This guide breaks down practical, easy-to-apply strategies to drive stronger results and make your ad dollars work harder.

Sneak peek: Jump to the end to discover how Sotrender can help you analyze competitor ad spend and lower your CPM on Facebook Ads quickly and efficiently.

Understanding ROAS

What is ROAS in Digital Marketing?

ROAS, or Return on Ad Spend, is a crucial metric in digital marketing that measures the revenue generated by an ad campaign compared to the cost of running the ads. It’s a key performance indicator (KPI) that helps advertisers evaluate the effectiveness of their ad spend and make data-driven decisions to optimize their marketing efforts. ROAS is calculated by dividing the revenue generated from ads by the cost of the ads, and it can be expressed as a ratio (e.g., 5:1) or as a percentage (e.g., 500%).

Understanding ROAS is essential for any advertising strategy, as it provides a clear picture of how well your ad dollars are working for you. By keeping a close eye on this metric, you can make informed decisions about where to allocate your budget, which ad creatives to use, and how to refine your overall marketing strategy.

How to Calculate ROAS as a Percentage

To calculate ROAS as a percentage, you can use the following formula:

ROAS % = (Revenue from Ads / Cost of Ads) x 100

For example, if your ad campaign generates $100 in revenue and costs $20 to run, your ROAS would be:

ROAS % = ($100 / $20) x 100 = 500%

This means that for every dollar spent on advertising, you’re generating five dollars in revenue. Calculating ROAS as a percentage can help you quickly assess the efficiency of your ad spend and identify areas for improvement. By regularly monitoring this metric, you can ensure that your advertising campaigns are driving the best possible returns.

How to Set Clear ROAS Goals

Not all industries are created equal, and the same goes for ROAS benchmarks. Knowing the industry standards can help you gauge your performance and set more realistic yet ambitious goals. Your breakeven ROAS depends on your profit margins, but setting a higher goal can stretch your ad performance and profitability. Always keep profitability in mind and aim for a balance between aggressive scaling and sustainable returns.

What is a Good ROAS for Facebook Ads?

A good ROAS for Facebook ads at minimum would be anything from 4:1 or higher. A ROAS of 4:1 means that for every $1 invested in ads, the business is getting back $4 in revenue, indicating a positive return on investment.

It is also crucial to consider customer lifetime value (CLV) as it provides a more comprehensive understanding of long-term profitability beyond immediate returns from advertising.

However, this figure may vary depending on your industry, its advertising goals, profit margins, and other factors within a particular campaign. In some cases, some marketers can achieve a ROAS on Facebook ads of 6x and 10x in their ad campaigns.

Whatever the case may be, you should always monitor and analyze your Facebook ads performance regularly to determine the best ROAS for them within their specific goals and budgets. Don’t just aim for industry averages—use them as benchmarks to drive higher performance through iterative testing and refinement.

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How to Increase ROAS on Facebook Ads in 8 different ways

Set Up for Success

Establishing a solid foundation is crucial for achieving a high ROAS. This involves setting up a marketing funnel, prioritizing lead generation, and exploring different ad formats.

Establish a Marketing Funnel

A marketing funnel is a series of steps that guide potential customers through the buying process. It typically consists of four stages: awareness, interest, desire, and action. By creating a marketing funnel, you can ensure that your ad campaigns are targeted towards the right audience at the right time.

To establish a marketing funnel, start by identifying your target audience and their pain points. Then, create ad campaigns that cater to each stage of the funnel. For example, you can create awareness ads that target a broad audience, interest ads that target users who have shown interest in your product, and desire ads that target users who are ready to make a purchase. This structured approach ensures that your marketing efforts are aligned with the customer journey, maximizing the chances of conversion at each stage.

Prioritize Lead Generation

Lead generation is a critical component of any marketing strategy. By prioritizing lead generation, you can ensure that your ad campaigns are driving high-quality leads that can be converted into sales.

To prioritize lead generation, focus on creating ad campaigns that drive conversions. Use compelling ad creatives, clear calls-to-action, and targeted landing pages to drive users to take action. You can also use lead generation ads to drive high-quality leads. They offer advanced targeting options that help you reach potential customers who are more likely to convert, thereby improving the efficiency of your ad spend.

Nail Your Audience Targeting

Your ad’s success starts with selecting the right ad platforms and targeting the right audience. If you’re not reaching the right people, even the best creatives won’t convert. Precision targeting can save you money and drive better results by honing in on those most likely to convert.

• Lookalike Audiences: Clone your best customers and scale with precision. These audiences mimic the behaviors and demographics of your top-performing segments. Test different similarity percentages (e.g., 1%, 3%, 5%) to find the sweet spot between reach and relevance.
• Custom Audiences: Segment users who interacted with your site, emails, or videos. Target those who are already interested and closer to conversion. Retarget past buyers with upsell offers or complementary products.
• Interest-Based Audiences: Test and layer Facebook’s interest categories to find niche pockets of buyers. Combining interests with custom audiences can enhance precision. Target users based on their hobbies, pages they follow, or life events.

Expanding audience targeting while ensuring relevance can open new avenues of profitability. Continually refine audience segments based on ad performance data.

Leverage Retargeting

A strong retargeting strategy regularly involves segmentation of your audience based on their interaction level. For example, you can group users who’ve visited a specific product page but haven’t made a purchase and target them with tailored ads promoting that product. You can also create a separate segment for users who’ve abandoned their shopping carts, sending them reminders or offering special deals to nudge them toward completion.

Retargeting is an effective post-purchase strategy, as well. It allows you to upsell or cross-sell to customers who’ve already made a purchase, enhancing customer lifetime value. These advanced retargeting strategies do require a granular approach, but they can have a significant effect on your conversion rates and ROAS, making the extra effort a worthwhile investment.

Craft Compelling Ad Creatives

A killer creative can stop scrolling in its tracks. If your ad doesn’t grab attention, it won’t drive conversions. Visual appeal combined with compelling copy is the secret to driving clicks. Google Ads offers a highly effective platform for targeting specific audiences based on their search intent, providing more precise advertising opportunities compared to social media platforms.

• Use High-Impact Visuals: Bright, bold, and professional visuals work best. Test videos vs. images to determine which format resonates most with your audience. Ensure that visuals reflect your brand’s identity and the ad’s message. Check Facebook best practices for creating visuals that convert >>>
• Focus on Benefits: Show how your product solves a problem or makes life easier. Highlight key features, but always connect them to tangible benefits. Use customer testimonials or UGC (user-generated content) to build trust.
• A/B Test: Test multiple creatives, headlines, and CTAs. Small tweaks can lead to big wins. Run continuous tests to refine your creatives over time. Swap out creative elements regularly to prevent ad fatigue.

Experiment with different ad formats: carousel ads, video ads, slideshow ads, and immersive Instant Experience ads to find the best fit for your campaign objectives. Consider using storytelling in video ads to engage audiences emotionally. By diversifying your ad formats, you can keep your audience engaged and reduce ad fatigue, ultimately driving better results.

Landing Pages Matter

A great ad sends traffic, but your landing page seals the deal. Make sure they’re working together seamlessly.

• Consistency: Your landing page should reflect the ad’s offer and visuals. Inconsistency can lead to higher bounce rates. Align colors, fonts, and messaging for a smooth transition.
• Fast Load Times: Speed kills bounce rates. Optimize your site for mobile users and ensure lightning-fast load times. Use tools like Google PageSpeed Insights to test performance.
• Clear CTA: Don’t make users guess what to do next. Make the CTA bold and easy to find, minimizing friction in the conversion process. Use action-oriented language like “Shop Now” or “Get Started.”

Small adjustments to landing pages can have a significant impact on conversion rates, directly affecting ROAS.

Use Conversion Tracking (No Excuses)

If you’re not tracking, you’re guessing. Facebook Pixel unlocks critical data that helps you optimize.

• Install Facebook Pixel: This tool tracks user activity and measures ad success, providing essential insights into customer behavior. Place it on all key pages.
• Event Tracking: Go beyond purchases. Track add-to-carts, leads, and other micro-conversions to understand user engagement at different stages. Use custom conversions to track specific user actions.

Understanding your profit margin is crucial as it directly affects the calculation of breakeven ROAS, helping you evaluate the effectiveness of your advertising campaigns.

Effective tracking enables smarter budgeting and audience segmentation, which directly boosts ROAS.

How to Automate Lowering Ad Spend on Facebook Ads

Trying out all the strategies we’ve covered can deliver impressive results, but let’s be real – running tests like these eats up both time and budget.

In fact, testing can stretch over weeks or even months. And as marketers, we know you don’t always have that luxury (or the patience 😉). Wouldn’t it be better to spend that budget on ads that actually perform right from the start?

Enter AI – the secret weapon for boosting efficiency and maximizing results, especially with Facebook Ads.

Introducing Sotrender’s AI Ads Optimization

Sotrender’s Ads Optimization is designed to take the guesswork out of campaign adjustments. This AI-powered tool offers automatic recommendations to fine-tune your ad settings for lower ad spend and higher impressions – all while keeping your budget intact.

Here’s how Ads Optimization works:

• After selecting an ad to optimize, Sotrender analyzes your current settings.
• At the top of the screen, you’ll see the potential improvement (for example, a 20.6% boost) if you implement all the recommended changes.
• Below that, you’ll get a detailed breakdown of each recommendation, showing how the new settings stack up against the old ones – and exactly how much each tweak will impact performance.

The key optimization areas include:

• Age – Refine targeting by adjusting the age range of your audience.
• Interests & Demographics – Hone in on more relevant users by tweaking interests, job titles, and life events.
• Devices – Optimize for mobile, desktop, or both based on performance data.
• Platform – Get recommendations for running ads across Facebook, Instagram, or Audience Network.
• Placement – Fine-tune where your ads appear for the best engagement.

Why Use Sotrender’s Ads Optimization Over Manual Testing?

Sotrender’s AI isn’t just making random guesses – it’s trained on hundreds of thousands of ads across Meta’s ecosystem. By identifying patterns and trends in campaign performance, the AI can highlight the most impactful adjustments to improve ad quality and results.

The benefits?

• Better results, same budget – Stretch your ad spend further without increasing costs.
• Time-saving solutions – Skip hours of manual adjustments with ready-to-use recommendations.
• Full control – Choose which recommendations to apply, while keeping complete oversight of your campaigns.
• Competitive edge – Access insights and strategies that your competitors might not even be using yet.

Benchmark Your Ads Against Industry Competitors

Benchmarks give you an idea of where your ads stand in comparison to your industry competitors. By understanding the average performance metrics in your industry, you can set realistic goals and gauge your ad performance metrics. If your clients’ ads are underperforming relative to their peers, it might be time to reevaluate your strategy. On the other hand, if they’re outperforming industry standards, you know your strategy is working.

When benchmarking, it’s important to consider metrics beyond ROAS. While ROAS is a primary indicator of ad performance, other metrics like click-through rate, cost per click, and conversion rate also provide useful insights into your ad campaign’s performance. By comparing these metrics with industry standards, you can identify areas where your campaign excels and where it falls short.

Sotrender’s Benchmarking feature provides comprehensive data that allows you to compare your Facebook Ads performance with competitors in your industry.

You can analyze metrics such as:

• The number of impressions
• The number of clicks
• CPM (cost-per-mille)
• CPC (cost-per-click)

You’ll be able to compare your ad performance against similar advertisers to determine if you’re on track or if there’s potential to reduce costs, like lowering your CPM or CPC.

Discover how you can analyze all aspects of your competitors’ Facebook ads >>>

Final Thoughts

Boosting Facebook Ads ROAS isn’t rocket science – but it does take consistent effort. By refining your targeting, creatives, and strategy, you can stretch your ad dollars further and unlock more profits. Start small, test often, and scale what works. The more granular you get with analysis and adjustments, the greater your return on ad spend will be.