For more exciting content, please follow meTherefore, I recommend that you deduct click-through fees (CPC), per thousand impressions (CPM) and Facebook's "relevant score" from the metrics you observe.

Let's be frank: If you like to develop an ad marketing plan based on these three metrics from start to finish, and later an ad optimization strategy, you may not be as effective as turning ads on and off at will.

Here, I quote a foreign Facebook advertising analyst: "If I shut down THEC in large numbers, my total ad return ROI will eventually fall by 40%." Therefore, it can be seen that low CPC is not necessarily positive.

So what indicators should we focus on?

For each ad you post on Facebook, Facebook has advertisers with the same target bid, which determines which ads will eventually be eligible to appear to their target audience. 

The auction of Facebook ads is primarily about achieving these two key goals:

Create value for advertisers by helping them reach their target audiences and get results.

Provide a positive user experience for users using the Facebook platform.

Facebook ads differ from other digital marketing platforms in that they are very similar to Google in terms of "people-oriented" ad pricing. It is precisely because advertising itself is based on people, so the core of its advertising bidding and pricing is to show the right ads to the right people at the right time. The more relevant the ad is to the target audience, the more likely the user is to the ad itself, and the lower the ad fees advertisers must pay.

Facebook is different from traditional ad auctions, such as TV or print advertising, where the ad space is the highest bidder. Facebook's ad rules are more likely to deliver the highest total value to advertisers and users, so the following three metrics are core considerations for Facebook:

a. Advertiser bids

b. Users of Facebook's advertising system estimate the rate of action

c. Advertising quality ranking and its use value

The long-term survival of the Facebook platform depends more on providing a high-quality Feed experience for users who use it every day, which can satisfy and appeal to users, thereby increasing their stickiness and retention. Therefore, showing the most relevant ads to each user is more in line with Facebook's principles, which is why Facebook refuses the highest bidder to get a position.

On the other hand, the effectiveness of Facebook ads also depends on the large number of shoppers who can be highly engaged on the platform, and once the platform's highly active shoppers lose users due to a lack of a good product feed experience, no advertisers will be willing to pay for advertising space on Facebook.

In addition to maintaining a pleasant user experience for Facebook users at all times, the platform is designed to help advertisers continue to make money, display ads to those most likely to complete your conversion activity, such as "Purchase," and display big data from ads to The Facebook platform, so estimating user activity rates is also a very important issue.

Note: "Estimated Activity Rate is the likelihood that Facebook will determine whether an ad is likely to take action on Facebook based on your historical ad performance, post-click user experience, and follow-up after clicking on the ad." In extreme cases, a user's poor click-and-click experience may result in your ads being blocked.

Just as we're used to sorting ads based on their "total value," Facebook assigns a specific value to each user based on the need for ad space (ad space).

As a result, the demand for advertising space has been high for highly transformed shoppers, and the wave of traffic they want to fight for will lead to fierce price competition among advertisers, so it will inevitably cost more to put ads in front of more valuable people.

我举两个用户的例子来解释这种情况，也侧面代表了两类消费者，通过这两类消费者，你可以知道哪些类型的购物者最终会在你的广告定位中出现。

Sally Shopper

Skeptic Scott

Shopper A：SALLY SHOPPER’S TERRIFIC TRAFFIC

Let's meet Sally Shopper first! 

Sally Shopper, a 25-year-old American woman and high-frequency online shopper, has a high level of interest in Ads on Facebook, clicks on most of the ads she sees, and regularly buys products she finds on Facebook and Instagram. 

Thousands of advertisers want to show ads to people like Sally because it's easier to convert them by scrolling through advertisers' Facebook feeds. Facebook uses Sally's past buying habits to determine what kind of ads Sally likes to see and how interested and likely she is to buy them, and ultimately uses Facebook algorithms to optimize to show Sally her favorite ads.

However, because Facebook also limits the number of ads users see in its Feed, advertisers must compete with other advertisers for a limited number of ad spaces. Competition is particularly fierce for Sally users who often buy after clicking on Facebook ads.

For example, the brand, Fielder's Choice Goods, sells wallets made from old baseball gloves.

The ad is aimed at 25-55-year-old baseball fans in the United States, with an average wallet subscription value of $150, while the campaigns in use are designed to change and optimize the results of purchased ads. The following image shows the initial performance of the ad.

Take a closer look at the CPM and CPC metrics, which can scare junior advertisers at the start of an ad, think it's a problem with their own ads, and then quickly shut down the ads.

But in the end, the ad became one of the best ads on the "Expensiveclicks" and "HighCPM" accounts, spending more than $30,000 over its life cycle and a return on investment of 2.5 times (ROAS).

So maximizing your ads to the benefit of thousands of highly transformational users like Sally Shoppers is the best way to make your ads profitable in the end. Shopperally's Feed shopper Sally will be very expensive because the buyer profile is a highly transformative user. In this regard, it must be said that Facebook is doing the right thing, because high-conversion users of Feed ads are very competitive, so Facebook should also charge a higher fee.

Here are three ways to make sure you can maximize your ability to reach a high conversion audience: 

Always optimize for Purchase Conversions for Ad set.

Try testing multiple creatives to find the content that's most relevant to Target Audience. The more user value your ad reaches, the more competitive your ad will be in bidding. 

Make sure your bid is competitive in the Target Audience you're trying to cover. 

Do a good job of the above three points, to ensure that you can get a relatively cheap price for high conversion users! 

In this case, is it worth advertising to Shopper Sally at a competitive Ad space bid? The answer is yes, the conversion rate will increase proportionally as the cost of advertising space increases. In the ad example above, the ad gets 190 clicks at an average price of $5 per click, but 16 of the 190 clicks translate into purchases, with an overall conversion rate of 8.4%. Finally, 2.5 times the ROAS was generated in AOV (average order value) valued at $150.

Fielder's Choice Goods averages around 1.14 per cent full-site conversions (see screenshot from the Shopify store below), resulting in an eight-fold increase in ad traffic conversions for Facebook ads.

These may explain why CPC is a misleading indicator when evaluating the effectiveness of Facebook ads, especially when optimizing ads based on CPC across the site.

Shopper B：SKEPTIC SCOTT’S TRASH TRAFFIC

Next, let's look at CPC and CPM indicators that may be more misleading among other types of consumers.

Let's start with Skeptic, an American in his 30s who loves drama. He spends less than 30 minutes a day on Facebook and Instagram, but often clicks on ads, but never buys them because he likes to shop in person. He represents another category of consumers.

If you evaluate ad performance against CPC and CPM metrics, "Skeptic Scott" traffic coming in through Facebook ads sends you a highly misleading signal. Now let's take a look at the Fielder's Choice Goods ad below to find out why.

Seeing the data above, for new advertisers, will certainly feel that the data is very good, because THE CPC only needs 0.42 dollars, CPM only 5 dollars, such cheap traffic is very suitable for our site, so he will certainly start to increase the spending of this ad.

However, cheap clicks are sometimes not good clicks. Traffic is valuable to e-commerce conversion only if the traffic your ads bring is intended to be purchased. For the ad example above, the conversion rate of 2,400 clicks is 0.1%, more than 10 times lower than the average site conversion rate of 1.14%, making it difficult for Facebook ads to make you profitable. 

By comparison, the two main differences between 2.5x ROAS for the first ad example and 0.5x ROAS for the second ad example are:

Advertising ideas (out-of-print gift angle and product scarcity angle)

Campaign optimization goals (conversion goals and traffic goals)

These differences also led us to the final decision that in Campaign, Conversions (conversions) need to be used as Purchase objectives and ad optimization goals, not Link clicks (link clicks). Because our goal is to bring more conversions at the lowest cost, not get the highest traffic at the lowest cost.

In the first ad example, the CPM for the conversion target is $25, while for the second ad the CPM is only $5. However, even if CPC and CPM were much higher, sales of the first ad would be more than five times higher.

The advertising cost of driving the user's purchase intention is the key to determining whether the goods are profitable.

Facebook knows best who is most likely to buy, interact, click on ads or do nothing.

So if you're optimizing link clicks, Facebook is also good at helping you find the people most likely to click on your ads (like SwitchScott). But if you optimize your purchase conversion, Facebook will also show your ads to the people most likely to buy on your site. In this way, the cost of CPM and CPC for purchase may be much higher than the cost of link click as an optimization indicator, but it will also result in higher ROAS.

We analyzed the results of $100 million in advertising spending in the last quarter and worked to identify trends between CPC, CPM and ROAS. If you remember the two scenes mentioned above, Sally Shopper and Skeptic Scott, the results are not surprising.

When analyzing these ad accounts, it also found an interesting phenomenon: when people who recently visited the site were re-marketing, the CPM cost of these ads was more than four times that of potential customers who had never visited the site. Not surprisingly, ReTarget Ads has twice as many ROAS as AspectAds.

From this set of data, it's not hard to see why the high-value Realgeting audience has four times as many CPM as Cold audience.

Okay, let's get back to the point where we'll continue to explain the relationship between CPC, CPM, correlation scoring, and ROAS from data analysis.

Before we begin to elaborate on this relationship, let's clarify one concept: the relevant analysis. Correlation analysis refers to the closeness of the relationship between two variables. For example, height and weight are related, and tall people tend to be heavier than shorter people. However, this relationship is not entirely related, but there is also a relationship between the two variables.

The data analysis team calculated the correlation between CPC and ROAS and concluded that by analyzing advertisements that cost more than $100 million in the previous quarter, it was proved that there was no relationship between CPC and ROAS.

More precisely, the actual correlation between CPC and ROAS is -0.08 when the Campaign hierarchy chooses to purchase conversion targets.

Note: Explain the concept of correlation, with a value of 1 or -1 when there is a complete correlation between the two variables. Strong correlation is considered to be greater than or less than -50 related.

In this result, the correlation between CPC and ROAS is 0.08, which basically tells us that whether the advertisement has a high CPC or a low CPC, it will not be an indicator affecting ROAS. By contrast, the correlation between CPM and ROAS is slightly better: -0.12. But this is still a trivial correlation.

So what does it mean that CPC and CPM are so lowly associated with ROAS? Back in the Sally Shopper example, this means that if the target audience has a high conversion rate, some ads can win with high CPC and CPM because it's more expensive to reach that audience.

Ads with lower CPC and CPM may rank lower in Facebook's Total Value equivalent (Total Value s Low Bid s Low User Estimated Action Rate s Low User Value), which can also result in lower ROI. And that's why CPM and CPC can't be used as the basis for predicting ad success. Also, there are currently no indicators that indicate that high CPC and CPM are due to poor advertising quality.

One problem for junior advertisers is that they pay close attention to The Relevance Score Index for Facebook ads to determine whether their ads are more competitive than other competitive ads.

However, the least significant relationship among all of Facebook's metrics is the relationship between ROAS and the associated rating: .04.

Ratings are a measure of the quality of ads and user engagement on Facebook. Compared to other ads from similar audiences, the relevant score metrics summarize the quality of ads and related factors to help understand the correlation between ads and target audiences. These factors include positive feedback (such as clicks, app installations, video views) and negative feedback (for example, someone clicks "I don't want to see this" on an ad).

Facebook ads have a golden law that is available in all of our ad accounts: 

Good ads from the start (i.e., at least one purchase in the first 1x AOV spend) are usually in good shape.

Ads that start badly (i.e. 0 purchases in the first 1x AOV expense) usually stay bad.

For example:

1. Good advertising metrics

The following ads were purchased 15 times out of a $100 spend, reflecting a strong willingness to buy and focusing on metrics:

Unique add to cart (only add-on) cost: $1.17

Unique checkout (unique checkout) cost: $3.72

The cost is less than one-third of the target CPA cost of $10. 

CPA-related Unique add to cart and checkout are both indicators that should be focused on early in advertising, and keeping low costs in the early stages of an ad is a powerful early indicator of the ad's continued success throughout its life cycle.

2. Bad advertising metrics 

The following ads received 0 purchases during the first 1x AOV spend ($120), and the user's purchase intent metrics were weak:

Unique add to cart 成本：$29.77

Unique checkout cost: $59.53

The high cost of UniqueaddtoCart and Checkout is an early indicator of poor advertising quality. Each item added to the cart costs almost three times the target CPU of $10, and the cost of reaching the checkout interface is almost 10 times the CPA target. Therefore, I have no reason to believe that this ad will succeed and shut it down decisively.

You might think this model is too simpled, but it's very reliable when analyzing the effectiveness of Facebook ads.

When you post a new ad collection on Facebook, Facebook's auction effort is first and foremost to minimize the impact of certified public accountants on the audience and help advertisers save money. So Facebook will first show your ads to the audience they think is most likely to change.

Therefore, at the beginning of advertising, we should pay more attention to ads that promote optimization goals: such as buying.

When we analyzed the best ads in all ad accounts, we found that more than 85% of successful ads (in terms of ROAS goals) were purchased at least once in the early stages of their life cycle.

Let's continue with Fielder's Choice Goods, which sells wallets made from baseball gloves.

The average order value for a purchase is $150, so if I set up a new ad for my wallet on Facebook, I'll let it run to $150 to see if it can buy anything.

If this ad is twice as much as AOV ($150) and I don't get a purchase, I'll turn it off. This is because most of the ads I know (more than 85%) have reached my goal in their lifetime. The ROA buys at least once in the first twice of advertising spending. If I spend three to five times as much on AOV trying to get more data, I bet the ultimate goal of advertising is 15%.

However, if the initial advertising data is not sufficient, you can also look at these two metrics to determine whether these advertisers can drive purchases: 

Unique Adds to Cart

Unique Checkouts Initiated

Unique Adds to Cart is an indicator on Facebook dashboard that is triggered by a Facebook pixel when someone on your site or app adds something to their shopping cart. 

However, distinguish from the regular "add to cart" metric, which uses the Unique Adds to Cart metric to point only to the number of items added to the cart, not the number of items in the cart, i.e. when a person adds one or ten items to the cart, an effect is displayed.

Similarly, Unique Checkouts Outlet refers to the number of people who arrive at the checkout page.

Note: Reaching the checkout page is different from conversion. The checkout page is a page on a website where people enter payment information.

Unique Adds to Carts and Unique Checkouts Started have the most average relationship with ROAS at -50, so they're valuable indicators that tell you intuitively whether your ads are driving people to make purchases.

I don't care about CPC, CPM, or relevance score metrics in my ads, but I'm very concerned about whether my ads are driving my customers to change step by step in the buying funnel. Here's a snapshot of my ad's Facebook dashboard, which includes Unique Adds to Carts and Unique Checkouts:

I'm very concerned about the Unique Adds to Cart and Unique Checkouts Started indicators, from which I can predict the number of people who will end up buying.

For example, if I estimate from previous data that 40% of Unique Adds to Carts can eventually be converted to $150, I can make some predictions using Unique Adds to Cart data.

In the example above, 26 people added some items to their shopping cart. Considering that the average user conversion rate added to the shopping cart is 27% (i.e. unique add to cart-purchase), I can predict that about 7 of these 26 people may end up completing the purchase within my attribution window (28-day view, 1-day click).

The same theory applies to Unique Checkouts Started. If the average user purchase conversion rate for billing is 90% (i.e. unique checkout-purchase), I can predict that 7 out of 8 people who arrive at the checkout page will complete the purchase.

The easiest way to calculate accounts UniqueAddstoCart and UniqueCheckouts Intitiate is through your account lifetime data. For example, the following figure calculates the average conversion rate (28%) for users who add to their shopping cart through UniqueAddstoCart (13760) and the total number of purchases of sites in their advertising accounts (3917).

If you don't have data for your Facebook ad account, you can easily determine the ratio after a few days of running a new ad account. Alternatively, you can analyze the CVR (add to cart-purchase) in your online store to determine this benchmark.

Use three important FACEBOOK metrics to optimize your FACEBOOK ads

Now that you know which metrics to focus on, follow these steps:

Remove CPM, CPC, and relevance score metrics from facebook dashboards.

Add purchases, Unique Adds to Carts, and Unique Checkouts Outlet indicators and use them as the main indicators for turning off or adding.

Turn off ads if they don't get a single purchase after spending 1x AOV (and the number of Unique Adds to Carts and Unique Checkouts Started isn't enough to complete a conversion).

If an ad gets at least one purchase after spending 1x AOV (or Unique Adds to Cart and Unique Checkouts Launched have enough metrics to complete a conversion), let the ad cost the next AOV (2x, 3x, 4x, etc....). )。

With regard to FaceBook's overseas corporate advertising accounts, the name implies that they are corporate advertising accounts opened by agents in the Facebook area using the business licenses of countries on the other side of the country. Common examples include: Facebook Hong Kong Business Account, Facebook Taiwan Business Account, Facebook Malaysia Business Account.

However, this type of account, the general price is not low. See the scarcity and high price of Malaysian business households, suitable for high monthly consumption of enterprises or personal use. The biggest advantages of this overseas corporate account are:

Stable, not easy to seal accounts.

2. Advertising is loose, after all, FACEBOOK's restrictions on mainland accounts are between the most stringent on earth.

No restrictions on domain names, you can run different websites.

No limit on consumption, can consume thousands of dollars to tens of thousands of dollars a day.

No limit to the home page, you can bind your own home page, or change the home page.

6. After the advertisement passes, there are fewer reviews again, unlike domestic households will be frequently reviewed

Friendship reminder: to open an account to come to me, don't disturb our peers, they are very hard!

Facebook Overseas Business Account:Malaysia, Taiwan, Hong Kong, IndiaAnd so on, characteristics of advertising review fast, loose a lot, advertising run well, the most critical or stable and stable (important things to say three times).

Our professional team is not only advertising, but also for you to plan a comprehensive online content marketing, coveringBing广告、Facebook 、tiktok，谷歌、yahoo、line、YouTube，Pinterest，ins，MSN，SnapchatAnd other fields, so that you have a double or even triple sucker channels, multi-pronged, the effect is more comprehensive! Performance improvement is more robust!

Want us to help your e-commerce brand advertising or simply want to know more overseas marketing details and the latest products can contact us! !

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