How to Avoid Misspending Money when Running Your Facebook Ads!

In two recent blog posts we shared some highly effective and highly popular tips for how to maximize the success of your Facebook ads via A/B testing and clever use of images, titles and copies. But following all of this great advice will never work if you fall prey to a common but potentially fatal mistake. In this post we’ll explain what this mistake is and what you can do to avoid it!

So let’s assume you’ve followed our advice about A/B testing and you’re running two ads side by side. Your ads are driving to a sweepstakes which you are using as a way to generate leads for your company. The first ad (ad A) is generating a click through rate of 0.037% and the second ad (ad B) is generating a click through rate of 0.035%. So ad A is doing better than ad B, right? WRONG! This data (seen below) is taken from a real ad campaign we recently finished running and if you’d decided to run ad A and pause ad B you’d have ended up costing yourself a lot more money and generating far poorer results. Why? Because although ad A generated more clicks, the people who clicked on it were far less likely to enter the sweepstakes than those who clicked on ad B. In fact, when looked at in terms of cost per entry (i.e. the total money spent on the ad campaign divided by the number of entries that the ad campaign generated) ad A was almost 4x more expensive than ad B.

What does this illustrate? That you can’t measure the success of your ad on number of clicks alone. Instead, you need to define the goal of your ad (e.g. number of entries, number of coupons redeemed) and then A/B test to determine which ad results in the lowest cost per acquisition (CPA) and not cost per click (CPC).

But how can you measure the CPA of your Facebook ads? Fortunately, Wildfire recently released a new analytics platform that makes it easy for our whitelabel customers to measure the true ROI on their Facebook ads. We’ll explain how it works in 5 easy steps.

Step # 1: Generate referral sources to track the real performance of your ads
Wildfire’s new analytics platform enables our whitelabel customers to easily link their Facebook ads to the campaign they’re running with Wildfire (be it a sweepstakes, a coupon, a giveaway or another of our campaign types) so that they can measure which ads are resulting in the lowest cost per acquisition (i.e. cost per entry, cost per coupon collected etc).

To do this, log into your Wildfire account, click on ‘analytics’ next to the campaign you’re trying to measure and then click on ‘add referral source’. First you’ll be asked to name your referral source — this is so you can remember which ad applies to which referral source (so, for example, if the first ad you want to test is one with a photo of a cupcake, you could name your referral source ‘cupcake ad’). You’ll then be provided a URL that you should use to link your cupcake ad to your campaign. Once your ad goes live, our analytics will automatically track how this specific ad performs in terms of visits to and entries in your campaign.

Step # 2: Input the referral sources into your ad campaigns
When you are creating your ad, take the referral source that you generated for this particular ad and input it as the destination URL for that ad.

Step # 3: A/B test
Create a variety of different ads to find out which perform best. Follow the steps in our previous post about A/B testing to learn how best to optimize and test your ads. 

Step # 4: Analyze the results
Now it’s time to analyze the results of your ads and figure out which are performing the best in terms of Cost Per Acquisition (CPA), not Cost Per Click (CPC). To do this, you need to create a very simple spreadsheet that shows total money spent and total number of campaign visits and entries for each of your ads. You can calculate the CPA of each ad by dividing the total money spent by the number of entries.

The lower the CPA, the more effective the ad!

 

The important thing to remember is that your cost per entry is determined by two main ratios: your click-thru rate and your entry rate.  As you can see from the example in the spreadsheet, the ad with the highest click-thru rate only has an entry rate of 16% whereas the winning ad has an entry rate of 54%.  This is why you should look not only at click-thru rates, but also entry rates when determining which ads to pause and which to expand on.

Step # 5: Pause those ads that are not performing well
Now that you’ve identified which ads are generating the lowest CPA, pause all other ads. You may want to try A/B testing new ads against your current best performing ads to see if you can generate ads that produce even lower CPA.

Calculating your ROI
After you have optimized your ads, you now have a set of effective ads that will continue to bring in more leads for your business.  You can compare the cost per lead of your Facebook ads with other marketing channels— Pay Per Click (PPC), email marketing, telemarketing, trade shows, direct mail— you may be surprised at how effective Facebook turns out to be for generating leads for your business, especially if your promotion takes off in popularity.

We are strong believers in the effectiveness of Facebook for generating leads— in fact, we have hundreds of major brands continuing to launch one promotion after another.  We know it works well.

So what do you do with your lead?
You've got your lead, which at its most basic is an email address but can contain many other fields (since you can customize your Wildfire entry form to ask your entrants whatever information you feel is useful to learn).  You can add these leads to your email marketing database as subscribers to your newsletter, or for other outreach.

You might consider using one of many email marketing self-service solutions like ConstantContact or MailChimp to message your new leads to stay in regular touch with them and strengthen the relationship your brand has with its customers. With Wildfire Promotion Builder, you can actually sync up your leads management with several email marketing solutions so that the leads port right into your email service.

An exciting bonus!
Facebook introduced a feature just last week called “Tell Your Fans,” where Fan Page administrators can now import sets of email contacts (like the ones you got from your Wildfire promotions) and message out to those users using the Facebook messaging system, as a way of telling them to visit and “Like” the Fan Page. This is a great way to reach out to users after they’ve interacted with your campaign to remind them of the great reasons to “Like” your page!

This is an especially valuable feature if you happened to run a promotion using Wildfire, but didn't require your users to like your page before they entered.  You should also use this in your ROI calculation, with the knowledge that money you spent on ads went to acquiring Facebook page “Likes,” even after the end of the promotion.

Now that you have the knowledge to accurately assess the ROI of your promotional and advertising campaigns in a variety of different ways, planning a marketing strategy for your brand will be a much more effective and measurable task! What metrics do you use to analyze the effectiveness of your marketing outreach? We’d love to hear from you about them in the comments below!