For example, if an order earns you an average of $ 75, how much can you afford to pay to acquire a new customer? Take into account all the costs involved in producing and shipping a product to calculate your profit margins. If you are generating leads, calculate your value per lead (the average revenue generated by each incoming lead) as well as the lead-to-customer conversion rate. This will allow you to estimate the maximum cost you can pay per lead. Once these costs have been estimated, launch Facebook advertising campaigns with the right objective (e.g. conversions, generation of leads, installation of apps) and measure the results. If you launch a conversion campaign optimized for purchases, you will find the number of purchases and the cost per purchase (acquisition cost) in the “Results” and “Cost per result” columns.
Depending on your campaign objective and its configuration, the “Results” and “Cost per result” columns will display different indicators. You notice that each campaign has a different acquisition cost and one of my campaigns has a significant purchase volume. This is because we invest the majority of our budget on this campaign. I also advise you to analyze the Bahamas Email List evolution of your acquisition cost every 7 days and every 28 days in order to see if it increases or decreases. Avoid evaluating your cost of acquisition every day, at the risk of making decisions based on emotion because one day was less good than another. (In the rest of this article, I’ll show you how to spot a lack of interest in your ads or ad fatigue that can affect your cost of ownership.)
The evolution of your acquisition
Finally, also assess your cost per conversion at the ad set level (audience) and ad level to identify possible optimizations. For example, you might find that one audience (let’s call it Audience A) generates conversions at a cost of $ 20, while another audience (Audience B) generates conversions at a cost of $ 40. In this case, you should assess the relevance of audience B since the cost per conversion is twice as high as audience A. Should you cut it? Probably… if the following indicators point in the same direction. 4) Evaluate generated revenue and return on investment (ROAS) If I told you that one purchase costs me € 20 and generates € 200 in turnover, while another purchase costs me € 25 and generates € 280 in turnover, is it really a problem to pay? more expensive for a purchase that brings me more turnover?
Of course ! This is also true if you are doing lead generation. Paying more for a prospect isn’t necessarily a bad thing if those prospects are buying more or converting at a higher rate. This is why you cannot only analyze the performance of your campaigns by evaluating the cost of acquisition. You must also take into account the turnover generated and the return on investment (ROAS – Return on ad spend ). Of course, the acquisition cost allows you to calculate your profit margin, but it doesn’t always tell the whole story. Some people spend more than others, but cost more to “acquire” on Facebook and Instagram (because they are targeted by more advertisers). Before looking at some examples, let’s take a look at the relationships between number of conversions, cost per conversion, revenue, and ROAS.
The cost per conversion is twice as high as audience
As seen previously, the cost per conversion is calculated by dividing the number of conversions by the amount spent. If you generated 10 conversions for an invested budget of $ 200, your cost per conversion is $ 20 ($ 200 ÷ 10). Revenue is calculated by the number of conversions multiplied by the value of those conversions. If you generated 10 purchases for a product sold at a price of 60 €, the turnover generated by these 10 purchases is therefore 600 € (10 x 60 €). Facebook can provide you with this information only if you have installed the Facebook pixel settings (including content_ids , value and currency settings ). Your developer knows what I’m talking about … Let’s come back to the turnover generated. Once you’ve calculated the latter, you have all the information to calculate the return on investment of your Facebook ads (ROAS).