The Difference Between The Cost Of A Facebook Ad Click & The Value
Managing your ads based on getting cheaper clicks & leads is not always the best option.
Take these results from a test of 2 ad variations as an example.
The control (left) has:
The variation (right) has:
If you only looked at the data reported for lead generation (the top 5 rows) you would say that the control (left) is the winning ad variation.
However, when you look at the Cost Per Purchase, which has the most significant impact on your profits, it's clear that the variation (right) is a much more profitable ad.
Now, I'm NOT saying that a higher CPC will produce a lower CPP or that low cost leads are not as profitable...
What I am saying is that costs are relative & you need to look at the value of your conversions instead.
Keep In Mind...
A lot of Facebook advertisers test & check their ads performance based on KPIs that are calculated based on their average conversions or industry benchmarks (& this can be harmful to your profits).
So, for the sake of example, let's say that the control (left) ad variation represents the average conversion rates of the funnel & you need to keep your CPP below $400 to be profitable
With a 3% conversion rate (7/206 = 0.03) our CPL must be $12 or lower in order to keep the CPP below $400. (0.03 x $400 = $12)
Based on this calculation example the variation (right) ad falls out of KPI at the lead stage of the funnel.
However, we clearly see that the leads from the variation (right) convert at a much higher rate.
Now, if you have conversions occurring several days, or even weeks, after the lead event but are turning off ads that fall outside of KPI every 24-48 hrs you may be missing out on finding these profit pockets.
Now, I'm NOT saying that KPIs aren't useful - they are - the point I'm trying to highlight is that
The cost of a click or a lead is not as important as the value & you need to test & track everything to make sure you're getting the best value possible.
(try looking at the CPP of campaigns you've turned off in the past month to see if you've missed out)
This is why, at ViaFunnel, we don't focus on reducing the cost of your clicks or your leads, we focus on finding the most valuable ones for your business.
(if you can decrease your costs at the same time then that's a bonus!)
Learn more about how we can help you optimize your ads for your most valuable leads (& see if we can help you get get a higher ROAS from your Facebook ad campaigns too).