Tackling the world of Facebook Ads is a challenge in itself. From copy and visuals to audience and budget, there are many components in this type of advertising. But once all of this in place, how do you evaluate your ad performance? Do you compare the number of results each week or do you use quality, engagement and conversion metrics Facebook provides?
Facebook has a wide variety of reporting metrics that allow you to assess the performance of your ads, but when you want to compare their performance to competitor ads what can you do? The solution: benchmarks! In this blog, we’re going to talk you through these metrics, what can affect them and how you can use these in your Facebook Ad marketing plan.
What are benchmarks?
A benchmark, by dictionary definition, is a standard or point of reference against which things are compared. In this case, our Facebook Ad benchmarks will be an average cost seen across all Facebook Ads.
Benchmarks can also be defined by industry. For example, the apparel industry will have different benchmarks compared to the B2B industry. For this blog, we’re going to focus on all industries and the E-commerce industry to keep things simple.
Facebook Advertising Benchmarks
When you look at Benchmarks online, you’ll often see there are 6 main measuring metrics for Facebook Ads: Cost Per Click (CPC), Cost Per Mille (CPM), Cost Per View (CPV), Cost Per Action (CPA) and Cost Per Like (CPL) and Click Through Rate (CTR).
CPC is the most common for advertisers as it shows how much it’s costing us to have users click on our ads. Cost Per Action and Click Through Rate are also popular measurements for marketers. When you choose your benchmarks, think specifically about what’s best for your objectives, ad types and ad goals.
Let’s break each of these benchmarks down further:
Cost Per Click (CPC)
Although it’s quite self-explanatory, it’s important to know what the difference between Cost Per Click, Cost Per Action and Cost Per Landing Page View is. The CPC pricing structure only charges advertisers when a Facebook user clicks an ad. This click can be a Call to Action (CTA) like a Shop Now or Learn More button, or could be from the user clicking on the business page or when expanding an image or video.
This benchmark is good for those who want to see how much it’s costing them to provide engaging content for their target audience. The average CPC across all industries is $1.86.
Cost Per Mille (CPM)
Every time an ad is displayed 1,000 times or receives 1,000 impressions it gains a CPM. It’s often a low-cost alternative to CPC as you’re asking for an easier commitment from your audience. It’s important to note impression don’t necessarily mean a user interacts. It could mean the ad is showing on their Facebook page.
This benchmark is great for those who want to see how their brand awareness is growing on Facebook. The average CPM across all industries is $11.20. In other words, that’s 1 cent per impression ($11.20/1000 impressions = $0.01)
Cost Per View (CPV)
This pricing model is designed for video ads and charges advertisers every time their video is watched by a Facebook User. Keep in mind a video only has to run for three seconds for Facebook to consider it a view. If you decide to use this benchmark, make sure you also look at the seconds or percentage of video views as well to determine if the ad is successful or not.
This benchmark is good for those who want to see how much it’s costing them for users to view their video ads, and make a call on whether video content is a good option for the marketing of your Shopify store. The average CPV across all industries is 1-15 Cents.
Cost Per Action (CPA)
Again, CPA is very similar to CPC but it has a key difference. CPA is only charged when the user takes a certain action on the advertiser’s website. Popular actions you can choose to optimise your ad and be charged for are: View Content, Add to Cart and Purchases. Because of these varied objectives, the average benchmark may be higher than you’d expect. A good indication on if your ad is profitable, is to check if the action e.g. a purchase is equal to or more than the CPA.
This benchmark is designed for those who want to see how much it will cost them to get a user performing an action on their website. The average cost across all industries is $18.68.
Cost Per Like (CPL)
If you set your CPA to “Like” you’ll be charged for CPL. This is a low-cost way of gaining more likes for your business and building brand awareness by targeting new audiences. This type of advertising works best if you have an active social media page as it will give new ‘likers’ content they can engage with.
This benchmark has an average cost across all industries of 12-16 Cents. However, no matter what ads you have on Facebook, the business page will always be present. This means that you’re increasing brand awareness, whilst still advertising with another objective. If a user is interested in your brand they can like your page through any ad. So even if you want to increase your brand awareness, your budget may be spent better focusing on CPA.
Click Through Rate (CTR)
CTR is the proportion of visitors to a web page who follow a link to a particular site. In Facebook Ad terms, this means you can see how many of your audience have clicked a link to go to your site. Although this is similar to CPC, the key difference is that you’re looking at the percentage of people who have gone to your site, rather than how much it has charged you for a person to go to your site.
This benchmark is good for those who want to see how effective their ad is at getting people to their website. The average cost across all industries is 0.90%.
Factors that influence advertising costs
There are a number of factors that can influence your advertising costs and put you above or below these benchmarks. Some are out of your control and some you need to monitor. Here are our top 5 factors to consider:
1. Holidays / Seasons
Particularly around holidays like Christmas or seasons like Summer, you’ve probably noticed an influx in ads. Being key times of the year, advertisers ramp up their marketing and get quick sales from potential customers. Because of this increase, it’s not uncommon for your costs to increase and results to decrease. There’s more competition for your ads to compete with, therefore Facebook wants you to bid more.
If you’re worried about costs at these times, there are a few things you can do. First of all, why not join in? If your Facebook Ad goal is to generate sales, hold a seasonal sale and change up your marketing to advertise this. You may see an increase in cost but because you’re providing incentive, you may get more purchases which can counteract these costs.
If your Facebook Ad goal is to increase brand awareness or increase website traffic, you may find it better to pause your ads until the season or holiday is over. This option works best for those who are paying more for ads but not gaining results for these increased costs. Keep an eye on them and if you become worried at the cost per result, don’t be afraid to put things on hold.
The objective you chose for your ad campaign is key to what results you get from your ads. For example, if you want to gain purchases from a video you have created, it would be better to choose the Conversion objective over the Video Views objective. This is because the Conversion objective will optimise for conversions like purchases, whereas Video Views will optimise the ad to show to people who are likely to view your video. You may also find that objectives that require a larger commitment from their audience (e.g. a purchase) will have a higher cost than objectives that have a smaller commitment (e.g. Page Like).
Here’s a rundown of our favourite Facebook Ad Objectives for E-commerce and what they are good for:
- Brand Awareness - Good for reaching people who are likely to engage with your brand and increase your brand awareness to new audiences.
- Traffic - If you want to increase the number of people who visit a certain destination like your Facebook or Website.
- Lead Generation - Focuses on those who are interested in your brand and are likely to interact with a form so you can capture leads.
- Messages - Increase the number of people who send a message to your business Messenger. Perfect for linking with a Facebook Bot.
- Conversion - For those who want to drive valuable actions to their website like Add to Carts and Purchases.
- Catalogue Sales - Good for driving valuable actions to a website by using a Catalogue of products linked with Facebook.
Audiences are the reason why your ads are shown to different people. On Facebook, they use a User-based tracking system to target those in your audience, whereas Google uses cookie-based tracking. This means the audiences you create will only be targeted on Facebook if they use Facebook.
There are hundreds of audience targeting options on Facebook which allow advertisers to pinpoint exactly who they want their ads to target. But it’s not as simple as just creating your target audience and sending out ads to them. Until a user has interacted with your business on social media or on your website, they are known as a cold audience. Cold audiences are great for when you’re trying to increase brand awareness but can be harder to initially generated purchases from as they’ve shown no previous interest in your brand. If you want to start generating purchases with your ads, you’ll need to look at creating custom audiences around those who have visited your website or interacted with you on Facebook.
Another area of Facebook audiences that is often overlooked, is overlap. If you have multiple campaigns all using the same audience, you’re indirectly competing against yourself because you’re targeting the same audience multiple times, therefore increasing the bid to show your ads.
To make the most of your ads, you should target audiences that are similar but should also make sure the overlap in your audiences is less than 30%.
You can check this by going into Audiences in your Business Manager, selecting the audiences you want to compare. Then when you move across to the 3 dots, a menu will appear where you can select ‘Show Audience Overlap’. Do note, if your audience has less than 1,000 people in, Facebook will not show you the overlap to protect user privacy.
In the example above you can see that we’ve created Lookalike Audiences from Warm Audience sources like website visitors, engaged with Instagram and our Mailing List CSV. With an overlap of 4-5%, we know it’s unlikely we’ll be competing with ourselves.
4. Ad Placement
On Facebook, you have two options when it comes to ad placement, Automatic and Edit. Edit placements allow you to pick and choose where you want your ads to show whereas Automatic will decide for you. Believe it or not, the best option here is to let Facebook work for you and go with Automatic Placements.
It’s natural to assume that certain placements will be more effective than others for your business. For example, if your brand has a strong following on Instagram, it can be surprising when ads run exclusively to Instagram followers do not perform. This is why Automatic Placements are great. When you first start a campaign, Facebook will evenly distribute the budget across everything, but as it starts to see more results, it will automatically optimise the budget to go towards what performs best. In this case, it will put more budget and effort into showing ads to the placement that has performed best. If you restrict your placements, you might actually be restricting your ads from showing to the placement that performs best which could cause your costs to rise. So why not let Facebook do the work for you?
But if you really wanted to find out which placement is best, you could create multiple ad sets for the same audience but change the placements for each ad set. You could then directly split test placements and see which one/s perform best.
5. Ad Quality
A common mistake a lot of marketers make when creating Facebook Ads is only using one ad visual or one version of ad copy. This method is restrictive and doesn’t actually show you what your audience likes. Have you taken a look at your competitors? Are your ads similar to theirs? It’s highly likely if a competitor is doing something different with their ads, it could be because they’ve proven it works. Testing and optimising is key to having good quality ads. Make sure you aren’t restricting yourself by using images when videos are really what gets your audience’s attention.
Personal preference vs quality data is also a big part of ad quality. Just because you like the way an ad looks, doesn’t mean your audience will. This is a big hurdle for many marketers but once you find your winning ad format, change the ad visual to as many variations as you can, even if you don’t like it so that you can see what your audience actually likes. You can then use the benchmarks above to compare the visuals or to compare your ads to competitors by using the Engagement, Quality and Conversion Metrics which show you if your ads are Above, Below or Average compared to your competitors.
Facebook Advertising Benchmarks for E-commerce
Here at Blend, we’ve been creating Facebook Ads for Shopify Clients for quite a while now, and although we use the benchmarks listed above, we also have another set of benchmarks that we use when analysing our ad results. One of the issues we’ve found with using industry benchmarks is e-commerce vs brick and mortar stores. For example, a brand new female activewear brand isn’t going to reach the same benchmarks as GymShark or an Activewear Shop. For this reason, we compare our results to E-commerce specific benchmarks.
Here’s an insight into what we look for when optimizing our clients Facebook ad accounts.
Cost Per Link Click (CPLC)
This is the same as CPC but is usually charged when a link is clicked. A link could be your Shop Now or Learn More button linking to a website. Or your ad linking to your Facebook Page. A good benchmark for CPLC is keeping costs below $0.50.
Cost Per Landing Page View (CPLPV)
This is very similar to CPA but is charged when someone clicks a link and lands on a page. For example, if a user clicks a link but doesn’t wait for it to load it will be charged as CPC. But if a user does wait for the page to load and continue to browse it will be charged as CPLPV. Because this cost requires a large commitment from the user, a good benchmark is to keep costs below $1.00.
Cost Per Facebook Page Like (CPL)
This is exactly the same as CPL mentioned at the start of the article, however we aim to keep costs under $0.50. We do this because as explained above, any ad can get you a page like, so if we keep costs as low as possible we know this ad type will be beneficial to use.
Although this isn’t a cost, it does show you how many times your ad is shown to a person. For example, if you’ve reached 40 people with an ad and have a frequency of 4.58, this means your ad is shown to one person around 4 and a half times. A frequency that high and for so few people means that you could be exhausting your audience and therefore see the above costs rise.
Frequency should be between 1-3% but it isn’t uncommon for e-commerce stores to see 3-5%. This is because it takes a person around 7 interactions with a business before they decide to buy from them, which is why it’s important to show the user an ad at every step of their customer journey. If you notice your frequency is increasing and your costs are increasing, consider expanding your audience so that more people are targeted.
Return on Ad Spend (ROAS)
When we’re advertising on Facebook we want to see profitable results. ROAS is a good way to determine this. Facebook has its own ROAS calculation where it calculates the ROAS for the number of purchase compared to its ad spend. Anything below 1 means it’s not profitable. If your ROAS is low, make sure you take a look at your website, in particular, your bounce rate, page load time and abandon cart rate. It’s good to make sure there’s nothing on your website that is putting people off.
Ideally, with Facebook Advertising the amount purchased as a result of the ads need to outweigh the cost of the ad so you can make a profit. However, Facebook is unable to tell you this. You’ll have to take a look at your analytics, find out how much the purchases were, minus any manufacturing or buying costs you have, and then minus the amount you spent on the ads. If your number is positive then you’re in profit. If not, then take a look at all of the steps above and see what you can do to optimise your ads to get the best results.
The above benchmarks are designed to give you a guideline on how well your ads are performing amongst themselves and compared to other ads on the platform. However, it’s unlikely that every advertiser will fit into these benchmarks so it’s important to understand your business goals and objectives so you can select the benchmarks that are right for you.
If you have any queries or need any extra help, feel free to get in touch with Blend. We’ll be on hand to give any extra advice or help.