Before explaining what is good ROAS for Facebook ads, it is of course necessary to know what ROAS is. ROAS stands for ‘Return On Advertising Spend’ and this abbreviation consists of the initials of the structure. ROAS is used to calculate the rate of return for advertising expenses. ROAS metrics are of great importance to the advertiser. Because the results obtained and the general situation of the advertising campaigns can be examined. ROAS provides information about the impression value and click value of the ads.
Today, most of the promotional and marketing activities are carried out over the internet. With the use of people from all over the world, this digital world is now becoming indispensable. Therefore, brands find it logical to carry out many of their transactions digitally. ROAS, which is mostly preferred by e-commerce sites, is used to increase sales figures with advertisements and to determine the value of reaching customers.
Advertising website owners aim to meet the return of their investment with the income they earn from advertising. And in order to achieve this goal, it is necessary to make sales and have a certain marketing budget. Therefore, it is inevitable to use marketing strategies on Facebook, which has the most users today. Creating an organic traffic by e-commerce sites is the biggest step in brand and product promotion. In order to reach this traffic, of course, paid advertising must be given. ROAS is an application that can analyze the profits and losses of e-commerce sites on advertising campaigns.
What is ROAS for Facebook Ads?
The ROAS application is not available to all e-commerce sites. It can only be used actively on Instagram, Google Ads and Facebook. There are several conditions for using ROAS on Facebook:
- Having Facebook Pixel code attached on your website,
- Having a shopping system installed on your site,
- Having the dynamic currency value code installed on your website,
- Having made at least 100 shopping transactions with Facebook ads before,
- At least 10 shopping transactions must be completed with Facebook ads within 7 days.
Many advantages can be obtained by using ROAS in Facebook ads. Thanks to ROAS, you can get many analyzes and reports about your advertising campaigns. You can observe the average performance of the advertising campaign you publish and get detailed information in the financial return section. In addition, you can view a detailed analysis of the budget increase and decrease in advertising campaigns and act according to this data. You can determine the most valuable and highest performing ad campaigns, ad groups. On the other hand, you get average values and recommendations against future changes and strategies for your ads.
Overall, calculating your ROAS gives you and your ad campaign team insight into the performance and quality of your ad campaign. With ROAS, you can take actions and get detailed data that you can use to optimize your ad spend. By calculating the formula and estimating the performance of your ad campaigns, you can also predict the potential sales figures that will come from the ads.
When calculating ROAS for Facebook ads, there are a few structures to consider. The first of these structures is the profit margin. The income structure in the ROAS account actually emerges with the selling price of the product. However, it is necessary to consider other structures that affect this sale price. The profit margin is found by subtracting the expenses from the product sales price in the process until the product is produced and sold to the customer.
Another structure that needs attention is the conversion rate and the average order amount. These data are also viewable as a result of the ROAS calculation. You can measure the efficiency of your advertising campaigns by performing the relevant analysis. Advertising duration and advertising purpose constitute the other two structures. If the purpose of the advertisement is sales, the ROAS value would be a very appropriate type of calculation. However, in cases where the purpose is brand, product promotion and announcement, the brand may have achieved its target even though the ROAS value is low. The duration of the advertisement also varies depending on the purpose of the advertisement. It is possible to decide on the ideal form of this period by analyzing the advertising campaign from time to time.
How to Calculate Facebook ROAS?
Calculating ROAS is an invaluable structure for the advertising website to direct its advertising campaigns. You can determine the profit and loss amount with the value obtained from this calculation, and future advertising strategies can be realized according to this amount. With a simple equation, you can measure ad performance with a percentage rate and see whether you can reach your target. Facebook calculates the ROAS value for the advertising campaigns published on its platform and transmits it to the user. But if you want to calculate it yourself or if you want to know what it is, here is the equation:
Roas value is calculated as ROAS=(Ad Revenue / Ad Cost) x 100. For example, if an advertisement for which 1000 TL is paid, 4000 TL is generated, this calculation is made as follows.
ROAS = (3000/1000) x 100. The ROAS value obtained as a result of this process is expressed as 3 or 300%. So, how to interpret the ROAS value for Facebook ads?
So, how to interpret the ROAS value for Facebook ads? Calculating the ROAS value by itself doesn’t make much sense. It is necessary to be able to read, interpret and analyze the ROAS value obtained. On a sample basis, a ROAS of 300 indicates that the ad is performing quite well. This result means you earn TL 3 in revenue for every TL 1 of ad spend.
It can be said that a good ROAS for Facebook ads is 3 or 300%. It is a very useful rate in ROAS values, it is seen that this rate drops to 0.25 and 25% in some advertising campaigns. Such a ROAS calculation proves that the website is making a loss by advertising. Generally speaking, the ROAS percentage value should not be below 100%. When it is even 101%, it can be considered that the firm has started to make a profit. But when it stays 100%, the website will earn as much as the amount spent on advertising, so it cannot make any profit.
How to Increase ROAS for Facebook Ads?
It is necessary to know a few tips to get good ROAS and increase sales in Facebook ads. These are:
Optimized Landing Page
If click-through rates appear high in the ad, but still have a low ROAS, the landing page may be unoptimized. Make sure you use similar language in both the ad and the landing page, use an effective CTA, and take any other necessary steps to optimize your landing page.
Correct Attribution Model
It is very important to correctly interpret and process data from ROAS. Using a first or last click attribution model can make a successful campaign appear unsuccessful. Therefore, these values should be actively controlled during the advertising campaign.
You should make sure that advertising campaigns and product views are developed in a mobile-friendly manner. This is a structure that facilitates the purchase of your potential customers. It has been proven that many users give up on shopping when there is no mobile compatibility.