ROAS---ROAS stands for Return on Ad Spend, it is the marketing universes acronym for ROI. Return on ad spend is one of the most important metrics that you are looking for when running your ads. The Creme de la Creme of ad metrics. ROAS tells you for every dollar you spend in Ads Manager, you are making X number of dollars. This number is what you want to always pay attention to. This is an important reminder about setting your account up correctly from the start because Facebook calculates your ROAS utilizing your Facebook pixel. The goal of this number is to always be above 1, and in a perfect world you want to see this number hitting 4, 5, and beyond. When we look at ROAS we look at all levels to understand across all of our campaigns, ad sets, and ads, are getting a combined average ROAS above a 1.
Purchases---Purchases just simply means the volume//number of purchases made. This one is pretty self explanatory in its importance but this is obviously a number that you want to see continually and steadily increasing
Purchase Value---Purchase value is the dollar amount you’ve made on your store from Facebook ads. This amount is important for a variety of perspectives. First off, this amount is what Facebook utilizes to calculate your ROAS. Second, it’s important to look at your purchases vs. your purchase value, especially if you have a store with a variety of different priced products. If you purchase volume is incredibly high, but your purchase value is low, perhaps you are advertising the wrong products or need to rethink a promotional strategy
Cost/Conv.---Cost per conversion means how much money did Facebook Ads spend (on average) for someone to click through and purchase your product. Cost per conversion is important to note for a few reasons but the main one is that you always want your cost/conv. To be less than the lifetime value of a customer (don’t have the Lifetime value of your customer yet? Don’t worry, aim to have your cost/conv. Be less than the average price of an item on your site).
How to look at it all
There are a ton of different ways to slice and dice your data and get really granular with what you are looking at but most times simple is better. When you’re looking at all of the metrics we break down above, first look at what all of the blended or average numbers are at the account//campaign level before you start getting into things on the more individual ad set and ad level. If performance at the top level is moving in the right direction, that’s what you’re looking for. Then you can take time to get into individual ad sets and individual ads to understand their performance and ways to improve it but give it time. Looking at your ads right away is great and seeing your numbers increase over the first few days is a great feeling but before you really take stock in your numbers and start adjusting ads and budgets and what not, allow your ads at least 7-10 days of time. The Facebook Ads algorithm needs time to learn and serve youor ads in the smartest//most efficient way possible and if you are in making changes every single day it will never get the chance to do so.
The Golden Ticket
We mentioned that your ROAS is one of, if not the, most important metric to look at when you’re reviewing your ads so we wanted to leave you with goals you should hit to start and let you know some of the amazing numbers that we’ve seen in working with Shopify stores over the last few years.
Your Top of the Funnel Campaign should have minimum of a 1 on your Return on Ad Spend.
Your Middle of the Funnel Campaign should have a minimum of a 3 on your Return on Ad Spend.
Your Bottom of the Funnel Campaign should have a minimum of a 5 on your Return on Ad Spend.
These numbers combined, to start, should get you an average ROAS for your account of a 2x which means you’re making $2 for every $1 you spend and that’s on your way to victory.
But we want to leave you with some inspiration and things that you can shoot for and that we know can happen. We’ve helped a streetwear clothing brand start out with 5x or 6x and progress all the way to a 15x in 2020. And we’ve helped a small women’s wear brand go from a social media presence on her own, no ads, and a struggling website to regularly getting 22x ROAS every month. And these are only a few of the many.