The idea behind paid ads is great – you put money into an ad, and for every $1 you spend, you get $1.5 (or $2 or $3) back. It’s an investment, right? But it doesn’t always work out that way. Before you even start, you need to be aware of the role that competition plays in the digital ad world - and there’s a lot of it. . It’s vital that you ensure your ads are working well because you’re spending your hard-earned money on them. You don’t want to keep throwing in good money after bad.
Paid advertising is an investment, and it should be treated as such. You wouldn’t neglect maintenance on a $2m home, would you? Once you reframe your mindset from “a have to do”, to a “have to improve”, you’ll be better positioned to reap the rewards of a stellar paid ad strategy.
If you’re running a paid ads campaign, and not getting the results you want - this is for you. Where do you start? What do you work on? What metrics matter most? It sounds like a lot - we know. But the answer is simple, really.
The data will tell you.
The beauty of digital advertising is that everything we create has a data set assigned to it. Everything is backed by a number. From reach to performance. These numbers exist to show us where we can improve or optimize our campaigns. Data isn’t just a factor to consider. It’s the determining factor.
It’s not always easy to understand what the numbers are telling us, though. So if you’re struggling with interpreting your data, here are a few of the most important metrics to look at, and what they mean for you.
ROAS
If you can’t pronounce it, don’t worry. This is just an efficient way of saying, “return on ad spend”. This is the overall big-picture metric you want to look at. It tells you how much you’ve made for every dollar you’ve spent. If your ROAS is below one, it means that you’re losing money on your ads. Conversely, if it’s above 1, it means you’re making money. That said, you need to also consider your profit margins and cost of goods - or courses. You likely have other costs outside of your ad spend, and you need to take those into consideration to determine what you want your ROAS to be.
What does a good ROAS look like?
While it might sound like a cop-out, the truth is, it depends. Every business and school is different. A good ROAS is entirely dependent on factors such as your profit margins, stage of business, business goals, etc. It’s best to calculate this for yourself and work out what you want to target. That said, a common ROAS benchmark is 4:1, and that can be a good starting point for you too.
How to improve your ROAS
The most important thing to note when looking at ROAS is to make sure that conversions are tracking accurately and with the correct value. Depending on your process, that might be tricky to do. You have to take data from your application portal, payment processor, as well as your ads platform, and combine them all to calculate this effectively. Conversion tracking can be made easier with a CRM like HubSpot.
If you’re sure that you’re tracking everything correctly, but your ROAS isn’t great, don’t worry just yet. The next few metrics will help you deep-dive into the effectiveness of your campaign, and spend. Often, marketers find themselves too busy to re-strategize. While we can commiserate, it’s not an acceptable excuse when an enrollment campaign is on the line. Small tweaks like budget distribution between campaigns and ad sets might be time-consuming, but they’re worth it. Doing something as simple as shifting a budget will ensure that you’re spending on an ad that is delivering results.
Conversion Rates
It might seem obvious to some - but it’s often overlooked. The next stat to look at is the conversion rates of your landing pages/forms. How many of the people who click on your ad actually convert to leads? This tells you how well your landing pages are doing, and is a reflection of how well your strategy speaks to your audience. If your conversions are tracking effectively to your ad platforms, you’ll be able to see it directly on the ad platform; otherwise, you’ll always be able to see this data from wherever you’re hosting your landing pages.
What is a good conversion rate?
Conversion rates vary widely across industries, and Unbounce reports that in the Education industry, the median conversion rate is 5.8%.
Conversion rates can also vary by channels – Wordstream’s studies show that in the education industry, Search ads have an average conversion rate of 4.15%, whereas Display ads have an average conversion rate of 0.38%, and Facebook ads have an average conversion rate of 13.58%. People who are searching for a specific term are more likely to be ready to take action, so it makes sense that search conversion rates are higher. Remember: Content and strategy need to be relevant to the decision-making stage of your audience, not just based on your resource availability.
Can conversion rates be improved?
Well, of course, they can! If your conversion rates are lower than you’d like, you’ll want to focus your energy on the landing pages. Review the copy and design on the landing page – do they speak to the needs of your potential students? Are you telling a compelling, consistent story, all the way from your ads to your landing page? You want to make sure that your landing page resonates with your audience, and that it aligns with the ad they clicked on to get to the page. Consumers value consistency - and they will expect as much from you.
Bonus tip: personalizing a landing page according to the ad can make a big difference in conversion rates. Create variations of the headlines, imagery, colors, and button text of the landing page, to match each individual ad. You can do this using a tool like Hubspot or Google Optimize.
Some other ways to improve the conversion rates on your landing pages include:
- Adding more testimonials and reviews
- Moving the form higher up on the page
- Removing unnecessary form fields
- Testing different offers & CTA buttons
- Reviewing the user journey, and ensuring that copy and creative assets align with this projection
If you’re having trouble determining what to adjust on your landing page, you can install a tool like Hotjar to see how your users are using your site. This could give you insight into where they are getting stuck, or what’s holding them back.
Click-through Rates
If your conversion rates are good, but your overall performance isn’t, then the problem likely doesn’t lie in your landing pages. Now it’s time to review the ads themselves. This is where your CTR will come in handy. This metric shows how often your ads are clicked on. The click-through rate is calculated as the number of clicks your ad has divided by the number of people who have seen your ad. This is a reflection of how effective your ad is – whether it has caught the attention of the viewers enough for them to click.
What is a good Click-through rate?
Similar to conversion rates, this varies based on your industry, as well as where you’re running ads Wordstream’s Search Advertising Benchmarks show that search ads in the Education & Instruction industry have an average CTR of 6.17%. Facebook ads, on the other hand, have been shown to have an average CTR of 0.55% (within the Jobs & Education industry). Of course, you’ll want to set your own goals based on your needs, but those benchmarks are a good place to start.
Improving your click-through rates
If your click-through rates are below your targets, this means your ads themselves aren’t working well. This typically means one of two things. Either 1) your ads are being shown to the wrong people, so they’re not interested in what you’re selling, or 2) your ads aren’t catching (and holding) the attention of the people who see them, even if they’re the right people.
Make sure you’re targeting the right audiences, and test different audience groups and targeting methods. You’re also going to want to test different creatives. Test and optimize different headlines, CTAs, and image (and video) types. Yes, it takes time to create, but the more you test, the more you’ll be able to see what works (and what doesn’t). Today’s digital spaces are more competitive than ever, and you need your ads to stand out to be effective.
CPM (cost per mille)
If you’ve looked at your CTRs and Conversion Rates, and they are both performing well, but your overall return isn’t what you want it to be, then it’s time to look at CPM.
CPM is calculated as the amount spent divided by 1,000 impressions (an impression is each time your ad is shown; we’ll talk about that a bit more below). Basically, it is a measure of how much you’re paying for your ads to be shown. This is relevant for Facebook (and Display) ads, so you know how much it costs you to reach your audience
What is a good CPM?
This can vary greatly based on the audience you’re looking to reach. But as a benchmark, the average CPM of Facebook ads in the UK in the 3rd quarter of 2021 was US$19.
You’ll have to look for yourself to determine if your CPMs are too high for your goals. Based on your conversion rates and click-through rates, as well as how much a lead is worth to you, you’ll be able to determine the highest CPM you can afford to pay.
How to lower your CPM
CPMs are affected by ad quality, but they are primarily determined by the audience you’ve selected. In general, narrower audiences mean more competition, which means a higher CPM. A critical tool here would be audience testing. Try going broad – the algorithms of your ad platform might do a good enough job of optimizing your ads for you. Test lookalike audiences and retarget audiences. You’ll want to make sure your conversions are tracked correctly (uploading manual customer lists every couple of weeks is a great way to do this), to give your ad platform more accurate and complete data, and allow it to optimize audiences for you better.
As you adjust your audiences and test new ones, however, be sure to keep track of how they are affecting the CTR and Conversion rates of your campaigns – your new audiences may be cheaper to reach, but that only matters if they still click on your ads, and convert effectively.
Reach, Impressions & Frequency
We’ve grouped these three data points together because they are best seen as a collective. These numbers tell you how many people have seen your ad. Not every ad platform will have all three data points available (for example, Search ads only show you impressions), but when you can, it’s best to take a holistic view of all of these.
- Reach measures how many unique individual people have seen your ad.
- Impressions show how many times your ad has been seen in total (including if someone has seen your ad multiple times).
- Frequency is Impressions divided by Reach and gives you an indication of how often an average individual has seen your ad.
For example, say your ad is seen by three people. John sees your ad 3 times, Sarah sees it 6 times, and David sees it once. You’ll have a reach of 3, 10 impressions, and a frequency of 3.33. In practice, these numbers are going to be in the thousands (or even millions), but that’s how those values are calculated.
Arguably the most important metric of these three is Frequency.
You want to keep a track of this, as it’s going to affect the cost of your ads. You don’t want your ads to be shown too many times to the same people, because they’ll get tired of seeing the same ad. Keep track of this on both an ad level and a campaign level, and make sure it’s broken down by time frame (if a person sees an ad 3 times, but over the span of 6 months, that’s probably not a big deal).
What is a good frequency?
This varies less than the above metrics. In general, you’ll see the best performance with an (ad lifetime) frequency of between 1.8 to 4. There’s a big jump in CPA as the Frequency of an ad goes above 8 and into the double digits.
On a weekly basis, Facebook suggests not letting your weekly frequency go above 2 in general. That said, certain factors can lead you to target a higher or lower frequency.
Facebook outlines some of them in this chart.
For example, if you’re a new brand you might need people to see your ads more often so they recognize and are familiar with you. Or if your ad message is more complex, a user might need to see your ad more often before the message sinks in.
How to avoid your frequency getting too high
As your ads get shown more and more regularly, you’ll want to monitor the ad frequency. If the frequency goes above 4, you’ll want to start being more careful. If it starts going above 8, you’ll probably want to turn that particular ad off. That said, use your discretion; if the ad is still performing well, there may be no reason not to let it continue to run.
To avoid a frequency getting too high, you’ll want to test more creatives and messages. You’ll also want to rotate your ad creatives regularly. Every so often, change up the ads in your campaigns (even if the campaigns themselves are evergreen). This will minimize ad fatigue within your audience.
There are many more data points you can look at with paid ads, but these 5 are a good starting point. If you go through your campaigns and see which specific stats are falling short of the goals you’ve set, you’ll have a really strong head start to optimizing your ad performance –and seeing those ad dollars turn into sales revenue.
