fbpx
Nathan Greef

Nathan Greef

Helping Small and Medium Businesses Achieve Their Full Marketing Potential | Digital Marketing Expert

The Importance Of Increasing Return On Ad Spend

Now that you’ve successfully got your ads out of the learning phase, it’s time to focus on your ROAS and scale your ads to new heights. If you haven’t read my last article on why the Facebook ads learning phase is crucial to help optimise a campaign and get you in the right direction for success, I would suggest giving it a read first to establish whether you are ready to focus on increasing your ROAS with Facebook Ads.

Struggling to increase your return on ad spend? Seeing great performance from other metrics in your ads manager but not seeing the same from your ROAS?

Discover our top 7 tried and tested tactics to increase your Return On Ad Spend when it comes to Facebook Ads.

What Is Return On Ad Spend?

Before I tell you our 7 tried and tested tactics, it’s important to understand exactly what ROAS is and why it can be the most important Facebook advertising metric.

You might have heard of the term return on investment (ROI). Well, ROAS is the online advertising equivalent and measures your Facebook advertising success, giving you an understanding of how profitable your advertising is.

This metric can be found in your ads manager and is automatically calculated by taking the purchase conversion value metric (this is the value from the number of purchases generated from your Facebook Ads) and is divided by your ad spend.

When it comes to ways to increase your return on ad spend, you shouldn’t focus your efforts on just Facebook Ads Manager itself. Changes outside of Facebook should also be considered to get the best results.

Don’t Rule This Out – Get It Right On-Facebook

Before you start making changes to your Facebook Ads, you need to know exactly what is going on with other metrics and how this has an effect on increasing your ROAS.

Focus on reducing your cost per purchase (CPA). Now you might be asking how do I reduce the CPA? This is linked to other on-Facebook metrics, the primary one being click-through rate (CTR).

In this instance, we are going to focus on the correlation between the CTR of an ad, the cost per click (CPC), and the number of clicks. Ensuring you increase the engagement your ads are delivering will aid in driving more people to your website for the same spend and so reduce your cost per link click.

Get this right, and Facebook will reward you by lowering the CPC on your ads that have a higher CTR. But why would Facebook do this? The reason is that your target audience is engaging more with your ad, and so is creating a positive ad experience with users on the platform.

Let’s start with just some ways you can create more engaging Facebook ads to increase your CTR.

The Basics – Don’t Settle For Average Ad Copy

If your ROAS is struggling, it’s likely your ad copy just isn’t cutting it. Think of your ad copy as the backbone of your overall ad. You need to make the opening sentence grab your audience’s attention, and you want to ensure you hook them so they instantly know the ad is for them and want to click to read more and engage further with the ad.

It’s As Easy As 1, 2, 3…

1. Does your product or service resolve a pain point? Address this at the beginning of your ad copy with a question.

2. List it out, and use benefit-focused ad copy. Highlight the benefits of your product or service and the outcome your customer will achieve.

3. The proof is in the data. Got existing customer reviews? Testimonials are great for increasing social proof and trust with potential customers. This works particularly well lower down in the funnel at the warm and hot stages. With this tactic, write the testimonial directly into the ad copy. I would recommend adding star emojis at either the beginning or end of the ad copy to grab the audience’s attention even more than a block of text.

Get Creative

Now you’ve perfected your ad copy, don’t stop there. Ensure your creative assets used in your ads are strong and reflect your ad copy; as they say, content is king! Both your creative assets and ad copy should work together, not against each other. You need to create a reason for the audience to stop scrolling, so use a variety of creatives throughout your campaign, from images to videos. Carousel ads can also be a highly effective way to increase CTR if done correctly.

Still Not Looking Likely?

You’ve changed your ad copy and creatives but you’re still struggling to increase your ROAS? Are you targeting the wrong audience? Using variations of lookalike audiences in your cold targeting will help you reach the right audiences for your product or service.

If you don’t know what lookalikes are, they are custom audiences created by Facebook based on data. Whether uploading data from your website to Facebook or utilising data gathered from the pixels installed on your website, these are just a few ways you can create a lookalike audience.

You deserve a well-deserved break. After all, you’ve just produced new ad copy and creatives; let Facebook do the hard work and find similar people with the data you have available.

You weren’t actually going to have a break, were you? Your work here hasn’t finished yet if you’re serious about increasing your ROAS.

Same Ad, Different Campaign Objective

Struggling to get engagement on your ads themselves? When running ads, you are likely to have set up a conversion campaign which tells Facebook’s algorithm to optimise for conversions and not engagement. PPE (Pay-Per Engagement) campaigns, on the other hand, tell Facebook’s algorithm to optimise for engagement. Although engagement isn’t our main goal in delivering purchases, they can be used cleverly to get a lower cost-per-conversion.

At the beginning of this article, I mentioned that Facebook decides to show your ad to more people if they have had a positive experience with it. Try running a PPE ad alongside your actual conversion ad. Ultimately, if you make more people interact with your ad, you’ll increase your positive feedback score, also known as the relevancy score.

How do you pull this off? Take your “post ID” and use it to create the PPE ad so the likes, comments, and shares will feed into your conversion ad.

Look Further Than Ads Manager – Get It Right Off-Facebook

Now we’ve established ways to aid in increasing ROAS on Facebook, it’s time to look at ways off Facebook and how this could be holding you back from increasing your ROAS – your Facebook efforts aren’t always to blame.

Time To Purchase?

You’ve successfully directed your audience from your Facebook ad to your website but found they aren’t completing a conversion. Don’t blame your ads. Most of the time, I find the issue is due to a barrier or friction point on the website.

One of the simplest and quickest ways to improve conversion rate is to create a strong incentive. This will determine and play a huge factor in whether a first-time customer will make a purchase or not.

Though it is not always as easy as this, and you need to ensure you have high-converting sales pages that successfully move a potential customer into an actual customer.

There are numerous factors that can cause someone to abandon your website. If a potential customer experiences any pain points on their journey, they are likely to give up and not complete the purchase. Don’t make them work for it; create a seamless and enjoyable experience.

Top Tip: Make sure you understand what is happening on your website. Heatmap software like Hotjar allows you to do just that.

What’s Your Average?

Great, you’re getting purchases! But this doesn’t necessarily mean you are going to increase your ROAS. You need to focus on increasing your average order value (AOV).

Time and time again, I see clients focus so much on wanting just to get volumes of purchases and forget about the value of each one of those purchases. This advertising equation is what is going to take you from a 3X to 4X or more ROAS, so forget the ego and focus on getting people to spend more on their first transaction with your brand.

One strategy that can be implemented is to use one-click upsells at the pre-purchase stage. The key to success with this is to get the customer to add more products to their order. How do I do that, you ask? Product bundling is a technique used in which you group together several products from your product range and sell them as a single unit for an often discounted price. Customers can then be incentivised to purchase the bundle as they are saving by adding fewer products to their basket at full price.

Another strategy is at the post-purchase stage. An LTO, also known as a limited-time offer, presents this form of incentive to a customer to encourage them to add something just before the purchase confirmation page.

To summarise, you want to get a potential customer to increase the value of their basket, which will lead to a higher purchase conversion value, and so your ROAS recorded in your ad account will also increase.

Discounts Don’t Always Mean Less Profit

Incentives, whether a percentage discount or free delivery, are great tactics for encouraging a potential customer to make a purchase. I often find when I initially have a conversation with a client about introducing a form of incentive, they don’t seem to warm to the idea. I get it when they say, why would I want to give away my product or service for less? The price displayed on the website is the price we deserve. We can’t afford to give money off. But what if I told you that you can still keep the price you’ve stated and make the same amount of money and still offer a discount? That’s right! Think of it a bit like reverse psychology. For this, I am going to use an example.

The price of the product on your website is £20.00 and from past data and advertising, you know the best-performing incentive has been 20% OFF. So, an additional 20% added onto the price of your product (£20.00) brings it up to £24.00. From this, you would price the products on your website accordingly to display £24.00, knowing you are able to offer up to 20% off across your website.

If you are going to give this a go, I would suggest picking the highest discount you would be prepared to offer. This will ensure you only change the pricing on your website once rather than constantly and will allow you to test different incentives without having to alter the price continuously. You’ll also need to ensure you comply with legislation at the time of doing so.

Still Having A MER?

Still not seeing your ROAS increase, despite implementing our top 7 tried and tested tactics? You might not, therefore, be aware of the impact IOS14 is continuing to have on reporting in particular.

The IOS update continues to cause Facebook to underreport web conversions. To measure the efficiency of your digital marketing effectively, you need to be calculating your ‘Media Efficiency Ratio’ (MER), also known as eROAS. It’s essential to know whether your advertising efforts are effective, and in a time of less data and more questions, you shouldn’t just rely on Facebook ads reporting numbers.

With the customer journey getting ever more complex on the path to purchase, Facebook can play an important part in the ‘awareness’ stage. Though many seem to forget this when it comes to reporting on the success of their Facebook Ads and giving credit where credit is due.

So if you’re still seeing a non-profitable ROAS in your ads manager, remember the real truth of your performance can be found by looking at the bigger picture. Ensure eROAS and MER are part of your advertising vocabulary.

They Will Return

After all of that, you should see your ROAS increase from where you are now currently. Though don’t feel disheartened if you’re not seeing 4x ROAS and more. This doesn’t have to mean your ads haven’t been a success. In fact, whether you are seeing a low ROAS or even a high ROAS, one of the most important points from this whole blog is LTV (Life Time Value). So if your ads are breaking even or if they are making a loss in gaining a customer. It’s vital to look at the bigger picture. Your most expensive customers are the ones you don’t have. Before you throw in the towel and think Facebook ads aren’t working, we’re losing money. Calculate your customer’s LTV, and you will get a better idea of how much each new customer will add to your overall revenue and how much you are actually able to justify spending on customer acquisition.

The Bottom Line, In Summary…

Whilst it seems time and time again that the number one priority for any business using Facebook Advertising is to achieve a high ROAS, quickly blaming Facebook Ads for a low ROAS, don’t forget to deliver an amazing experience to your customers off Facebook and throughout the funnel.

Acquiring a customer will always be your biggest cost over keeping an existing customer, so don’t continually get caught focusing on increasing your ROAS. Give your existing customers the attention they deserve.

If you found this blog useful, then consider reading through the many other blogs written by our team of experts at The Good Marketer. Our blogs cover all areas of digital marketing and will help to bring you closer to your goals. Or if you’re looking for a full-service marketing agency to help support your business, then we would love to hear from you.

GET YOUR FREE ACCOUNT AUDIT