Based on our proprietary data, more than 30% of Facebook ad spend is currently optimized towards ‘Post Engagement’ and ‘Website Clicks’ objectives. In other words, towards objectives that do not drive direct revenue for most businesses.
Is That Efficient Advertising?
Online advertising and measurement platforms have taken massive strides over the past few years. There are numerous solutions that increase marketing efficiencies: sophisticated targeting capabilities, dynamically customized creatives, cross-channel, cross-device and people-based tracking, to name a few.
Online advertisers are quick to adapt new solutions and best practices – yet it is evident that some previously effective frameworks are still being used where they do not apply so well anymore.
For example, person-level tracking, targeting, and content customization (also called people-based marketing) are practices that many advertisers may understand in theory, but struggle applying them in practice.
Drive Results, Focus on the Right Metrics
Start focusing on KPIs that measure actual business impact. Forget CTR, forget clicks, forget CPM. Focusing too much on clicks and engagement is often tied to the commonly used funnel framework, which, don't get me wrong, is useful, but only when looking at an aggregate level.
Many advertisers optimize towards upper funnel KPIs because the funnel conversion rates are often predictable and thus can indicate expected business outcomes in the next funnel steps (from clicks to website visits to add-to-carts to sales).
For example: “If I generate a high volume of clicks at $0.10 CPC, they will turn into sales conversions at my targeted Cost Per Sales”.
Every person inside the funnel is different! Some click a lot but do not purchase, while others are hard to convince but generate a lot of sales once they do take action.
You should not assume that all clicks or website visits are of equal value. Think of this by segmenting your targeted audience. See the image below; the group in the middle represents the low-hanging fruit you should reach first to acquire cheap installs and purchases. However, after reaching all of them, you’ll need to choose which group to go after next – this is where your choices become paramount.
Our customers have been testing this kind of approach – see the example below from an e-commerce advertiser in South-East Asia. They A/B tested two identical campaigns with distinct optimization goals: one was optimized towards app installs, the other for purchase events. Optimizing for the latter objective generated better results, and while optimizing for installs also drove good results, those cheap installs did not convert into sales as efficiently as in the other campaign.
What Can We Learn From This?
When marketing to people, you cannot get everything at once. So don't assume that aggregate level funnel views are the whole truth. Prioritize what is important to you and focus on KPIs that measure primary business results. Other metrics are good secondary indicators of your advertising efficiency bottlenecks, but don’t let them drive your decisions.
Finally, I wish to highlight that focusing only on selected KPIs does not mean that all advertising campaigns should be forced into a single format. For example, upper funnel brand campaigns don't usually have an immediate impact on sales. Having said that, complementing direct response with simultaneous branding campaigns has been an efficient strategy for driving sales for some of our advertisers.
Consider each stage of your channel separately and measure accordingly. You can guide your 2018 planning with this framework I have been using with the brands I work with. You can always talk to us directly if you need guidance in structuring, setting up, and running your Facebook advertising.