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How to Improve Facebook Advertising ROI

Published: October 10, 2013

Author: Ryan Pitylak

Facebook ROI
One of my clients recently came across Drayton Bird’s Commonsense Direct Marketing, an interesting book about direct marketing that was originally written over 30 years ago.  Remarkably, I found that the principles described in this book still apply perfectly to online digital marketing with an ROI focus.
For example, Commonsense Direct Marketing identifies the top five direct response test variables by order of variability in effectiveness between best and worst:

1. List (i.e. target) 6x
2. Offer 3x
3. Timing 2x
4. Creative 1.35x
5. Response (call to action) 1.2x

When you apply these variables to Facebook, you will find plenty of opportunities for meaningful testing. Ultimately, these tests will help you achieve optimization in your ad campaigns.
The most effective variable is the List, which is the audience you’re targeting.  The ability to micro-target in Facebook is the main reason it’s so effective. This is why Facebook advertising tends to beat out display advertising on real-time bidding networks, where the targeting tends to be much broader.
The Offer is your promise to the customer. Without providing them something of value, why would they click?  It’s obvious that you have to get the offer right so they’ll take action.  On Facebook, the discount they’ll receive is a huge factor.
Timing is currently less controllable in Facebook than channels like Google.  However, the latest tools like Nanigans have the ability to pause/restart ads based on a variety on inputs so you can control for timing with the right tools. Note that there are some interesting ways to show ads to people based on where they are in their life.  You can target moms with kids between certain ages, for instance, or you can target people who are engaged.
You may have noticed that Creative is low on the list of traditional direct marketing variables. This makes sense when you consider that you must show a compelling offer to the right audience, or the creative won’t even matter. However, it’s important to realize that you should aim for a 1% CTR on Facebook; if you’re not hitting this CTR, then you should rotate through images and text until you find a winning combination.
The Response (your call to action) is always important in direct response advertising. Your Facebook ads should ask the person to download, purchase, browse, etc.  This makes it clear what you want them to do.  Note that your message will persuade users to convert only if you did a good job in the other variables.
So, optimization on Facebook is actually much easier than it may first appear. You should ask yourself:

-Am I targeting the right audience?
-Do I have a compelling offer?
-Am I targeting people at the right time?
-Is my creative interesting and driving a 1% CTR?
-Is my call to action clear and compelling?

Good luck!

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