What To Do When Your ROAS Drops When You Start To Scale and How To Deal With It

in Business

When scaling up your Facebook ad campaigns, a drop in your return on ad spend (ROAS) is to be expected. But that doesn’t mean there is nothing you can do about it. In this blog, we’re going to teach you what actions to take in order to increase the ROAS on your scaled-up campaigns.

The Quick Wins

Whether you’re a one-man band or a high-end Facebook advertising agency – the basics don’t change. Check your ads for any obvious signs of underperformance. As a rule, if a Facebook ad hasn’t achieved any conversions after 14 days—or after spending double your target CPA—it should be switched off. This means if you have a target CPA of £25 and your ad has spent £50+ without delivering any conversions (or there have been no conversions after 14 days of delivery), the ad should be paused.

This is why we call it a “quick win”, by switching off these underperforming ads, Facebook will stop delivering them to your audience and spend your ad budget on the better-performing ads. This will result in you reaching more of your audience, delivering more traffic to your site, and ultimately achieving more conversions.

Demographic Data

When in the ads manager view, you should see a dropdown menu titled ‘breakdown’. Click this, and you’ll be able to break down the results you see in ads manager based on all kinds of useful demographic information such as age, gender, platform, placement, location, region, and impression device.

Breaking down your results based on age can be incredibly useful as you’ll be able to see which age groups are engaging most with your ads and, more importantly, which age groups are converting the most. While it can be tempting to completely restrict ad delivery from a particular age group due to it not generating any conversions, first check the ad spend. Facebook will naturally give the most ad spend to the age groups that it has learned will engage most with your brand, so though the 18-24 age group may not have generated any sales, perhaps it has only received £5 spend. In the long run, it may be worth leaving this live and letting the Facebook algorithm spend small amounts of money in order to find the occasional converter, resulting in a large ROAS. However, if an age group has received a lot of spend (remember the rule about letting an asset spend double your target CPA) and still hasn’t achieved any conversion, then perhaps it is time to switch it off.

Filter your performance by ad platform, this will show you the performance of Facebook, Instagram, Messenger, and Audience Network as platforms. Typically, you’ll see spend respective to how we’ve listed the platforms. If the majority of conversions come from Instagram and Facebook isn’t delivering despite receiving significant spend (remember the rule about letting an asset spend double your target CPA), then you should look to turn off Facebook to allow more budget to be funnelled into the higher performing platform of Instagram. This could mean that more of your audience reside on Instagram, which naturally allows for lower costs and lower frequencies – this is useful information as you continue to scale up your Facebook ad campaigns.

Check if there is any difference between how the genders performed. Similar to age groups, this data should be looked at closely. Just because males converted less than females, it doesn’t mean they should be excluded. Perhaps they delivered a lower cost per acquisition (CPA) or, indeed, a higher ROAS. However, if a certain gender has been consistently underperforming, then certainly look to exclude them from the targeting. It is important to note that gender or age group performance won’t be uniform across the whole account. You should see fluctuations depending on each ad sets unique targeting, and so unique optimisations should be taken depending on each ad sets performance.

Once you’ve completed optimisations based on a breakdown of demographic data, your Facebook ads will be delivered to a higher-intent audience that has shown a better willingness to convert.

Budget Changes

Simple but effective. Increase the budget for ad sets or campaigns that are performing well. In ad sets or campaigns that are performing poorly, decrease the budget. Note that budget changes should be done in no more than 20% increments and never more than twice a day. Doing this puts you in charge of your budget and where it gets spent. Ensure the areas with the best performance are getting more spend. If you’ve incorporated a funnel strategy into your campaigns, remember to keep the majority of spend in your cold campaigns (roughly 70%) and the minority of your spend in retargeting (typically 20% in the warm retargeting and 10% in the hot)

Duplicate Your Best Performing Ad Sets

This is a super quick way to increase performance. If a certain ad set is achieving an above-average ROAS, you can duplicate it for a short time as a way of leveraging its performance for more conversions. This isn’t a long-term strategy, as your audience will quickly suffer from ad fatigue but is very useful when done for short periods.

These are some of the most effective ways to deal with the inevitable drop in ROAS you will experience when starting to scale. By checking which platforms are performing worse than others, reviewing your demographic data, and adapting your budgets, you should be able to re-stabilise your ROAS in line with your goals and continue your scale to success.

Image Credits: Will Francis

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