11 Jul Analyzing Facebook Ads Results – CPM
One of the most important Facebook ads metrics we must track is CPM. And in fact this is the metric most Facebook advertisers don’t track.
Remember, you’re not being charged for every click you get, or every lead you generated through Facebook advertising.
You are being charged every time your ad is shown to your target audience.
That’s right, Facebook advertising is actually very similar to conventional advertising. Just take brochure distribution for example, the moment you have the idea, costs start to incur.
First of all, you’ll need to get a designer to design your brochure. Once it is done, you will need to get them printed, and next hire somebody to distribute your fliers to the neighborhood.
Regardless if the person who receives your brochure actually reads it and takes action, or just throws it away into the trash, you have paid for the entire process.
That is why when it comes to Facebook advertising, every impression counts.
That is why you need to make sure your Facebook ads campaign has the 3 main pillars done right to get the most out of your ads dollars.
It has to be able to send the right message (ad creative and copywriting), to the right people (audience targeting) to get them to take the right action (Facebook ads objective).
Either one of the 3 main pillars fall, the balance of a Facebook ads campaign will tip off.
Remember our example in the previous chapter about a Facebook Ads campaign that suddenly started tanking or stopped working?
It could be because of the fluctuation of CPM.
CPM is a Facebook Ads metric that we have very little or no control over.
Facebook advertising is a bidding and auction marketplace. When there are more Facebook advertisers joining the competition, the higher the CPM gets.
This is because Facebook has its limitation in terms of how many times they can display ads to a Facebook user at a single time.
In most cases, a normal Facebook user should see one ad for every 5-8 posts they consume in their Facebook or Instagram newsfeed.
Imagine if you start seeing 2-3 times more ads every time you browse Facebook or Instagram, you’ll start hating it and probably coming back less.
That’s the last thing Facebook wants you to do.
So, the next time you face the situation again, the first thing you should do is to check your CPM.
TImes like festive season, such as Christmas, or major online sales events like Black Friday or 11.11, the CPM usually spikes.
Take Christmas for example, CPM usually starts to increase 2 weeks before the actual Christmas day. This is because advertisers started to come in and increase their Facebook ads spend during these times, and this would usually push the CPM to increase.
When you know the CPM is coming up, you’ve got a few choices.
If you really need to compete for the sale, such as if you’re an ecommerce seller in the gift category, Christmas sale is important.
In this case you can consider starting your campaign earlier, maybe 3-4 weeks before the actual day to have your campaign learn well before it enters the period with high competition.
Alternatively, if you’re in a lead generation business and you know for sure your audience would not be in the mood of signing up for a webinar or anything like that, you can choose to scale back.
Speaking of webinars, I’ve got a free video training about Facebook ads analytics, you can visit tribeupacademy.com/numbers to claim your free access.
Remember when we run Facebook ads, it is not carved on the stone that we will have to spend a certain budget on a daily basis. You are free to do adjustments.
We can always scale back or even pause the campaign during bad times, and adjust back accordingly when the CPM is back to normal.
How can CPM affect our advertising results?
Imagine your initial CPM is $10. That means if your daily Facebook ads budget is $10, theoretically you’ll be able to reach your audience approximately 1,000 times every day.
From there, you’d probably get 5 leads or conversions from the campaign. That makes your cost per result standing at $2.
There are good days and bad days when it comes to Facebook advertising or any form of digital advertising.
This is due to the fact that your ads are being presented to different people every day.
That is why when we measure and analyze the effectiveness of our Facebook ads campaign, we measure weekly data instead of daily.
When we measure Facebook ads data daily, we tend to get emotional when we encounter bad days in Facebook advertising and we tend to make the wrong decision.
However if we zoom out to look at the campaign performance on a weekly basis, we are able to have a more accurate and holistic view of our overall Facebook ads campaign performance.
Not to forget it is also important to have accumulated enough data for us to make better decisions on the Facebook ads campaign performance.
Back to the example of $10 as your usual CPM. Imagine when CPM jumped to $20, what kind of impact you’re about to get in your Facebook ads campaign?
Assuming you’re spending the same daily ads budget, which is $10. Instead of reaching your audience approximately 1,000 times, you can now only reach them around 500 times.
Even if we’re still able to get 5% conversion rate as we used to, we can’t possibly get back 5 leads or conversions like we used to.
Let’s just say we get 3 conversions this round, on the surface our cost per conversion increased from $2 to $3.3, and that’s the clear sign that might make you think that your Facebook ads campaign is tanking. At least to most Facebook advertisers.
But did it tank? No, it did not.
The conversion rate actually increased to 6% (3 leads from 500 impressions), and all other metrics remain the same. What really changed was the CPM.
If we dig to the very bottom of the Facebook ads campaign performance analytics, it is because of the hike of CPM that is causing us to reach fewer people, hence all the numbers that follow became bad on the surface.
If you’re not aware of what’s going on, you’d probably turn off the Facebook ads campaign and go back to the drawing board again to work on the next best audience targeting combinations or the next best ad creative and copywriting.
Which is not going to help you get better results next time around.
However if you know how to measure correctly, you’d know that your Facebook ads campaign has absolutely no problem.
In most cases, pushing it through for another week will highly possibly get you back to your usual results.
I’ve expanded this article into a full fledge ebook – The Numbers That Matter – Step-by-Step Guide to Analyzing Facebook Ads Results. You can get the book to continue reading.
Alternatively, if you can’t purchase the book, you can join my free training on Facebook Ads Analytics.