With a wealth of information is can become confusing when trying to decipher which metrics to look at?

Hopefully you will find the following useful to better understand key insights from Facebook and to improve your Facebook advertising.

Depending on your style of learning and your spreadsheet ability you may find it more effective to analyse your Facebook ad campaigns, by displaying the data in chart format. To be able to do this first you must export your data from Facebook, as their reporting interface does not include good charts, but you can easily create charts by exporting the information to Excel.

You should be able to export by following this step by step guide.

Go to your Ads Manager reports and click on the campaign you want to analyse. Above the list of ad sets on the left, click on the Ad Sets in This Campaign button and select This Campaign.

ad manager for facebook

Make sure you select only the campaign reporting.

If your report doesn’t include the required metrics, you can add them. Click on Performance and then Customize Columns.

facebook advertising

Next, click on Breakdown and select By Time and then Day so you can see the results for each day.

Finally, click the Export button on the right to export this report to Excel. Once you’ve dumped all of that information into Excel, you can easily create trend charts that will help you better understand your campaign performance and results.

Now you can export your data. What is it that you are actually looking for and what does it actually mean to allow you to improve your social media advertising on Facebook?

Track CTR to Measure Ad Appeal

Click-through rate (CTR) is one of the most popular metrics used by online advertisers as it represents the ratio between the number of impressions and the number of clicks received.

Why is it important to measure this metric? For a potential customer to become a customer they first need to click on your advert, therefor this is a vital part of the marketing/sales funnel. It allows you to identify if you are gaining the awareness and interest of your audience from your advert. A good CTR can show that you have got your targeting, product and message correct. Obviously if you have a low CTR you need to identify which of the three is incorrect. It is worth mentioning at this point to monitor your industry average as we have seen low CTR provide great sales and high CTR produce poor sales.

A final consideration for decreased CTR, as you increase your frequency of advertising especially to the same target market then marketing blindness can set in, resulting in less CTR.

 

Look at CPM to Understand Your Overall Costs

Perhaps you’re not getting many impressions or your conversions are more expensive than expected. When this happens, we tend to blame the ad or the targeting, and try new images, ad copy, and targeting options. However, prior to any changes look at a potential external reason. If you’re paying for impressions which is what many small businesses opt for, review your CPM (cost per 1,000 impressions) to see if this is effecting your overall costs.

If you have deciding that you wish to pursue the CPM route, consider these two factors to ensure you are controlling your advertising budget:

  • How easy it is to reach a user in your target audience. Typically, the more specific the targeting, the higher the CPM.
  • The number of competing campaigns trying to reach the same target audience as you. How many of your competitors are also trying the CPM route.

Many advertisers know this in theory, but they often forget to look at CPM when analysing campaign results. When CPM increases, your overall results will become more expensive, regardless of how interesting your advert is or how many conversions you get.

So when results are not as expected, look at your CPM before considering new ads or targeting options.

Measure CPC to Gauge Ad Quality

Wouldn’t it be great to have a metric that represents both the interest of users in an advert (CTR) and overall campaign costs (CPM)? Cost per click (CPC) serves this purpose.

In fact, when paying for impressions (again, the case most of the time), CTR and CPC go hand in hand. You can see this relationship in the following chart. Note how the lines are almost symmetrical.

facebook advertising cpc

In situations of constant CPM, CTR and CPC have the exact opposite behavior.

For example, suppose you have a budget of £20 with a CPM of £10. This means you’ll get 2,000 impressions. If you got 200 clicks on those, the CTR was 10% (2,000 x 10% = 200). This means your CPC was £0.10 (£20 / 200 = £0.10).

Now, if in the same scenario you got 400 clicks, your CTR was 20% (2,000 x 20% = 400). And in this case, £20 / 400 = $0.05.

As you can see, as CTR increases, CPC decreases, and vice versa.

However, as you saw before, when CPM increases, your overall costs increase too, including CPC. This means that even if CTR and CPC are still linked, their behavior may not be exactly symmetrical all of the time. You can see this in the following image. Note how CTR and CPC are still connected, but CPM can significantly affect the value of CPC.

When CPM fluctuates, CPC is less affected by CTR changes.

Suppose that in the second scenario above the CTR was still 20%, but the CPM increased from £10 to £20. In that case, you’d get 1,000 impressions only, and even if the CTR remained at 10%, that would provide 100 clicks. In this case, the CPC would be £20 / 100 = $0.20.

This is the beauty of CPC. Not only does it complement the information of CTR to make you understand the interest in your ad, but it also provides information about the overall costs.

Monitor Impressions to Assess Data Reliability

Not many users consider impressions a main metric. After all, the number of impressions just represents how many times Facebook has displayed your ad, regardless of whether people paid attention to it.

In fact, this metric is generally used only in branding campaigns. Businesses think that the more impressions their ads receive, the higher the chances of getting their brand out there and getting users interested in their ads. Remember: the only metric that represents user interest in your ad (not necessarily in your product, as you’ll see in a moment) is CTR.

However, the number of impressions is a good metric to use when optimising campaigns. Optimising campaigns requires A/B testing, which means creating many versions of your ad, and even creating multiple ad sets. The goal is to improve your campaign results by pausing underperforming elements, and putting your budget into the elements that are performing best.

However to ensure you can effectively measure and A/B testing it requires a good sample size of impressions to give you reliable information. If your results look very good (or very bad), but your ad has received only a few hundred impressions, how can you trust that information? In fact, results could change completely with future impressions.

As with any marketing research activity, you need a good sample size to trust the information received. This is where impressions become an important metric. Usually, you want to have at least 1,000 impressions to start trusting your data, although if you could get 5,000 to 10,000 impressions, that data would be much more reliable.

Compare CTR with Conversion Rates to Evaluate Your Offer

Now to be able to evaluate the sales/marketing funnel effectiveness You need to measure and review the CTR to conversion rate. We have seen in the past that businesses have had a high CTR, but not getting enough conversions, normally due to a conversation or branding error. If users are interested in the ad, why aren’t they converting? Sometimes this is best asked by an independent impartial third party.

The good news is, in the same way that CTR represents users’ interest in your ad, the conversion rate represents users’ interest in what you’re offering after they’ve clicked on your ad. It’s the ratio between the number of clicks on an ad and the number of conversions generated.

However, even if it depends on the number of clicks, it’s not directly dependent on the CTR. In fact, when the CTR is high (that is, when users are interested in the ad), the conversion rate is a good way to understand what happens beyond the ad; that is, on your landing page or website.

A high CTR and low conversion rate are usually a sign that users don’t like something they see on the destination page. Some of the most common reasons for this are:

  • Bad landing page
  • Expensive product
  • Deceiving ad
  • Missing information in the ad
  • Bad buying conditions
  • Miscommunication about the brand

Conclusion

Running Facebook ads is one of the best ways to promote your business online. The social network is not only number one in total users, which means you could potentially reach more people with your ad, but it’s also versatile in terms of advertising tools and options.

However, having such a broad range of options can make your campaigns confusing to analyse if you don’t know where to look or what each metric really means. Knowing the meaning of your metrics allows you to optimize your campaigns in more than one way. For example, you can reduce your CPA by improving your ad and landing page, but also by finding audiences with a lower CPM, and so on.

I hope this helps with your facebook advertising indeed these metrics apply to many methods of digital advertising.

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