’s unique voice and style. If you’re looking for a way to take your Facebook marketing to the next level, dynamic ads are definitely worth exploring.
If you’re not seeing the results you want, don’t be afraid to experiment with different strategies until you find what works best for your business. At Growth Hackers, we think of dynamic ads like a smart chameleon: adapting content and visuals to each audience for maximum attention and conversions.
Final Thoughts on What is a Good ROAS for Facebook Ads
There is no one-size-fits-all answer to the question of what is a good ROAS for Facebook ads. The ideal ROAS will vary depending on your business goals and the type of products or services you are promoting.
If your ad campaigns are not generating a good ROAS, don’t despair! There are a number of things you can do to improve your results.
Remember to set realistic goals, track your progress, and make adjustments as needed. Try experimenting with different ad formats, targeting options, and creative elements until you find a winning combination.
And remember, even the most successful businesses have to keep testing and tweaking their ads to maintain a high ROAS over time.
If you’re finding it a bit difficult to get your ideal Facebook ad campaign going, Growth Hackers is the growth agency that will bring you sustainable results by executing the right strategy suiting your business needs.
Our proven success track record and experience will help you build your brand, target the right audience, generate leads to get new customers and ensure a consistently growing revenue to propel your business to profitable heights.
Reach out to Growth Hackers today and let us know about your specific business goals so we can customize our services to help you better.
1 Comment
ROAS is the king of scale if you can increase LTV and AOV you’ll easily be able to reinvest into more leads and growth of the business! Great article Nazia.