My Facebook ROAS has increased (or decreased) – what now?
Published: October 18, 2016
Author: Molly McCarty
Facebook metrics have a lot of elements in play: competition can raise or lower CPCs, user feedback and engagement can raise or lower CTRs, among other things. ROAS (return on ad spend) can yo-yo as well, and if you’ve been noticing that yours is rising or falling lately, we’ve got some possible causes – and some recommended action items that follow.
When ROAS is up
In most cases, improved ROAS comes down to one of two things:
Your CPC has improved – If you’re noticing your CPCs have been trending down, this is likely because your click-through rates have increased. This could be an effect of running fresh new creative or could come from sales that are sitting really well with your audience and producing higher relevance scores.
New audience types could also have an effect on CPC. An audience you just added may be a more qualified audience and therefore your CPCs will come down if they click through your ad more than other audiences.
Recommended action item: nothing immediate, but be sure to monitor ads to gauge when creative refresh is needed.
Your revenue has increased – If you’re noticing your revenue has increased, this can be caused by your average order value increasing or your conversion rates improving. Both of these metrics can be caused by running your ads to a more qualified audience – or by high-conversion events like sales or promotions.
Recommended action item: see recommendation above.
When ROAS is down
Trying to figure out why your ROAS has been declining lately? Similar to metrics to look at when ROAS is increasing, these are potential culprits.
Your CPC has increased – Your CPCs may be increasing, leading to higher CPA and therefore dropping ROAS. If your CPCs are increasing, take a look to see if CTR is decreasing as well. If it is, this is one of the main causes for CPCs being on the rise.
Recommended action items: ad creative refresh, new messaging, or re-starting the ad to get rid of negative feedback that may be dragging down CTR.
Average order value has decreased – You may be running a sale on your site that causes average order value to drop; a best-seller could be out of stock or depleted; or inventory may have shifted to lower-cost items.
Recommended action items: look into top items on your site and see if any are no longer available or if any costs have dropped.