How Average Data Is Killing Your Facebook Ad Profits
You don't want average results or average returns...
But, if you're just looking at the preset reporting metrics in your Ads Manager dashboard without taking the time to really dig down & analyze your in-depth metrics, you're making decisions based on average data.
For the purpose of this blog post we are referring to the mean average which the most commonly used average calculation.
(all the values in a data set are added & their total is divided by the number values)
Why Is Average Data Bad For Profits?
Averages are used to express an amount that is typical for a group of things while acknowledging most things within the group fall either side of the average number.
ie. When we read that people spend an average of 5 hours per week on Facebook we realize that is a good indicator of how much time people spend on Facebook in general, but also understand that an individual person is much more likely to spend more or less time on there each week, as opposed to exactly 5 hours.
So, while averages are a great way to summarize a large amount of data into one representative value, when it comes to Facebook ad performance reporting, looking at the averages doesn't allow you to easily:
all of which will obviously have an impact on your profits (& is one of the reasons many advertisers struggle to get the results they really want from Facebook ads).
Another problem with averages is the impact of outliers.
Say for example, your KPI for CPP (cost per purchase) is below $25 & you have the following average results from 2 ad variations that have 40 purchase events each:
Ad Variation 1 CPP = $24.45
Ad Variation 2 CPP = $25.15
Based on this data you would shut off variation 2 because it's outside your KPI value.
Now, in most cases this will be the right course of action however, there is always the possibility that the average CPP is being skewed by an outlying result.
For the sake of example lets see how that would work here:
Ad Variation 1
Purchase Events = 2 CPP = $33
Purchase Events = 12 CPP = $21
Purchase Events = 13 CPP = $22
Purchase Events = 10 CPP = $26
Purchase Events = 3 CPP = $38
Purchase Events = 0 CPP = $0
Ad Variation 2
Purchase Events = 1 CPP = $34
Purchase Events = 14 CPP = $19
Purchase Events = 11 CPP = $23
Purchase Events = 9 CPP = $25
Purchase Events = 4 CPP = $37
Purchase Events = 1 CPP = $80
When you first looked at the average CPP results Variation 1 looked like the more profitable ad however, when you dig down into age segments you can see that the majority of purchases are coming from the age groups 25-54.
When you take into account that the average CPP for 25-54 is:
- Variation 1 = $22.80
- Variation 2 = $21.88
It's clear to see that:
Yes, I acknowledge that these specific numbers are just an example however, they aren't completely pulled out of thin air.
This type of data break down is actually quite common!
Just go into your Ads Manager Dashboard to segment your results based on age & gender to see what I mean.
Why Does Facebook Report Average Data?
The Facebook Ads Manager has the ability to report on an overwhelming amount of data points & provide extremely valuable in-depth information on the performance of your ads.
However, due to the sheer amount of data, the top level of reporting (what you see first inside your reporting dashboard) is comprised of average values.
The good thing is that you can filter results based on your objectives & break down the data based on the metrics that have the most impact on your costs & ROAS to get a more in-depth report on your ads performance.
The biggest problem with this setup is that, unless you know what you're looking for amongst the hundreds of data points within the Facebook Ads Manager, it can be very time consuming & confusing trying to sort through & understand the mass of data available.
What's The Easiest Way To Find My In Depth Data?
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