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Boost Your Facebook Ad ROI with These Crucial Metrics

Published on: November 20 2023 by Jordan Welch

Boost Your Facebook Ad ROI with These Crucial Metrics

Table of Contents

  1. Introduction
  2. When to Shut Off an Ad Set or Campaign
  3. Testing Indicators for Ad Set Shut Off
    • Indicator 1: Hitting Break-Even CPP with No Sales
    • Indicator 2: CPM Over $30
    • Indicator 3: Linked CPC Over $3
  4. Scaling Indicators for Ad Set Shut Off
    • Indicator 1: ROAS Below 2.5 for 3-5 Days
    • Indicator 2: Bad Performance for an Entire Week
    • Indicator 3: Allowing 48 Hours Before Killing Ad Set
  5. Patience and Proper Approach to Ad Set Shut Off

When to Shut Off an Ad Set or Campaign

In the world of e-commerce, it's essential to not only test products but also assess the performance of your ad sets and campaigns. One of the significant challenges faced by many online entrepreneurs is determining the right time to shut off an ad set or a campaign. It can be confusing to analyze metrics and decide if an ad set is scalable, or if an ad that previously performed well will continue to do so. In this article, we will explore the metrics and indicators I look for when deciding to shut down an advertisement, whether you are in the testing phase or scaling your campaigns.

Testing Indicators for Ad Set Shut Off

When testing a product, there are three key indicators I consider for shutting down an ad set. These indicators help determine if the ad set is worth pursuing or if it's time to shut it down indefinitely.

Indicator 1: Hitting Break-Even CPP with No Sales

A crucial factor to consider is the Cost Per Purchase (CPP). If you've hit your break-even CPP, but haven't made any sales, it is unlikely that the ad set will perform profitably in the long term. Although there are exceptions, generally, if you reach the break-even CPP without any sales, it's best to kill the ad set. Of course, you can explore other options, such as trying a new creative or optimizing your landing page, but if it's a winner, it should be selling itself.

Pros:

  • Allows quick identification of non-performing ad sets.
  • Saves time and resources by focusing on profitable campaigns.

Cons:

  • Potential missed opportunities if not thoroughly tested.
  • Some winners may require further optimization before generating sales.

Indicator 2: CPM Over $30

The CPM (Cost Per Mille) is the cost you incur to reach 1,000 impressions for your ad set. If the CPM exceeds $30, scaling the ad set in the long run becomes challenging and may not be worth the invested dollar. However, exceptions exist when dealing with highly profitable products. In such cases, a high CPM can be ignored if the campaign is generating significant profits. Generally, though, a high CPM can make it difficult to achieve a good Cost Per Purchase (CPP) and maintain profitability while scaling.

Pros:

  • Avoids excessive expenditure on ad sets with low potential.
  • Promotes cost-effective advertising by focusing on lower CPM campaigns.

Cons:

  • Some highly profitable products may not fit the CPM guideline.
  • Rigidity to CPM cutoffs may result in missed opportunities.

Indicator 3: Linked CPC Over $3

The Linked CPC (Cost Per Click) is the cost you incur each time a user clicks on your ad and is redirected to your landing page. While previously setting the cutoff at a CPC over $2, I have recently revised it to $3 based on successful experiences with higher CPCs. However, a low CPC is preferable, especially below $1 or even below 50 cents. The CPC threshold becomes essential when scaling a campaign, as high CPCs impact profitability and make it harder to achieve desired ROAS (Return on Ad Spend).

Pros:

  • Controls advertising costs by avoiding high CPC campaigns.
  • Ensures better profit margins by focusing on lower CPC ad sets.

Cons:

  • Some successful campaigns may have higher CPC but still deliver good results.
  • Potential missed opportunities if overly focused on CPC.

Scaling Indicators for Ad Set Shut Off

Scaling a campaign involves allocating larger budgets and reaching a broader audience. While scaling, I closely monitor three indicators to determine when it's necessary to shut off an ad set.

Indicator 1: ROAS Below 2.5 for 3-5 Days

Return on Ad Spend (ROAS) is a metric that measures the revenue generated for every dollar spent on advertising. If the ROAS falls below 2.5 consistently for 3-5 days, it's a sign that the ad set's performance has deteriorated. While good performance can fluctuate, consistent poor performance over this duration indicates a need to switch something up or possibly move on to another product. Strategies to alleviate poor performance can be found in my previous videos on the Facebook Ads Blueprint.

Pros:

  • Promotes efficient allocation of advertising budget by identifying underperforming ad sets.
  • Maximizes profitability by focusing on campaigns with higher ROAS.

Cons:

  • Some campaigns may experience temporary fluctuations, leading to premature shut off.
  • Requires continuous monitoring to prevent missed opportunities.

Indicator 2: Bad Performance for an Entire Week

When scaling campaigns to larger budgets ranging from $100 to $1000, it's essential to allow at least 48 hours before considering shut off. Facebook requires time to optimize the delivery of ads and identify the target audience for optimal performance. While the initial performance might not be outstanding, the second day often yields better results. However, if you experience two consecutive days of poor performance on a new launch with a larger budget, it's likely that the campaign will not bounce back, warranting shut off.

Pros:

  • Gives sufficient time for Facebook's algorithm to optimize ad delivery.
  • Reduces the risk of premature campaign shutdown due to initial fluctuations.

Cons:

  • Requires patience and may hinder quick assessment of initial performance.
  • Rigid adherence to the 48-hour rule may delay necessary shut off in some cases.

Patience and Proper Approach to Ad Set Shut Off

Patience is crucial when it comes to launching and assessing the performance of ad sets. It's important not to get too attached to specific ad sets or campaigns. Having patience allows you to make informed decisions, rather than panicking at the first signs of underperformance. Additionally, if an ad set that initially performed exceptionally well suddenly declines, it's essential to pivot and explore alternative strategies, such as launching new ad sets, targeting different audiences, or creating new ad creatives. Remember that persistence and flexibility are key to success in the dynamic world of e-commerce.

Pros:

  • Encourages a calm and strategic approach to ad set management.
  • Enables quicker adaptability and resource allocation for better campaign outcomes.

Cons:

  • May result in missed opportunities if patience leads to prolonged poor performance.
  • Requires continuous monitoring and adjustment to avoid stagnation.

In conclusion, determining when to shut off an ad set or campaign depends on several factors. While there are general metrics and indicators to consider, each situation is unique, and personal preference plays a significant role. By following these guidelines and paying careful attention to key metrics such as ROAS, CPM, and CPC, you can make informed decisions that minimize losses and maximize profitability in your e-commerce ventures.

Highlights

  • Knowing when to shut off an ad set or campaign is crucial in e-commerce.
  • Testing indicators include hitting break-even CPP with no sales, CPM over $30, and Linked CPC over $3.
  • Scaling indicators involve ROAS below 2.5 for 3-5 days, bad performance for an entire week, and allowing 48 hours before killing ad sets.
  • Patience and a proper approach are essential for ad set shut off, avoiding attachment and being open to pivoting strategies.

FAQ

Q: Should I shut off an ad set if I hit the break-even CPP with no sales? A: Generally, it is recommended to shut off an ad set if it hits the break-even CPP without generating any sales. However, there are exceptions, so consider other factors before making a decision.

Q: Can I scale an ad set with a CPM over $30? A: It can be challenging to scale ad sets with a high CPM, as it may affect profitability and cost-effectiveness. But if the product is highly profitable, an exception can be made.

Q: How long should I allow a campaign to run before shutting it off due to poor performance? A: It is advisable to allow at least 48 hours for larger-budget campaigns before considering shut off. This allows Facebook's algorithms to optimize ad delivery and target the right audience.

Q: Should I get attached to an ad set that initially performed well but suddenly declined? A: It is best not to get too attached to an ad set. If performance declines, pivot and explore alternative strategies rather than becoming frustrated or sad. Persistence and flexibility are key to success.

Q: Why is patience important in managing ad sets? A: Patience allows for a calm and strategic approach to ad set management. It prevents premature shut off and allows for adjustments and optimizations without missing opportunities.

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