Top 5 Metrics to Measure Ad Creatives for Facebook & Instagram

In one of my blogs earlier I spoke about "How to Create Best Creatives for Facebook & Instagram Ads?". 

In this blog we will discuss, the top 5 metrics that we should measure to understand if the creatives that we have made are doing well or not.

The top 5 Metrics that we should measure to determine if our ads are working or not are:

1. Click Through Rate (CTR)
2. Quality Score
3. Engagement Rate
4. Return On Ad Spend & Conversion Rate
5. Profit On Ad Spend

 

Click Through Rate (CTR):

Click Through Rate is one of the most important metrics, it tells us how engaging is our ad copy & creative for the target audience.

It is possible that the same ad creative has better CTR for one campaign as compared to the other. This tells us that the creative is resonating with the target audience of one campaign and not the other.

On Facebook there are 2 different types of CTRs – Link Click Through Rate & Click Through Rate.

Link Click Through Rate is the number of clicks we have got on the call-to-action link that we have given for the ad divided by impressions.

CTR is the number of all the clicks, which will include the clicks on the like button, clicks for commenting & even clicks on the links divided by impressions.

Hence, if our objective is to get sales or traffic, then we should measure “Link Click CTR” and not “CTR”.

We can also measure the "Outbound Link Click Through Rate". This is basically the number of outbound clicks (clicks to websites other than FB or Insta) divided by impressions.

 

Quality Score:

Quality Score is very important and is used to understand how is the algorithm perceiving our ads.

Simply put, the quality score is the score of your ad as compared to the other ads competing for the same target audience.

Similarly, we have Engagement Score and Conversion Score. Now, Conversion Score tells us how is our ad getting conversions as compared to the other ads targeted to the same audience. 

If the algorithm rates our ad as Above average then we know that our ad has a higher chance of winning in the auction.

This is the algorithm’s view of your ad based on various parameters like – how people are interacting with your ads.

Quality Score is an important metric to look at bi-monthly or monthly. But this alone should not be an indicator of how good your ad is.

Hence, we should not discard the ad creative just because of poor quality scores. We can make changes in the same ad creative to improve the quality score.

Having said that it is important to maintain a good quality score because of the higher chances of winning auctions.

 

Engagement Rate:

The engagement Rate gives us an understanding of how is our target audience liking the ad.

It also tells us if our ad is working well in stopping the thumbs of the target audience while scrolling & if the message is landing correctly with them.

The engagement Rate is calculated by summing up all engagement – likes, comments, saves, shares, etc. and dividing the same by reach.

 

Return On Ad Spent (ROAS) & Conversion Rate:

ROAS & Conversion Rate both are very important business metrics but for ads that are running in conversion campaigns, these should also be looked at while judging the performance of the ad creative.

Once you start experimenting you will see that a few ads are very good at getting good ROAS & conversion rates as compared to others.

If the message is properly communicated to the audience in the ads, we can say that they have moved down the funnel and the chances of them converting are higher. For an ad that is not designed properly, a half-baked audience will reach the website.

Hence, it is important to measure this and understand if the ad is getting us good conversions or not.

 

Profit On Ad Spent (POAS):

Most of the people that I speak to have not heard of this metric and hence are also not measuring the same.

But today when everyone is considering profitability as one of the key problems in D2C, this metric is of utmost importance.

It is calculated by dividing the profit by ad spend.

 

Let me give you an example to explain it better.

We have 2 Ads running in the same campaign and the same ad set – Ad1 and Ad2

Ad1 – Talks about a 25% discount

Ad2 – Talks about new launches

 

Let us assume we have spent 1000 Rs in each of these ads.

 

Now, considering the Indian audience, we all know that Ad1 will perform better. While analysing we see that the ROAS as:

Ad1 – 3, which means Revenue of 3000

Ad2 – 2, which means Revenue of 2000

 

Now, if we consider the Gross Margins to be 50% for all the products. Then the Margins with both ads are:

Ad1 – 3000 * (50% - 25%) = 750 Rs

Ad2 – 2000 * 50% = 1000 Rs

 

Hence the POAS will be:

Ad1 – 750/1000 = 0.75

Ad2 – 1000/1000 = 1

 

POAS doesn’t just help in discounted vs non-discounted scenarios. It also helps us understand many other things like - if we are promoting the correct products or collections.

So which ad is more profitable for the business? Ad2.

 

Now this simple example was just to explain to you the POAS, in real scenario, there are many layers to this –

 

1. What is the AOV we are getting from each ad?
2. Sometimes the profitability will not be very different with vs without the discount.
3. Many times the objective is just new customer acquisition, so profitability takes a back seat.
4. A lot of times the Conversion Rate we get from both different ads makes all the difference.
5. Sometimes Shipping cost of two different products is extremely different and that impacts profitability.

 

 If you want to understand more about POAS, here is a blog on the same by Profit Metrics.io.