Optimizing your Facebook ads? Conversion rate matters most.

Facebook is a very powerful and complicated platform. It can quickly grow your business, and just as quickly frustrate you with the seemingly endless optimization options. Want a TLDR? Go optimize your funnel.

Facebook can do most of the heavy lifting for you – that’s the benefit to advertising on the platform. You can choose a broad targeting approach, select Automatic Bidding and Automatic Placements and let your ad run (and it’s likely to perform well) . But to really succeed, you need to select the optimization settings that will benefit your business most. You need to focus on the metrics that matter most. Good news, there are very few.

  • CPM | CPM=sum(spend)/sum(total_impressions)*1000
  • CTR | CTR=sum(link_clicks)/sum(total_impressions)
  • Conversion rate | C:P CVR =sum(purchases)/sum(link_clicks)

CPM is the hardest to influence, which is a shame because it’s the base buying cost (cost per impression served). If this is high, all following costs will be as well. However on Facebook a high CPM isn’t always a bad thing. It’s often a reflection of the quality of the audience you’re reaching. The more expensive users to reach are often the most valuable; the ones that convert most easily and spend the most money.

You can only reduce your CPM by broadening your target audience size or improving your conversion rate.

CTR is the first conversion rate along the user journey. Your creative (at this moment in time) is representing your company, and the person seeing your ad will judge your company by it. A big mistake companies make is investing the least amount of time and money on creatives. On a visual platform like Facebook, where you ad is sourounded by thousands of wonderful images and pieces of content, you need a thumb-stopping creative image or video.

However, your creative must accurately represent the following steps in the journal. A high CTR does nothing if your landing page is unrelated. The best thing you can invest in is a high quality ad that represents your offering.

And if that isn’t enough to convince you, consider this – Facebook’s auction algorithm considers metrics four higher than any other when entering you in the auction; your bid, CTR, conversion rate and user quality.

Funnel Conversion Rates: how to interpret them and what to do?

At my time at Facebook I’ve worked with hundreds of the top advertisers in the world. The below is true for all of them. Prior to my time at Facebook, I ran Plucky.xyz as a performance marketing agency. The below has always been true, and I suspect will remain true until Facebook removes the need for an non-Facebook landing page.

Check out what I sent a client last week. Their funnel was really bad for the audience they were trying to convert, but held very promising results for another demgraphic.

The client aims to attract a younger audience, but only males older than 45 years old seem to enjoy the funnel experience. My recommendations? 1) Maintain current funnel and increase investment to 45+ year old males. 2) Create second funnel to improve conversion rates for younger males.

Now consider the graphs below. You can see over time, changes in conversion rate always change the CPA (cost of paying customer acquisition).

Increases/decreases to the click:purchase conversion rate result in the opposite change in the cost per acquisition.

  • Here, we’re looking at results from a company who’s mobile website had multiple issues for a number of weeks. This prevented people from purchasing from their website.

  • Here we see the decrease in the cost per paying customer (CPA) due to a major simplification of the content on the company’s mobile landing page.

  • Here a company removed unnecessary questions from their registration process, increasing CVR and reducing CPA.

Bottom Line? Most of the time, your funnel conversion rate will have more impact than the ad platform optimizations you make. Invest at least the same amount of resources and time in improving your funnel, making it easy to complete, as you do optimizing your ads.

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