Think about Facebook Ads as that total "10" you saw on an online dating site. He/she highlights all of the best features that somehow perfectly match your interests. But, when you meet, you realize his/her photo was from ten years ago, and the listed activities are more like a loose list of what the person hopes to do one day. Instead, your perfect 10 is now a generous 2 who plays SIM City at home living in the basement.

How is this relevant? Facebook is your generous 2. They highlight all of the best features while hiding many of the important factors—like living in said parent's basement. To help you better understand the business impact your Facebook Ads are having, here are the 5 essential metrics every small business owner and Facebook advertiser should know to evaluate Facebook Ad success.

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5 Facebook Ad Metrics that Matter to Increase Your ROI

Cost Per 1,000 Impressions (CPM).

CPM is the average cost to show your ad 1,000 times. Part of using Facebook means you have to trust what the social network is telling you, suspending your skepticism and believing in unicorns. But if you're anything like me, you love the idea of a unicorn; however, you know when you go horseback riding, you are 100% NOT going to ride a unicorn. For this reason alone, I opt for running impression-based campaigns over other objective-based campaigns for projects that require reaching new customers, promoting a hard/soft launch for a new product or brand, and overall brand awareness. There are less mystical, magical things happening behind the curtain for me to trust and just believe.

Here's an example of the unicorn Facebook sells you:


Facebook changed the way it measures reach. When you log in, your newsfeed loads about 250 posts. Previously, all 250 posts were counted as reach regardless of whether or not a person saw the post. Now, reach is measured only if you scroll through and see the post.

This means year over year metrics are no longer a significant metric because you're now comparing apples to oranges. It also means, your previous data is basically junk.

Pro Tip: I often use my own combination of analytics—Google Analytics and Facebook Analytics—for lead conversion instead of trusting Facebook to do as they say. In Facebook Ads, ask yourself are people clicking on your ads? In Google Analytics, ask yourself what are people doing once they get to your site (inside of Google Analytics look at the time-on-page and pages-per-session to start), and are they converting to sign ups, sales, or whatever your overall business objective might be? You can measure the conversions by setting up goals conversions in Google Analytics. You still have the ability to capture and measure leads, but you're not relying as heavily on the hefty CPL (cost per lead) that Facebook sells you.

Frequency.

Frequency is the average amount a person sees your ads: To see frequency, click the columns "performance," and then, select delivery from the dropdown menu. I make the date lifetime, and then also month for a good comparison. I once consulted with a client whose ads went from $1 per click to $20 per click. The reason? The ad rotation was upwards to 20x per week, meaning any one person was seeing this ad 20 times per week. If you see something 20x you're not going to click it, which raises the CPC (cost per click) because you may have already clicked it and you're literally tired of seeing it (aka user fatigue).

Pro Tip: When you're targeting people who don't follow your page, I keep the rotation at 4. For your page followers and remarketing, I keep the rotation at about 2. There is obviously some wiggle room depending on your target demographic, but I cap it at 8.

Facebook Engagement.

Facebook Engagement means people who engage with your content: You won't find this in the Facebook Ads interface, and it's technically not a measurable metric. Understanding Facebook Engagement will help decrease user fatigue and safeguard your frequency cap. In the same way that you don't want high frequency, you don't want to share the same post too often with someone who liked your post, clicked to your site, commented, etc. These are people likely to buy your product, become a loyal customer, and/or share about your brand via word of mouth (both offline and online). These are your people, so handle them with care.


Facebook has a tendency to show your ads to people who already liked your posts because it makes them look better and allows their numbers to be a bit inflated. Once again, enter the unicorns and rainbows.

Pro Tip: Since you won't find this metric in your ads manager, you need to build this as a custom audience. Click here to open the audiences panel in your ads manager.

Click the + in the left hand corner and click Facebook Page. From there, you'll be able to create an audience for people who have engaged within x amount of days. Usually, you want to aim for 7 days. When you create a new Facebook Ad Campaign, make sure you exclude this custom audience so you don't show your ad to people who have already engaged with your page.

CPC | Cost Per Click.

There are a lot of ways to measure your dollar. And it should come as no surprise: Facebook wants to make your dollar appear even shinier. The cost per click is how much is costs for someone to click through to your website upon seeing a Facebook Ad. Sound important, right? It's not as clear cut as it seems. You'll want to break it down and consider the CPC as it relates to Return on Ad Spend (revenue/CPC).

Pro Tip: Here's how to think about ROAS. If you have a product that has a net of $200, and your CPC is $2, you're sitting pretty. On the other hand, if you have a product with a net of $2, and your CPC is $2, that can be a big 'ole ouch to your bottom line and sustainability of your business. To that effect, I've had luxury brand clients with a high CPC (sometimes upwards to $10), but with a net of $8k, $10 is a drop in the bucket. Small business owners can get stuck with the sticker shock before evaluating what it actually means. Check the next step to break it down even further.

Lifetime Value.

This is the projected revenue a customer will generate during their lifetime: Small business owners tend to evaluate their businesses on a month-to-month basis, but there is a lot more happening on a larger scope because it takes people time to purchase, and if you're building a loyal audience, your ROI.

Pro tip: Consider this scenario. Your monthly Facebook budget is $500/month, and in that month, 5 people purchase with an average value of $50 for $250 total. You may think to yourself this is not working.

Assuming you have an integrated marketing plan—a strategy that integrates multiple pieces like SEO, email marketing, paid social media—you now have email addresses from those 5 people. After sending an email blast, in the first month after the initial campaign, a person buys another $50 item. In the second month, two people buy items totaling $100, and in the third month, you have a sale, wherein those 5 people again buy an average of $250 of product collectively.

Now, your $500 has just rolled into $650 in 3-4 months.

While your first perspective was that your ROI was -50% return, your lifetime value is 130% return. Keep in mind, in this scenario I haven't accounted for net profit. But the point remains the same. So while Facebook is sending you lots of data, it's up to you to properly measure how valuable these users are to your business over the span of a larger amount of time than what you see inside any ads interface.

Ok fine. I'll admit, not all of these are sitting pretty in your Facebook Ads manager, but they are important to understanding the actual success of your Facebook Ads. Many business owners knows about likes, shares, and clicks, but there are many instances when none of these metrics correlate with sales, sign ups or goal conversions (and if someone tells you they do, run Forest, run.)

In comparison to the likes, shares, and clicks your Facebook Ad generates, the activity that occurs on your site, including checkout conversions and new customer sign ups are equally, if not more important to how you evaluate the overall success of your advertising campaign.

In 2014, it was reported that 74.5% of small businesses now use social as part of their business plans, spending an average of 21.4% of their TOTAL media budgets on social—more than any other platform. We're not in Kansas anymore, and it's time you get to the Emerald City—you know, the one that's green because it's lined with $—before your competitor does. The best way to get there? Understanding what the f*ck you're spending your $$ on. See you in Oz, Dorothy.

Need help measuring your Facebook Success or maybe you don't know where to begin? Shoot me an email. I'm here to help!


Gabrielle Nickas

P.S. If you're not ready for Ads or you're still curious about organic reach, click here or on the image below.


And for some extra reading, here are some Facebook metrics that the platform is removing on May 1st.