Are your Facebook ads effective? Without any context, it’s hard to know whether the click-through rates on your latest ad campaign were good, bad or somewhere in the middle. It’s even tougher to know whether your ad spend investment is yielding an ROI.
Whenever the 21 Handshake team reports Facebook Advertising results, we always try to provide our clients with some context so they can understand what the numbers actually mean. After all, being told that the click-through-rate (CTR) on your latest B2B campaign was 2.2% might seem really low– until you considered the average CTR for B2B campaigns is 0.78%, according to Wordstream. In this case, you’ve just outperformed the industry average by more than double. The same goes for cost-per-click (CPC): paying $3 per click might not seem that terrible until you realized the average CPC for B2B campaigns is closer to $2.52 and even lower ($1.72) across all industries.
Why Do Facebook Ad Benchmarks Matter?
It’s human nature to want to know how you compare to everyone else. In the world of Facebook advertising, it’s absolutely critical that you benchmark your performance against your industry averages. That’s because averages across all industries can vary widely– and even a slight deviation from the norm could mean you’re overpaying for ineffective ads.
Returning to our previous CPC example, the average cost per link click across all industries is $1.72. Finance and industry ads are at the top of the spectrum, costing $3.77 per CPC. On the bottom are apparel ads ($0.45) and travel/hospitability ($0.63). Sure, a few dollars may not seem like a lot for a handful of clicks. If thousands of people are clicking on your ads over the course of your campaign, a few dollars can quickly balloon into thousands. Lowering CPC and increasing CTR by just a few fractions of a percentage point could save your company thousands of dollars each quarter.
It’s difficult to refine your advertising strategy, however, if you don’t know where you stand against the industry. Yes, there’s always room for improvement. But if you’re outperforming the industry average on CTR but underperforming on CPC, you know there’s a mismatch in your targeting and bidding strategy. A few simple tweaks could improve your campaign’s effectiveness.
How Can I Use Advertising Benchmarks to Improve My Campaigns?
Targeting: it’s the “golden rule” of advertising for a reason. The more specific your audience, the more cost-efficient and effective your ad will be. If your ad budget is tight, don’t blow it on a wide audience that may never convert into high-paying customers. In fact, for some companies, converting into a paying customer isn’t enough. They’re better served by narrowly targeting the big fish: the small audience segment that becomes high-paying, repeat customers and brand evangelists.
When it comes to refining the audience for targeted Facebook ads, every company is different. However, it helps to start by benchmarking where your business stands compared with the competition. Look at cost-per-click (CPC), cost-per-action (CPA), average click-through-rate (CTR) and average conversion rate. How does your business stack up to your industry’s averages?
Next, drill down into the data and identify opportunities for improvement. How many qualified leads is your ad generating compared with previous ads? Ideally, you’ll be running multiple versions of the same ad and testing out different CTA taglines, graphic visuals and headlines. Which combination of these elements is most effective with your audience? Is there a clear winner, or are all your different options coming up short against the industry?
Benchmarking against industry competitors is one of the most important ways for determining ad effectiveness. Creative ideas and analytics can – and should – coexist. Benchmarking data brings context to your analytics so you can better identify opportunities for improvement, whether that’s a more engaging tagline, a more compelling value proposition, or simply narrowing down your target audience.