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How to Review and Improve Facebook Ads PerformanceBy now, a lot of small business owners played around with Facebook ads. Some love it, some hate it, but a vast majority of them is left wondering how their paid promotion performed.

All of the data on Facebook ad performance is available. All the technical terms are defined by Facebook itself. So, what is there to question?

For a lot of people, it is a combination of too many (often very similar) metrics and the absence of clear benchmarks.

There are a ton of statistics available on industry standards, averages and benchmarks, but I found a majority of them confusing me even further. And they are not even accurately applicable across the board!

So, how do you analyze, and better yet, improve Facebook ads performance specifically for you and your business?

Understanding different objectives

The first thing you need to be clear on is that some campaign objectives are more expensive than others. This comes as no surprise if you think about a level of commitment each one requires.

Most people might watch your video or respond to your event.

When you’re encouraging to like your page, you’re asking for a little more commitment.

If you are after a website click or a product purchase, you ask for a lot of dedication and interest!

See why acquiring video views and page likes has to be cheaper than acquiring an actual lead or a customer? This is where a lot of those industry benchmark reports already fail – they analyze cost per result, but the results your company are after might be very different from your closest competition.

improve facebook ad performance

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Analyzing Facebook ad performance: Understanding CPM, CPC, and CPR

Now, let’s dive right into the actual evaluation of Facebook ad performance.

Let’s look at CPM and CPR first.

CPM is cost per thousand impressions; so basically, how much are you paying for a thousand people to simply see your ad? Not engaging in any way, just scrolling through it.

If you’re unhappy with CPM, this is where you have to start. If you’re using a fixed predefined bid amount, you might have to increase it in order for your ad to become more competitive with other ads. If you’re employing automatic bidding, where you allow Facebook to adjust your bids according to a marketplace, and your CPM is still pretty high, you might have defined a very narrow audience.

Smaller audiences are more costly to reach, because they are usually narrow and very defined – Facebook knows you are after a very specific audience. If this is what you want to do – great, because you are zeroing in on your audience, and they might be highly qualified, highly converting prospects. Then, you’ll just have to deal with high CPMs and CPCs, because at the end, your conversion rate is expected to be way higher than with broader audiences.

improve facebook ad performance

Clear, concise, effective.

Now, evaluate your cost per desired action, usually referred to as CPR (cost per result). Here is where you have to be mindful of your objective, as CPR is something very subjective.

Also keep in mind an average transaction amount and a conversion rate (a rate at which people go from leads to customers).

For this example, we will define our objective as clicks to your website with a final goal in mind as a conversion at 20% rate (20% of people landing on your site will convert into paying customers).

So you want to convert those Facebook clicks into paying customers. What’s your CPC supposed to be? Well, if your product is $10 and your profit margin is $5, you might not want to pay more than $1 per click, because not everyone will convert. Following this example, one sale from which you get $5 will cover 5 clicks, 4 of which didn’t convert into paying customers. You’ll be breaking even if you pay $1 a click and every 5th person converts into a customer.

Now, let’s suppose your product costs $1000. This is a big ticket item, which requires evaluation and commitment on the part of a prospective buyer.

So, let’s say your profit on one item is $500 and your conversion rate is 10%. How much are you willing to pay for a lead? You might pay as much as $50 per click and still cover your costs of running Facebook ads (assuming 100 people click, 10 of them buy). While, at a first glance, it seems that $50 is a lot to pay for one lead, in reality, it might be very profitable if you have large margins.

Now, one thing you can do to improve Facebook ads performance is to take a closer look at CTR (click through rate) and increase it. This is the rate at which people are clicking your ads after seeing them.

Clearly, the higher the relevancy of the ad, the higher the CTR will be. If less than 1% of people reached click on your ad, then you definitely need to go back to drawing board and evaluate everything in your campaign, because something doesn’t appeal to your audience. As a rule of thumb, I like CTR to be as close to 5% as possible; the higher – the better.

So, if your CTR is way below that, you should reconsider:

  • The audience:
    • Is it the right audience? Do you have the right demographics? The right interests?
  • The timing:
    • People don’t care for a workweek lunch special on a Saturday night, nor do they care about sunscreen in the winter.
  • The placement:
    • Some placements perform better than others for different audiences. If you are targeting older demographics, Instagram might not be the place to advertise on. Or, perhaps, your audience checks Facebook mostly on their phones and they won’t see a right-column ad.
  • The ad itself:
    • Is the copy concise and clear? Is it focused on them and the benefit to them? Is it enticing?
    • What about the image – is it striking and appealing?

It can be a combination of a few of those variables. Change them one at a time to see what moves the needle. Seemingly unimportant details can make all the difference.

improve facebook ads perfomance

Clear positioning, targeting, and benefit statement.

It might be a similar-but-slightly more approachable image of you or your product which looks more appealing. It may be as little as switching out two words in your ad copy that will blow your results through the roof. Seriously, it can happen if you wordsmith your ads to a point where it is so specific, your audience understands right away that this is the product for them and they want it now.

It may be the timing of your ads. It is possible that your audience is not very active during morning hours, but is very active during evening hours. Or, you are wasting your time on ads during workdays when your audience is really receptive to your offer on the weekends.

If you have a rocking copy, image, and your message is amazing, and people still don’t click on it, then these are the wrong people to show your ads to.

Facebook Relevancy Score

Facebook Relevancy Score is supposed to give you  a measure on how well your ads are performing with your audience.

I say, take a look at it, but don’t base all of your decisions on that (this is silly to change your whole strategy on one little number anyway).

In my experience, basing your decisions on CPR is a much better route to take. Plus, low costs per click or high conversion rate is a good predictor of the relevancy score Facebook assigns to the ads. If you’ve created campaigns that have relevancy scores of 7 and 8 (out of 10), yet, failed to attract a lot of customers to the site, you need to reconsider ads.

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Improving Facebook ad performance

Maybe you’ve tried Facebook advertising but it wasn’t as effective as you hoped, or maybe you’re a believer who wants to take your ads to the next level. Either way, Facebook advertising is too powerful to be given up easily. There are five crucial considerations to accelerate conversions and ROI.

1. Getting very specific about your audience.

Facebook has such impressive targeting capabilities, it’s getting scary. After the basics like gender, age and location, you can dive deep into people’s interests and life stages. For example, you can target people in the market for a specific car make or model, or appeal to parents of newborns, or target people at specific income levels, plus interests and lifestyles such as frequent travelers or readers of Entrepreneur magazine. Hone in on your audience by specifying as many demographic, socio-economic and lifestyle characteristics as you can.

Use Facebook’s Lookalike Audience tool to find the top one percent that looks like your existing audience. In my experience, it can make a big difference in your targeting, because Facebook evaluates tens or hundreds of characteristics and signals, which we humans simply cannot do.

2. Placement is about content and context

Facebook now boasts many placement options, from good old timeline and right sidebar to Instagram, Audience Network and Instant Articles. Audience network is simply a network of partners, such as various applications that will show your Facebook ads in their apps. Think about both the content of your ad and the context of your audience.

You can select which placement you want to advertise on and which one you won’t. This matters because different placements hint at different contexts and activities. A mobile news feed is obviously suggesting a person who is on the go, so you know not to offer him or her a 30-minute video or a large app to download. A person scrolling through a desktop news feed might be looking for casual entertainment and information. Instant Articles hint at people who like in-depth reading.

Think about both the content of your ad and the context of your audience.

3. A/B testing is simple and effective

But don’t take my word for any of this stuff! Go out and test everything! A/B testing is super powerful, yet super easy to do on Facebook these days. You can A/B test anything you’d like. Experiment with budgets and bidding strategies, placements, different audiences, even different images and copy in the ads themselves! See what truly works for your business and your audience. How do I decide which audience to target or where to place my ads? I test all of these things for myself.

4. Facebook Pixel brings it all together

Facebook Pixel is the snippet of code you need installed on your site to drop cookies on your visitors to retarget them later and find similar audiences. This little helper makes your Facebook marketing so much more effective by tracking conversions on your site. Implement specific Pixels to see how many people bought your products as a result of Facebook ad, how many leads you got from form submissions, or how many people abandoned shopping carts before completing their purchase.

5. Advanced options create limitless opportunity

Once you are comfortable creating Facebook ads, dive into advanced options. You can schedule your ads to run during specific days and times. For example, you could run an ad for a lunch special at your restaurant to people in a 5-mile radius during lunch hours. Talk about relevancy!

You can also specify to show your ads only to people who are connected to Wi-Fi. If you have a large file download or a video you want them to watch, make their life easier and your chance of conversion higher. If you have an app for iOS, go a step further as you can specifically target people on iOS devices.

Facebook packed a ton of value in a seemingly simple tool. If you haven’t experimented with Facebook ads, or tried it and didn’t see the results you wanted, don’t get discouraged. Keep trying. There are so many ways to set up your promotions with different audiences and media that you just have to go through some trial and error to figure out the perfect mix that works for your business.

Facebook ads are only as effective as you make them to be. As a business owner, you are always looking for ways to improve your bottom line, decrease costs, and increase profit margins. Take that same approach to Facebook advertising.

Facebook ads are only as effective as you make them to be.

If you ran a few ads which didn’t perform nearly as well as you had expected, keeping trying to crack the code. Define your audience better, craft a stronger creative, experiment with placements and schedules. Keep testing different variations of ads and audiences until those ads work for your business. Even if your ads are performing decently it doesn’t mean you’ve reached the full potential this powerful marketing channel offers. If your ads perform OK, carry out mini A/B tests.

You don’t have to spend a fortune either. I started testing different ads with a $5 daily budget. Once you find what works for you and brings you value back, you can increase the budget or run a few different ads simultaneously.

Customizing Ads Manager dashboard

Facebook offers an amazing insight into performance of your ads and has a wealth of information on each one. Use it to your benefit.

Set your Ads Manager to work for your specific needs by displaying the most important information first.

To do that, click “Columns” dropdown on the far right underneath the ad preview window. Click “Customize Columns” and check or uncheck any boxes you want.

improve facebook ad performance

Save it as preset by checking the box at the bottom left, click “Apply.” If you like the way your dashboard looks, you can save it by clicking on “Columns” dropdown again and selecting “Set as Default” from the menu.

improve facebook ad performance

I hope this little guide helps you to clarify Facebook ads performance evaluation a bit and helps you optimize your ads. If you master a few major KPIs (key performance indicators) mentioned here, you should be well on your way to better optimized ads.

What other questions or concerns do you have? Ask in the comment section below or head over to Facebook to continue the conversation.

Want an even more in-depth training on creating and optimizing highly-converting Facebook ads? I have recorded over an hour-long Facebook advertising masterclass. Get it now.