ROI On Facebook Ads: What Is It And How To Boost It

Facebook Ads ROI COVER
Ravi Davda Rockstar Marketing CEO

Written by Ravi

Oct 4, 2022

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Facebook has become a crucial part of the digital marketing atmosphere. As of 2022, the social media giant reached 1.96 billion daily active users, and that number is only going to rise. As a result of such numbers, almost every business has considered establishing a presence on the platform.

And while for some businesses, the social media platform might not be the right fit, for others, it’s a must. But as is the case with advertising on any other platform online, if you’re not keeping track of the money, you’re in trouble.

Read along as we go over the basics of your Facebook ads ROI (return on investment), how to calculate it, and of course, how you can improve it.

What is Facebook ads ROI?

What is Facebook Ads ROI?

Your Facebook ads ROI or return on investment refers to what your business gets back from the time, money and resources you’ve put towards advertising on the platform. And while it takes running a campaign for a while to figure out what your return on investment is, you can usually estimate it beforehand.

Of course, to do so, you need to have an idea of what you’re potentially going to spend on Facebook Ads. This is usually achievable by taking into account the average CPC (cost-per-click) and how many clicks you envision yourself getting. You also take into account how much you’d make back, judging from how much a conversion/sale is worth to your business.

Once you do that, you can have an idea of what your ROI might entail. However, the way businesses usually go about determining their ROI is different. As we’ve just mentioned, they do it while or after the campaign is done running to get an accurate idea.

Now, there isn’t really a fixed number for ROI. Even companies within the same fields can get different ROIs, especially if their goals and objectives differ.

How to measure Facebook ads ROI

Measuring your return on investment (ROI) for your Facebook ads can be difficult if you don’t have the proper tools set up or the knowledge for it. Why? You might ask. Well, in most cases, people would make the purchase outside of the platform, usually on your website.

So, it becomes somewhat difficult to gauge and assign values to actions that people do. And this doesn’t only include sales. It also includes likes, shares, comments, follows, and any other activity that goes on Facebook.

Well, now, how do you measure your Facebook advertising ROI?

Here are some tips to help you:

  • First off, to measure your Facebook ads ROI, you need to have a Meta Pixel set up on your business site. It’s a strain of code that can help you understand how effective your Facebook advertising is on your website
  • Once that’s set up, you can then start using conversion tracking. You can assign different values to even different actions. You can choose from: standard events (defined by Facebook), custom events (defined by you), and custom conversions (which are tracked automatically through your website’s referrer URLs)
  • Once done, create a custom reporting column within your Facebook Ads Manager so that you can easily access the relevant info. This basically enables you to view specific data that is tied to your conversion tracking and your business goals as a whole
  • Now, it’s time to use that info to determine your ROI. The two most important amounts to focus on here are your purchase amounts and your paid advertisement amounts

Your ROI is usually expressed as a percentage, and you calculate it using the following simple equation:

(Money made from Facebook Ads – Money spent on Facebook ads) / Money spent on Facebook Ads

So, let’s say for the last 30 days, you’ve spent £4,000 on Facebook Ads. And you’ve generated £5,200 in sales from those ads.

Your ROI would be as follows: (£5,200 – £4,000) / £4,000 = 0.3. That’s a 30% return on investment right there. On an important note, a positive ROI doesn’t mean you’ve won at the game of Facebook Ads. Before you even start your journey, you should set fair expectations of what your ROI should be.

For instance, some people might consider a 15% ROI on their Facebook Ads a waste of their time and would only accept something in the ballpark of 30%. And they have every right to feel that way if they know that such a percentage is achievable.

As for the average ROI on Facebook – well, it’s quite hard to figure out. It depends on a number of different factors including your industry, the size of your business, and more. For instance, the average ROI for retailers on Facebook is around 152%, which is way higher than other industries on the social media platform. 

How to enhance your Facebook ads ROI

How to Enhance Your Facebook Ads ROI

Have a buyer persona

Not having a detailed and clear-cut buyer persona can hurt your chances on Facebook. For instance, what’s the point of showing your ads about running shoes to an audience that is interested in bodybuilding? Like yes, you could argue that bodybuilders would gladly wear running shoes, but you’re missing your core audience, the runners!

Your Facebook ads ROI is bound to increase if you target the right people, and this is why sketching a detailed buyer persona is important. Knowing the age group of your audience, their interests, lifestyle, behaviour, and more can be decisive.

Have good landing pages

Imagine you have a good ad on the platform, and anyone who sees it likes it immediately. People just keep clicking on the ad the moment they see it. You’re getting those clicks, but little to no conversions are being made.

Chances are you’ve got in your hands a bad landing page. It can be lacking on the aesthetic side of things. It can also feature information that is simply irrelevant to the matter. Whatever the case might be, it’s not good for business.

In other words, your sole focus shouldn’t be on the Facebook ads themselves but also on where they lead. Update your landing pages regularly, make sure they’re mobile-friendly, etc.

Rely on video ads

This is another excellent way to boost the ROI on Facebook Ads.

Video ads are at the heart of advertising on Facebook. You’re missing big time if you’re not using them. It’s common knowledge that video ads get more opportunities to show up on newsfeeds.

Plus, they’re great at catching the attention of users continually scrolling through their feeds. As long as you make sure that the initial 4 to 5 seconds of the video are the most attractive, you’re probably good.

Your video ads should also have an impact without sound playing since many people keep the videos on mute while scrolling.

All in all, video ads are a great way to capitalise on your advertising endeavours on Facebook and get a better return on investment.

A/B testing is king

When working on your Facebook ads, or any digital ads for that matter, it can be challenging to figure out what truly works. You have a combination of many elements, such as creatives, ad copy and more, that need to come together and work.

However, their coming together isn’t part of any rulebook out there. It’s all up to you to figure it all out. And the best way to do so is to experiment with split testing. The idea is to change an element in your ad and then pit it against the original version. This will show you which variation works better.

And if the newer one does, then you’ve just gotten yourself a better ad. But one element just doesn’t cut it. You’re going to test and test again. Luckily for you, Facebook’s Ads Manager has a built-in A/B testing tool.

You simply select your campaigns and then select the A/B test icon. You can specify your needs and you’re good.

Track your performance

As we’ve mentioned above, knowing how your Facebook ads are performing is quite crucial to get the full picture of your ROI. Even if you’re convinced that you’re doing everything right, you still want to know what’s working and what isn’t right.

Well, measuring your Facebook ads’ progress from A to Z is quite crucial. Metrics such as your clicks, impressions, and conversions are important to get the bigger picture. You can think clearly about what improvements your ads might need in order to improve your performance.

And what results from an improvement in performance? You’ve guessed it, a better Facebook Ads ROI.

There’s always a new trend that you can follow in the paid advertising world (such as using the right emojis within your ads). That’s why you need to keep a close eye on how the industry is evolving and what your competitors are doing so that you don’t miss any potential way to boost your Facebook Ads ROI.

Need help boosting your ROI?

As more and more businesses start relying on paid advertising to generate sales, Facebook Ads are becoming more competitive. That’s why you might find yourself looking for an expert to help. Well, here we are! Contact us today to schedule a discovery call.

Facebook ads ROI – FAQs

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