How To Calculate ROI From Facebook Ads.
It’s important to measure your return on investment (ROI) from social media marketing.
By doing this, you’ll be able to plan and budget for your future marketing efforts and advertising campaigns more effectively.
As social media marketing has become common, more time, energy and media spend is allocated to creating, sharing and promoting content.
Social media management can be a time consuming activity. One of your social media goals should be to track, measure and improve the return you get from the time and money spent.
Measuring your social media ROI and outcomes will help you create a sustainable and manageable social media marketing strategy.
ROI can be generated through increasing brand awareness, goodwill and even customer support. However we are going to look at the direct return on investment that comes directly by generating leads and sales from advertising.
To assist your business with your ROI (return on investment) calculations with your social media campaigns, we’re sharing two of our popular calculators below.
One is an E-Commerce ROI calculator and the other is a Lead Generation ROI calculator. Both of these are using Facebook (which includes Instagram and Messenger) as the social media platform.
Each has some detailed information on how to use the ROI calculators so you can quickly identify your ROI of social.
E-Commerce ROI Calculator
Click the ROI calculator below to change the sliders to suit your E-Commerce store and see your results.
Contact us if you’d like to improve your Facebook ad campaigns or launch a new campaign for your E-Commerce store.
Key Metrics
As you use the calculator you’ll notice a few key metrics play a big role in how profitable your E-Commerce store is.
Revenue and Cost per sale will highlight your markup on your products and reveal how important it is that you set your prices correctly. For new E-Commerce stores, we often see that their profit markup is too low. Adjust these figures based on your average sales numbers and see how they affect your profit.
Your Website Conversion Rate is critical and should not be overlooked. If you’re sending people to your store and you have an old/outdated shopping cart and people leave before checking out, you’ll profits will suffer. Industry metrics show that you should be converting between 1.5-4.5% of people.
If you’re not in the right conversion rate range, you will need to engage someone to improve your conversion rate optimisation. Contact us if you’re below the 1.5% or would like to improve.
Your Cost per Click is one of the most significant metrics to measure. The lower the click cost, the more profitable you will be. The simple reason for this is that you will need a lot of clicks to generate the sales, so being the highest variable (# of clicks) reducing your click costs even by a few cents can make a huge difference to profit.
If your click costs are too high you may not have the right campaign structure or audience targeting in place.
Lead Generation ROI Calculator
Click the calculator below to change the sliders to suit your Lead Generation campaigns and see your results.
Key Metrics
As you use the calculator you’ll notice a few key metrics play a big role in how profitable your lead generation is from an initial sale through to life time value.
Total ad spend per month
This amount would be how much you will spend consistently each month as part of your advertising budget. It’s directly associated with what you will pay to Facebook.
Average cost per lead
This average will vary based on several factors. If you have a number of campaigns running simultaneously as a sales funnel, then use the average cost per lead across all campaigns.
Conversion rates
Conversion rates vary greatly between industry as well as each businesses ability to convert leads to sales.
Average contract vs Average Life Time Value
It’s not uncommon for businesses to generate multiple sales over time from the same customer. Use these different metrics to see if your initial campaign is profitable and how much revenue is delivered over time.
*Please Note: The social media ROI calculators on this page include many variables and should be used as a guide only. Speak to us for more information to see if Facebook Advertising is a good fit for your company.
We hope that you’ve enjoyed using our free tool to calculate the potential return from your future Facebook ad campaigns.
