If you're a marketer aiming to scale campaigns or a business owner trying to make the most out of your budget, knowing your Facebook Ads ROAS (`Return on Ad Spend) points you towards profitable decisions. This metric tells you exactly how much you’re getting back for every pound you spend on ads.
What is ROAS?
ROAS, or Return on Ad Spend, measures the revenue you earn for every pound spent on your ads. It’s a key metric in Facebook advertising because it focuses solely on the direct return from your ad spend, unlike ROI (Return on Investment), which considers the overall profitability of marketing campaigns.
ROAS helps you see whether your ad campaigns are hitting the mark in terms of generating revenue and maintaining healthy profit margins.
Why ROAS is Important for Facebook Ads
When you know your ROAS, you can clearly identify which campaigns are driving real results and which aren’t, making campaign budget optimisation or allocation more precise and data-driven.
A high ROAS signals effective ad performance, indicating where to double down, while a low ROAS highlights areas that need adjustments.
It also helps align your ad performance with business and campaign objectives, such as improving sales, boosting conversions, or increasing customer lifetime value.
How to Calculate Meta Ads ROAS
Start by Gathering Data from Facebook Ads Manager:
Open your Ads Manager and look at the specific campaign you want to analyse. You’ll need two key numbers: the total amount spent and the total revenue generated from that campaign.
If you’re tracking conversions through Facebook Pixel, this information should be right there in your campaign’s performance dashboard.
Apply the ROAS Formula:
ROAS = Revenue from Ads / Cost of Ads
For example, if you spent £500 on a campaign and made £2,000 in sales, your ROAS would be 4x. This means you earned £4 for every £1 you spent on ads.
Consider Different Reporting Windows
Facebook Ads Manager offers various reporting windows, like 7-day, 28-day, and custom views. These windows impact what counts as a conversion and when it’s credited to your ads. If you’re reviewing ROAS, it’s crucial to use a consistent reporting window that matches your business cycle or decision-making timeframe.
Attribution Models for ROAS Measurement
Attribution models are how Facebook decides which ads deserve credit for conversion. They are a set of algorithms in Meta ads Manager.
Last-Click Attribution: This model gives 100% of the credit to the last ad clicked before a purchase. It’s straightforward but doesn’t consider any ads that helped along the way.
First-Click Attribution: Just the opposite of last-click, this model credits the first ad someone clicked. It’s useful if you’re focused on the initial touchpoint, but again, it misses any contributions from other ads.
28-Day View and Click Window: This is the default setting in Facebook Ads Manager. It considers both clicks and views over a 28-day period, giving credit to ads that users either clicked or saw within that timeframe. This window helps capture longer decision-making processes, which can be crucial for higher-value purchases.
The attribution model you choose affects what your ROAS looks like. For example, if you use a last-click model, it might show high returns for your final conversion-focused ads, but miss the value of earlier ads that nurtured the audience.
So, picking the right model depends on what you’re trying to measure: immediate conversions or the broader customer journey.
What A Good Facebook ROAS For Your Industry
So, what counts as a "good" ROAS? It really depends on your industry. Different sectors have different benchmarks, and a ROAS that’s fantastic for one business might be underwhelming for another.
For instance, e-commerce businesses typically aim for a Facebook Ads ROAS of 4x to 10x, meaning for every pound spent, they’re looking to earn at least £4 to £10 in return.
On the other hand, industries like real estate or luxury products might have a lower target ROAS, often around 2x to 4x. That’s because the profit margins in these industries are usually higher per sale, so even a smaller return on ad spend can still be considered profitable.
Industry benchmarks are shaped by factors like profit margins, the cost of goods, and the sales cycle. For example, if you’re selling high-ticket items, a lower ROAS can still deliver a healthy profit per product sold. But if you’re in a more competitive, lower-margin industry, hitting a higher ROAS might be essential just to stay in the game.
Factors That Impact Target ROAS
Your audience is everything and fortunately, Facebook is a platform that gives you the opportunity to target specific groups through Lookalike Audiences and Custom Audience, which can help you reach people who are more likely to engage and convert.
If you’re targeting a cold audience; people who’ve never interacted with your brand before you might need a different strategy to warm them up.
But if you’re focusing on your existing customer list or Lookalike Audiences based on loyal customers, your chances of generating a higher ROAS go up significantly. The key is finding the right mix to connect with your ideal customers.
Ad Creative Quality
It’s not enough to just get your ads in front of people; the content has to grab their attention. High-converting visuals, engaging copy, and the right ad format (video ads, carousel ads, or collection ads) make all the difference to your Facebook Ads ROAS.
Video ads can be a great way to build a connection quickly, while carousel and collection ads are effective for showcasing multiple products. You should always aim to create high-performing ads that resonate with your audience and drive them to take action.
Ad Placement and Bidding Strategies
Facebook offers different bidding strategies like automatic bidding options and value-based bidding, which aim to get the most profitable conversions for your budget so you're spending smarter.
You should also select placements strategically; how does your ideal buyer persona behave? This should guide you on whether you would target placements on news feeds, stories or in-stream videos.
Sales Funnel and Landing Page Optimisation
You can run the best ads in the world, but if your landing page isn’t optimised, all that effort goes to waste. Aligning your ad messaging with a well-designed landing page can significantly boost your conversion rates.
This means keeping your sales funnel smooth and clear and tracking relevant conversion events to understand how people are moving through your funnel. When everything from your ads to your landing page is working together, your ROAS sees a boost.
Seasonality
Consumer behaviour changes with seasons, and so should your ad strategy. ROAS can fluctuate around major holidays or events like Black Friday and Cyber Monday, when competition and buying intent are at their peak.
If you plan your ad spend ahead of these key time periods, you can capture the most value from your Facebook advertising.
Competition
When many businesses are advertising similar products, the cost of advertising campaigns can rise.
This means staying competitive isn’t just about having good ads; it’s about continuously refining your campaigns and finding creative ways to stand out from your industry competitors and maintain a strong Facebook ROAS.
How To Improve ROAS On Facebook Ads
Optimise your Target Audience
To get the most out of your Facebook Ads, it's not just about who you target but how you target them. Facebook’s advanced audience features help you develop a strategy that works for you.
You can set up custom audiences to retarget people who’ve already shown interest in your brand like those who visited key pages on your site or engaged with your content. This way, you’re focusing on people who are already familiar with you, increasing your chances of conversion.
We also recommend using Lookalike Audiences to expand your reach to new potential customers. Lookalikes allow you to find users who share similar traits to your best customers. For instance, if you have a high-value customer list, you can create a Lookalike Audience based on these users, targeting new people who are more likely to buy from you.
For more advanced targeting, you can use insights from customer lifetime value to prioritise high-value segments. If certain groups tend to spend more or stay loyal longer, focus your advertising budget on reaching and retaining these target audiences.
Ad Creatives
Always create ads that would connect with customer persona. High-converting ads often focus on addressing customer pain points, showcasing benefits, and prompting clear actions.
Use compelling images, engaging videos, and concise messaging to drive your point home. Also, experiment with different formats like carousel ads or stories to see what resonates best with your audience.
Conversion Tracking
Meta Pixel can help you measure ROAS more accurately. You can track what actions users take after seeing your ads. It’s crucial to align these events with your business goals.
Track actual sales, not just clicks. Use standard events (like “Add to Cart” or “Purchase”) to understand your sales funnel better and optimise accordingly.
Learn more about using Conversion Tracking
Implement Dynamic Ads
Dynamic Ads let you personalise product recommendations based on user behaviour. For instance, if someone viewed a specific product on your site but didn’t make a purchase, dynamic ads can automatically show them that product again or suggest related ones.
This type of retargeting keeps your brand top-of-mind and leads to more conversions. Pair dynamic ads with collection ads to create a seamless shopping experience that takes users through the entire sales funnel.
Testing and Experimentation
A/B testing is a must. Facebook makes it easy to test different variations of ads, from visuals and headlines to targeting and bidding strategies.
The idea is to keep experimenting and refining your approach based on real data. This data-driven strategy lets you identify what’s working and what isn’t so you can focus on optimising the right elements of your ads.
Wrapping Up
Understanding Facebook ROAS ensures your marketing efforts reach broader business objectives and can help you make data-driven decisions on where to invest ad budgets.
If you're looking to get more out of your Facebook Ads and want a strategy tailored to your business, With the right approach, we can help you maximise your ads performance and reach your business revenue objective