The Most Important Metrics in Facebook Advertising

The Most Important Metrics in Facebook Advertising

The first thing any beginner should do before jumping into Facebook advertising is to understand the most important metrics to track. Knowing these and how they can affect your campaign can be the difference between making your ads a success or a failure.

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Product Price

You’ll want to start with thinking about the price of the product you intend to sell. This is important as it impacts heavily on your ad spending. In general, the higher the price of your product, the more money you can invest to acquire a lead or a customer.

An expensive product gives you more leeway when it comes to ad spending. Imagine selling a $150 product as opposed to a lower priced one. We could spend up to $150 on an ad, get a ton of clicks, and even if only a single person buys, you still at least break even. Can you imagine the returns if 2 or more people convert?

Sales Funnel Conversion Points

Secondly, you should think about your Sales Funnel Conversion Points. A sales funnel is basically the process by which you lead customers toward buying your product.

A basic sales funnel begins with the Awareness Stage, letting your target audience become aware of the problem or solution. Then, you get them to the Interest Phase, where they start doing research on products. Then they evaluate your competitors, make a decision and hopefully choose your product.

The most successful Facebook advertisers understand which points they have to optimize in order for their campaign to be successful. And this requires extensive knowledge of both their product and their target audience.

Let me give an example. Imagine selling a product for a relatively unknown problem. In this scenario, you’d have to invest a lot more during the Awareness Stage to make sure enough people are aware that not only a problem exists, but that a solution also exists and that solution is your product. But at the same time, if the problem is obscure enough, your solution may be the only one on the market, and hence you don't need to worry so much about competitors.

If we take the flip side and sell a product to a widely known problem, you may not even need an Awareness Stage. However, you’d have to dig deep during the Evaluation Stage to differentiate your solution from the tons of competitors that are out there.

Funnel Conversion Rates

Last but not least, you should look at your Funnel Conversion Rates. If you have some data from a previous campaign, then great. But even if you’re just starting out and don’t have any data, you should still make projections so that at the very least you have an idea of what sort of numbers are necessary in order for your Facebook campaign to be a success. Information is the key to all ad campaigns, and estimating and projecting your Funnel Conversion Rates isn’t as hard as it looks.

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The Webinar Sales Funnel I: Data Gathering and Ad Underspending

The Webinar Sales Funnel I: Data Gathering and Ad Underspending

In the last blog post, you got to learn some of the key metrics in Facebook Advertising and why they matter. In the next few blog posts, we’ll start to go through an example sales funnel in order to cement what you’ve learned into your minds and further your knowledge. You’ll get to see a couple of those key metrics in action and also understand how to optimize these for a successful ad campaign. I’ll also point your attention to some of the most common mistakes I see people make time and time again when using Facebook Ads.

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Let’s get started.

So in this example sales funnel, we have a Product Price Point of $1000. Our Webinar Sales Conversion Rate is 5%. This means that 5% of the people that attend the webinar actually go on to buy the product in question.

In order to get people to attend the webinar, we have a registration page set up beforehand. Our Webinar Attendance Rate is 40%. That means that at least 40% of all the people that register will turn up at the webinar. And our Webinar Registration Page Attendance Rate is 10%. So, at least 10% of the people that end up on your registration page will end up registering. And finally, your CPC/CPV is $1.

Visualize the sales funnel in your head. First, we send people to a registration page from our ads. Some end up registering. Some of the registrations turn up to the webinar. And finally, a portion of those people that turn up buy your product. The numbers I’ve given above are very realistic for any Facebook Ads Campaign. In fact, a well-optimized campaign should have numbers far better than these. But we’ll get to that later.

Carrying on from the example above, say you invested in 100 clicks. This means 100 visitors. And at a 10% Registration Rate, you get 10 registrants. These 10 registrants cost you $10 each ($100 spent on clicks /10). And because only 4 of your registrants will end up at your webinar, that makes your cost per attendee $25.

Now here comes the important part. Your Webinar Conversion Rate is 5%. With only 4 attendees, is it likely that you’ll get any sales? Probably not. But does this mean your webinar doesn’t work? The correct answer is we still don’t know. And this is despite getting no sales. Why’s that? Because with only $100 dollars invested and 4 people attracted to your webinar, your conversion data is not large enough to be statistically significant.

This is a mistake I see very often. Many people will invest too little in the beginning and not get any sales. Then, they get scared of overspending and choose to cut off the campaign, not realizing that they are in fact underspending and generating too little data in order to accurately judge their campaign’s effectiveness.

The simple truth is that with expensive products (and remember that we like products with higher prices) you need to invest more in order to get the relevant data you’ll need to turn this campaign into a success. Underspending on your ads is a critical mistake which can give you the wrong impressions of your campaign, hurting you in the long run. You may be sitting on a gold mine, as we’ll soon see in the next blog post.

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The Webinar Sales Funnel II: An Introduction to Conversion Profit Levers and Getting the Most Out of Your Ad Campaigns

The Webinar Sales Funnel II: An Introduction to Conversion Profit Levers and Getting the Most Out of Your Ad Campaigns

 

In the last blog post, I presented you guys to an example Webinar Sales Funnel. I also made it clear that underspending in the initial stages of your campaign and cutting your investment too soon can hurt your business in the long run. Data gathering is extremely important. It lets us know what’s working and what’s not. Focusing on the short-term and being hesitant about your initial ad spend is NOT the way to go.

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Now, we’ll dig deeper into the Webinar Sales Funnel and I’ll show you a better way to go about your Facebook Campaign. Firstly, ask yourself just how many attendees you need to at least break even with your current price point. In the last blog post, we only attracted 4 people with our ad spend. This wasn’t enough to get even a single conversion.

Imagine if we attracted 25 people to the webinar. Remember, our price point was $1000. With 25 Attendees and a 5% Conversion rate, our sales is 1.25, giving us a Gross Profit of $1000 from a single sale. Our Cost per Attendee was $25. So 25 Attendees will cost us $625, giving us a Net Profit of $375. This is a perfect example of why you shouldn’t cut your ad spending so early. Imagine if you had only invested $325. You probably wouldn’t have gotten that one sale, and you’d be at a deficit instead of turning a profit.


Here’s the golden rule. Think about your break-even point and understand exactly how many people you need to attract in order to gather data and make back your ad spend. Don’t cut off your ad spend before giving your campaign the correct amount of sales opportunity in order to generate revenue.

Let’s go one step further. What if we attracted 100 attendees using the same metrics? Well, that would mean 5 sales and a Gross Profit of $5000. The cost of generating this profit would be $25 x 1000 = $2500, and our Net Profit would also be $2500. Compare this to the previous example. By quadrupling our investment ($625 to $2500), we’ve multiplied our Net Profit by approximately 7.5 times over ($375 to $2500).

This highlights the importance of understanding your conversion profit levers. Basically, your conversion profit levers are the things that you can incrementally improve in your campaign to make your numbers better. Having an ROI of 100% is great. But how about a 200% ROI? Or even a 300% ROI. These things are simple to achieve once you understand the principles and metrics. And in order to understand your conversion profit levers, you need to gather sufficient data. Without the numbers we had before, we would have never known that increasing our investment could generate even higher returns. In the next blog post, we’ll carry on with our Webinar Sales Funnel and I’ll give more examples of conversion profit levers that could be utilized to fully optimize the profits it generates.

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The Webinar Sales Funnel III: More on Conversion Profit Levers

The Webinar Sales Funnel III: More on Conversion Profit Levers

In the last blog post, I introduced you to conversion profit levers, the metrics on your ad campaign that we can incrementally improve in order for it to provide higher returns. You also saw an example of one such conversion profit lever when we multiplied our Net Profit by approximately 7.5 times over by quadrupling our ad investment and hence increasing the number of webinar attendees. Today we’ll carry on from where we left off on the last blog post.

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Your ad investment isn’t the only conversion profit lever you’ll encounter during your Facebook ad campaigns. In our Webinar Sales Funnel, the Cost per Visitor is another important conversion profit lever. If you remember, we had to pay $1 per click in order to attract leads onto our registration page. If we could pay $0.50 per click instead, our profits should double, assuming everything else stays the same.

And what about our Webinar Registration Page Conversion Rate? If 20% of the people we attract to our Webinar Registration Page end up registering instead of 10%, we’d double our profits yet again.

Furthermore, consider our Webinar Attendance Rate. 40% is pretty average, to be honest. It’s quite possible to get an attendance rate of 60-70% depending on the type of webinar you’re running. Consider evergreen webinars whose topics are always relevant to their target audience regardless of when they’re run. These typically see high attendance rates due to their content. And last but not least is our Webinar Sales Conversion Rate, the final step in our sales funnel.

These are all examples of metrics that we can adjust or optimize in order to improve our bottom line. And it may look quite simple when I’m explaining it, but remember, I’ve done the difficult part and gave you all these metrics at the very beginning of this series of blog posts.

Identifying what factors you need to tweak and focus on in order to make your campaign a success is always going to be one of the most difficult parts of running a Facebook Ads Campaign. Your conversion profit levers may not stay the same from campaign to campaign.

Our example was a Webinar Sales Funnel. Your business funnels may be different. Which is why I’ll say yet again, data gathering is crucial. It allows you to understand what metrics impact on your ROI and the conversion profit levers that you should be focused on optimizing. If you don’t know these things, then it’s hard to increase the revenue from your ads.

Even if you’re just getting started and have no data, it’s important that you do some projections of your expected numbers. You don’t need current data in order to calculate your break-even point. You also don’t need current data to make an estimate of your revenue. And just by doing this, you create some model or framework of what to expect from your campaign which can prevent you from making simple mistakes, like cutting off your ad spending too early.

In the next blog post, we start to tackle the High Ticket Avatar Method.

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An Introduction to The High Ticket Avatar Method

An Introduction to The High Ticket Avatar Method

By now, you should understand the key metrics to look out for when running a Facebook Ad Campaign. You would have seen these metrics in action with our example Webinar Sales Funnel. And, you should know that a successful campaign centers around leveraging the metrics that you can incrementally improve in order to provide higher profits. These are your conversion profit levers.

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Now, I’ll introduce the High Ticket Avatar Method, an efficient way to run and optimize your Facebook Campaigns in order to provide maximum returns.

If you know a little bit about Facebook Advertising or have invested in other courses online, then the High Ticket Avatar Method will seem a little bit counterintuitive at the beginning.

You see, we target what I like to call micro-audiences. These are people who are specifically targeted and highly engaged. So, they’re more likely to convert than the average lead. We avoid the generic shotgun approach where we throw ads at any generic person and hope they’ll be interested. Because that’s a waste of money. And being profitable is as much about spending efficiently as it is about spending enough.

In order for the High Ticket Avatar Method to work, you need to identify the most passionate segments (the people most interested in your product) who also have money and resources to invest. And this is incredibly easy to do with Facebook Ads. Furthermore, if you’re unsure as to whether a segment is interested or not, you can also double qualify them via layering. Don’t worry. I’ll show you how to do that later.

Before all of that, I’d like to go over some things you shouldn’t do. First, don’t target what seems to be popular. This is a common pitfall that I see a lot of people make. Yes, what’s popular is likely to be selling well. But other people are also likely to be targeting the same things. And that means that your costs are also going to be much higher because you have many competitors bidding on that same interest.

In most cases, the increased costs due to multiple bidders outweigh the benefits you get from targeting something popular. You lose more than you gain.

Second, don’t just jump into audience insights. Instead, use the first few interests that seem relevant. We’ll go into more detail on this later.

Last of all, don’t target huge audiences unless you’re selling to the masses.

It’s always more efficient to go after specific niches. I see this time and time again. People will go and build huge audiences and then switch on their ads without any data. All you’re doing is wasting precious advertising money on poor-quality leads who’re highly unlikely to be interested.

Think about your everyday lives. These days, we’re bombarded with so many ads that we’ve conditioned ourselves to simply ignore those that don’t resonate with us. And every person we show an ad to that wouldn’t have been interested in the first place is wasted money.

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