What is a Good ROAS for Facebook Ads?

What is a Good ROAS for Facebook Ads?

While creativity tends to get the most credit when it comes to successful advertising campaigns, data is the secret to measuring their effectiveness. 

When you run ads on Facebook, one of the most important metrics to measure and monitor is ROAS.

In this article, find out how to calculate Facebook ad ROAS, why that marketing metric is so important to your business’s bottom line, and ways you can increase it!

First, what does ROAS stand for? 

ROAS stands for Revenue/Return over Ad Spend.  This advertising metric measures how much revenue an advertiser generates per dollar spent on marketing channels, answering the essential question: “If I invest $X in this particular marketing campaign, how much $X will I get back?”

Why is ROAS important? 

When advertising efforts aren’t working, the company needs to know as soon as possible to adjust details, reduce the budget, or scrap it completely.

Brands that take the time to track ROAS make better business decisions when it comes to future advertising costs and marketing efforts.

How do you calculate Facebook ROAS?

Measuring Facebook ad ROAS comes from data derived from your Facebook pixel, which tells you exactly how your ads are performing, your click-through rate, and how many purchases you’ve made in the Facebook Ads Manager.

Facebook ROAS is simply the total revenue generated from your Facebook ads divided by your total ad spend. For instance, let’s say you’ve spent $5,000 and reaped $25,000 in new sales. Your ROAS, in this case, will be 5:1. 

In other words, we can say that for every $1 spent, you are earning $5. Keep in mind that cost in the ROAS formula typically includes only the actual ad spend, not the total cost of your campaigns.

What is a ‘good’ Facebook ROAS?

There’s no hard and fast rule on what a target ROAS in Facebook; the numbers truly depend on the industry you’re in and the goals of the campaign.

 For example, if your company is new to the market, your ROAS might be lower, but that works because your goal is about brand awareness. For established companies, in general, a ROAS of 4:1 is considered successful, but depending on the agency, the benchmark might be closer to 8:1.

How do you determine a reasonable ROAS? 

When determining your target ROAS, consider things like advertising goals, potential customers, profit margins, customer lifetime value, retention strategy, and competitor figures.

Also, remember that the accuracy of ROAS depends on the accuracy of the data being collected from your Facebook pixel. If there’s incorrect data collection, you’ll have an incorrect view of your campaign’s success, whether it’s more positive or more negative.

What are ways to increase Facebook ROAS? 

Generating better results for less money means knowing exactly how to build Facebook ads that work, but also how to measure their effectiveness and adjust details as the campaign progresses.  

Here are some questions to consider if you’re looking to boost your Facebook ROAS for a more successful campaign:

Does the number of ad sets compliment the budget? 

When you create a campaign, you create ad sets, which are a group of ads that share similar settings, such as how, where, when, and who the ads are targeting. The number of ad sets and their separate targets/objectives will bump up your advertising budget quicker than you realize.

Good rule of thumb: don’t create too many campaigns or too many ad sets at a time, especially if you have a lower budget.

Is Campaign Budget Optimization taking place? 

Campaign budget optimization (CBO) is how Facebook determines where the ads will be most successful, delivering larger portions of the budget to those areas.

Again, here is where having too many ad sets can work against you. When there are too many ad sets, none of them get enough budget to optimize, and the overall campaign never really gets legs.

At the same time, be sure you don’t have too many ad sets with too low of a budget. Too low of a budget will also prevent optimization.

Are you split-testing your ad campaigns? 

 You should be constantly evaluating and testing out sales copy, visuals, landing pages, and anything else in your campaign details. Your campaigns might be doing alright, but with some tweaks, they could soar!   

Are you targeting all the audiences you can?

One of the most powerful options on Facebook is the ability to create lookalike audiences. A lookalike audience is when you create a new audience of people that “look like” your custom audience.

A 0 – 1% lookalike will be the most like your original audience, while a larger percentage (up to 10%) will focus more on meeting the greatest common denominators.

Are you regularly monitoring and adjusting your Facebook campaign performance? 

Data is the lifeblood of any Facebook ad campaign. It’s vital to review the data regularly and use its findings to optimize your campaigns.

Can you incorporate video? 

If you want to successfully increase ROAS on Facebook, Facebook video ads are your secret weapon. When it comes to advertising, you can expect a 30% lift in conversions when using video.

Is your ad copy strong?  

Your sales copy is more important than you might think. After all, it’s the words people read that push them to act! 

Get familiar with the following strategies: target the customer’s pain point, agitate it, and provide a solution (your product!) Talk about the emotions and experiences your product will create. Hit their pain points: how can you help them? Explain how your product is one-of-a-kind and better than anything else they can get.

 For more advice, click through to read our full post on How to Write Facebook Ad Copy That Sells. 

What’s a specific example of increasing Facebook ROAS? 

Prior to working with ParaCore, Sallie Tomato had no paid ad presence and no idea where to begin. 

We launched paid ads on Facebook, testing several cold audiences. Our goal was to reach new customers and target users at every stage of the buying cycle.

Within the first 90 days, Sallie Tomato was averaging 5:1 ROAS, with an increase in website traffic by 72%.

ParaCore is the transparent resourceful expert you need when it comes to hyper-targeted Facebook ads.

Get in front of your ideal target audience today; click here to start a conversation!