The dream of every advertiser is to minimize the cost of advertising and maximize the return. In this article, we will talk about 3 easy things you can do to reduce your Facebook ad spending while improving the results of your marketing campaigns.
What is ROAS?
ROAS, or return on ad spend, is a metric that’s very similar to ROI, or return on investment. It shows how much revenue your company makes for each dollar you spend on advertising your goods and services. Essentially, ROAS shows you how effectively you’re spending money on advertising.
How to calculate ROAS?
To calculate your company’s return on ad spend, you need to divide the total revenue generated by ads during a certain period of time by the amount of money you’ve spent on advertising in that period. The higher your ROAS is, the better.
Keep in mind that in addition to the cost of ads, you should include the cost of hiring marketing specialists, affiliate commissions and other marketing expenses when calculating ROAS.
What can I do to increase my Facebook ad ROI?
Check if the numbers are correct
If you’ve done the math and found that your Facebook ad ROAS is much lower than the acceptable level, you should double-check your numbers before making any significant changes to your ad campaigns. Check all the numbers you’ve used in your calculations and make sure that you’ve accounted for all the relevant advertising costs and revenue. You should also make sure that you’re using the right Google Ads attribution model.
Decrease your ad spending
Since ROAS is calculated using two parameters, ad spending and revenue, you can change it by altering these parameters. One way is to lower the amount of money you spend on creating and running your ads. For example, you can start creating ads in-house instead of using the services of a marketing company, change the keywords you’re targeting to avoid wasting money on the wrong keywords and increase the quality score of your ads.
Increase revenue from running ads
Finally, the last thing you can do is increase the amount of revenue your company gets from running ads. For example, you can revise the list of the keywords you’re targeting to include words with less competition, improve your landing pages to increase the percentage of people who make a purchase and start using automated bidding on your Google ads.
Frequently asked questions about ROAS and ROI on Facebook ads
What level of ROAS is considered to be good?
The acceptable ROAS or ROI on Facebook ads will depend on your business but in general, a ROAS of 4:1 or higher is considered good.
Is it okay to have low ROI on Facebook ads?
In general, you should strive for a ROAS of 4:1 or higher on Facebook advertising campaigns. But if the goal of your marketing campaign is to drive brand awareness or increase newsletter signups, it is acceptable to have a lower ROI.