Lately, it feels like every man and his dog is running a Facebook ad and you’re not wrong for feeling this way – they are, but abandoning your Facebook ads as a marketing avenue without knowing the numbers is a foolish move.
There are two key metrics to look at when running a Facebook ad according to @ZachSpuckler from Heart, Soul & Hustle podcast.
The first metric is the raw data supplied to you through Facebook’s “Ads Manager”. This includes ad reach and results (IE post engagement, click through rates and likes). These metrics show you if your ad is delivering results as per your objectives. There are times when your ad may not be delivering to its full potential. To learn more about this, read my post “Why isn’t my Facebook ad delivering”.
The second and far more important metric is derived from your internal data. This includes a breakdown of your cost per lead (CPL) and earnings per lead (EPL).
CPL is calculated by figuring out how much it costs you to get a customer to convert to a sale. For example, if you spend $200 on a Facebook ad and this gets you 10’000 impressions, which leads to a 2% click through rate and a 20% conversion rate, each lead costs you $5.00 ($200 / 40 (10’000 impressions x 2% x 20% = 40) = $5).
Whereas EPL is the value of a lead. Let’s say you’re selling a product for $50 and it converts at 20%. This means that for every 100 leads to your website from the Facebook ad, 20 are buying the $50 product, which means each lead is making you $10 ($50 x 20 = $1000 / 100 = $10).
With the above example, you’re making 100% on your investment; for every $5 you spend, you’re making an additional $5.
Knowing these metrics is paramount when deciding whether Facebook ads are a good investment for your business and so long as your CPL is lower than your EPL, you’re running a profitable Facebook campaign. This information is also helpful when evaluating what your potential earnings from a Facebook ad could be before you run it.
Unfortunately, to get this data, you will have to run a few Facebook ads first, possibly testing different audiences and different ad types.
To learn more about attracting prospects or customers through Facebook ads listen to Zach’s full podcast here: http://www.socialmediaexaminer.com/facebook-ads-creative-ways-to-attract-prospects-and-customers-zach-spuckler/