How do you measure your success on Facebook advertising?
You probably know by now that you should focus on Conversions.
So which conversion metrics should we look at?
In Facebook Ads, conversion-related metrics include:
- Number of Conversions
- Cost per conversion
- Conversion rate
Let’s say you’ve already launched your Ads and optimizing them is next in your to-do list. Should you pay close attention to all 3 conversion metrics?
My experience tells me what only 2 of them are really important when it comes to Facebook Advertising – and I’ll show you WHY with a couple of my counterexamples.
But before that, I’ll start by defining what each of those 3 metrics mean.
We’ll limit it within the scope of Facebook Ads.
1. Number of Conversions
A conversion happens when a user clicks on a Facebook Ad and goes to a website.
It also happens when a visitor signs up for your lead magnet or product.
2. Cost per Conversion
The cost per conversion is calculated based on what the conversion is.
A click on your Ad may be considered a conversion. But it’s more popularly known as cost per click.
What you may be concerned with is the cost per conversion on your webpage – the cost for each lead magnet downloaded or product sold.
3. Conversion Rate
Finally, the conversion rate can be defined as either:
- The number of clicks on your Ad out of the total number of impressions (otherwise known as clickthrough rate (CTR)); or
- The number of visitors who sign up for your lead magnet or product
For the sake of our discussion, we’ll define Conversion Rate as only the number of visitors who signed up for your lead magnet or product, which is often the definition understood and used by marketers.
So which of these 3 metrics are the ones you should focus on?
Conversions and Cost Per Conversion.
And which metric should you PROBABLY ignore?
That’s Conversion Rate.
Disclaimer: I’m using oCPM, so I expect Facebook to promote the highest performing ad both in terms of conversions and cost per conversion more than the rest.
How 3 Conversion Rate Myths May Be Hurting You
Myth 1: Higher Conversion Rates mean Higher Conversions.
As you can see in the red box, the highest conversion rate is 23.421%, but only 89 conversions resulted from it.
On the other hand, if you look inside the green box, the highest conversion is 1292, yet the conversion rate is only 20.324%.
Yes I know, Facebook ran the lower converting Ad more often and hence there were more conversions.
Which is why I say you probably shouldn’t look at the conversion rate!
Now, experts will tell you that the difference of 3% is quite substantial and will probably advise you to turn off the Ad with 1292 conversions to let the higher converting ad run.
So next, I’m going to show you exactly WHY you should do the opposite.
Myth 2: Higher Conversion Rates mean Lower Cost per Conversion
The truth is, an Ad with a lower conversion rate can have a lower cost per conversion.
You must be thinking, “how can it be?!”
Look at this example:
Imagine 2 ads, A and B.A has a lower conversion rate than B.
So assuming that each Ad is clicked by 1,000 people. Fewer people from A will sign up than B.
However, that doesn’t mean that A will cost more than B!
Here’s the proof. The Ad with the highest conversion rate has ALMOST 2X the cost per conversion of the Ad with a lower conversion rate.
Myth 3. Higher Conversion Rates has nothing to do with CTRs
Now, I’m going to retract what I just said.
It is TRUE that higher conversion rates translates into lower cost per conversion – if and only if you account for ALL the conversion rates in an equation.
In this case, you need to account for BOTH CTRs and the rate of people signing up for your lead magnet or buying your product.
If CTRs are relatively higher, even with a low on-page signup/purchase rate, the cost per conversion can be lower as we’ve seen in the previous example.
Conversion Rates and CTRs as we know them, are independent of one another. But both of them can have a drastic impact on your eventual cost per conversion as well as the number of conversions, as we have already seen.
So here’s the missing puzzle from our earlier discussion. The CTR on the lowest cost Ad is more than 2x the Ad with the highest conversion rate.
It is this CTR that was culpable and that explains why the cost per conversion for the last Ad is so much lower than the 2nd Ad.
Are you buying in to these common conversion myths?
Now, you may be confused or dazed. I made a hoo-ha out of something seemingly simple to understand. So what are the REAL takeaways?
Here they are.
- Prioritise total no. of conversions and cost per conversion if you have to choose
- Always take into account ALL the conversion rates in your equation
The 3rd point, which I haven’t discussed at all in this post, is why people choose to keep track of individual conversion rates (CTR and on-page signup/purchase rate) rather than look at it as a whole.
Food for thought: The main reason, I believe, is that with this break down, you can also see whether an Ad is driving relevant traffic to your page.
In the event that an Ad’s conversion rate is much lower than the rest, even with a high CTR, it could signal that the target audience is of a low quality and potentially irrelevant.
What has been your experience with these 3 metrics? Share it with me.
If you liked what you saw in this article, do subscribe on my blog.
Next month, you’ll receive 4 daily emails to show you what I’ve learned from generating over 5,000 leads and $80,000 in additional sales for a client, the exact steps we took, and the mistakes we made. If I can’t convince you, no one else can!