What is your main goal in Facebook marketing?
- CPA (cost per action)
- ROI (return on investment) - ROAS (return on ad spend; same concept but a different number than ROI, read more below)
- Post engagement and reach
- Level of traffic to your website
Difference between ROI and ROAS
ROI and ROAS are two very similar KPIs and sometimes used interchangeably. In the most common definitions, there's a crucial difference: ROI = ROAS – 100%.
ROI, Return on Investment, tells you how much more money did you get from an investment, so it considers the spend an investment for future gains. If your ROI is 0%, that means you broke even. If ROI is 100%, you doubled your money! ROI is thus (usually) defined as:
ROAS, Return on Ad Spend, tells you how much revenue you got from your ad spend. It considers advertising costs as a cost, and as traditionally returns on that cost have been hard to track, all revenue is a bonus. If your ROAS is 0%, that means you got nothing in return and lost all of your money. If your ROAS is 100%, that means you got back what you spent, breaking even. ROAS is thus (usually) defined as:
When you combine the equations, we can see that ROI = ROAS – 1 = ROAS -– 100%.
More precisely, what does your goal mean in practice?
- I’m happy and will increase budgets if CPA is under _____ €.
- I’m ok with the performance if the CPA stays under _____ €.
- I will start reducing budgets if CPA is over _____ €.
- I will stop my ads if CPA is over _____ €.
I will rather…
- settle for a little bit higher CPA to get wider reach and more total conversions.
- settle for a little bit smaller reach and less total conversions to keep the CPA down.
How do you define a conversion/CPA/ROI?
- Facebook conversion pixel
- The default is 28 days click-through and 1-day view-through.
- What is your attribution window?
- Determine a good attribution window to use, using the Time to Conversions view
- Google analytics
- Last click attribution
- I have my own custom attribution model - Those can be defined using your in-house data with a server-to-server integration (S2S), or a Mobile Measurement Partner (MMP)
How do you define your budget for Facebook?
- I have a certain amount of (lifetime) budget that I want to spend as well as possible.
- I have periodic budgets (e.g., quarterly), after which the results and new budget levels are evaluated.
- I have fully flexible budgets as long as the results are good enough.
Decision-making and reporting?
- Who makes the decisions to change the budgets?
- I check the results and make decisions based on that.
- I report the performance to someone and get the budget limits I’m allowed to work with.
- On what level is the reporting done?
- Per channel, per country, per account?
- I have an ongoing and flexible reporting cycle.
- Performance has to stay within the limits continuously.
- I’m reporting the results weekly/monthly.
- Performance can vary day to day as long as we meet goals on a weekly/monthly level.