Facebook is undoubtedly the most popular channel for social media advertising. Today, it is being leveraged by 6 million businesses who are actively trying to win the attention of over 2 billion users, mainly with the help of paid content and ads. These numbers alone show just how competitive Facebook marketing is, and the platform's recent Q4 2017 Earnings report indicates this trend will only intensify, making it more challenging for marketers to stand out in their audiences' News Feeds.
With so many companies present on Facebook, it is crucial for marketers to become more creative and tactical in developing advertising strategies that would enable them to cut through the noise. In order to understand how fruitful their efforts are, marketers first need to evaluate where their own strategies fall within Facebook’s advertising landscape.
Many companies rely on historical data when benchmarking the performance and cost of their Facebook ads. This practice is risky, as it can lead to misleading conclusions and a false image of one’s position in the industry.
In addition, the analysis of historical performance does not provide marketers with up-to-date insights that are critical to understanding the ever-changing market context and making more strategic ad spend decisions.
Measuring the real success of ads requires benchmarking them against the competition – something that has long been unavailable to companies advertising on Facebook. Now, for the first time, marketers are able to look into their competitors’ advertising strategy to gain a full picture of their performance and optimize their strategy by fine-tuning their content, targeting, and marketing investments.
In this guide, we provide practical recommendations on how to improve Facebook ads’ performance using a variety of smart tactics like competitive ads benchmarking. These methods will help marketers immediately elevate their position within the industry, country, and region.
In the past, the only method marketers could use to measure the results of their paid activities on Facebook was by looking at their own historical data. Today, however, marketers can access dynamic benchmarking data that enables them to go beyond past performance and see how they stack up against the competition. Here are five reasons why it’s essential to compare your Facebook ads against the market:
Knowing which metrics are the most accurate indicators of your standing in the market poses a challenge for many marketers. Yet, analyzing the effectiveness of your ads within the context of an industry, country, or region depends on measuring three key metrics: content, cost, and engagement performance.
Average Content Performance demonstrates how well your ads are tailored to your audience. In order to get positive response from the Facebook community, your content has to be quality, relevant, and convincing. It should also be delivered at an optimal frequency to generate great results without appearing overly intrusive.
Seeing how your ads perform within the market context is essential to improving your content strategy. Benchmarking your relevance score can be especially helpful, as it allows you to estimate just how good you are at understanding your target audience and delivering meaningful content in comparison to the competition. The better your relevance score compared to the industry, country, and region, the higher the chance that it’s you – not the competitors – who is going to successfully tap into the audience and turn them into customers.
Average Cost Performance is a reliable indicator of how well you’re using your advertising budget. According to Facebook’s Q3 2017 earnings report, ad spend on the platform keeps growing, which means it’s more important than ever to understand how your own investments compare against this trend and to adjust them accordingly.
By benchmarking your spend against the industry, country, or region you can discern whether you are over- or under-spending for your Facebook advertising. It is also necessary to investigate your ad costs in relation to the previously mentioned engagement metrics to see how much value you are receiving from your budget.
Average Engagement Performance shows how well your ads are resonating with your audience. Since the number of Facebook advertisers is only increasing, you are constantly competing for the wider Facebook audience’s attention. That’s why each of your ads needs to be first-rate to stand out in the News Feed, therefore encouraging your audience to interact. What’s more, generating a high number of interactions is critical to lowering your advertising costs and improving your social media ROI.
Measuring metrics such as impressions, actions, reach, and Click-through Rate (CTR) will give you a partial picture of the ad’s performance. In fact, it is only after you benchmark these metrics against the industry, country, or region that you’re able to pinpoint the strengths and weaknesses of your ad strategy.
In order for marketers to benchmark their ads’ performance against the market, they need to compare their average content, cost, and engagement performance with the average results for the industry, country, and region. The most effective way to do it is to use a smart ad analytics tool – Ads Benchmarks in Socialbakers Suite.
Socialbakers’ Ads Benchmarks processes data on $3 billion in ad spend to give you up-to-date market benchmarks and add a competitive context to your ad efforts. As a result, you’re able to gain a better understanding of your position, fix the potential shortcomings in your strategy, and generate more value from your Facebook investments.
To help marketers easily see how their Facebook ad strategies stack up against the market, we narrowed down the results of ads’ content, cost, and engagement performance to four scenarios we most commonly see among marketers.
Each scenario demonstrates the correlation between your budget, understanding of your audience, and ads’ performance, and is an adequate mark of the effectiveness of your current advertising strategy. Additionally, evaluating your results provides a good starting point for improving your future strategy.
Content Red Flags occur when your total spend and ad costs are high, but your audience engagement and content performance are low.
You’re spending a lot on expensive ads that don’t resonate with your audience. It is also likely that your ads are of poor quality or irrelevant to your target audience.
Getting to know your target audience should be the first step before creating your ads. Why? Understanding the people you want to appeal to is crucial to crafting the right message. After all, the tone of voice and visuals that are effective with 40-year-old entrepreneurs won’t work equally well with teenage high school students. Learning the details of your audience enables you to create personalized ads that are aligned with the target group’s demographics, interests, and lifestyles. As a result, your ads are more relevant and successful in driving business results.
Missed Opportunities occur when your audience engagement and content performance are high, but your total spend and ad costs are low.
Overall, it means that you’re doing a good job. However, if your ad spend is lower than the industry benchmark, you might want to increase it to contribute even more to the business bottom line.
Relevance score can help reduce marketers’ advertising costs greatly by incentivizing them to publish valuable content. The metric is displayed as a grade ranging from 1 to 10 that’s calculated based on the positive and negative feedback an ad received and is projected to receive. Positive feedback entails any positive reaction to your ad, such as Likes, and any completion of your advertising objective, such as clicks. Negative feedback, in turn, is the number of times users choose to hide one or all of your ads. The amount and type of feedback largely depend on how meaningful and high quality your ads are.
However, your audience’s reaction is not the only factor influencing the relevance score. Your grade is also impacted by ad frequency. Our analysis of nearly 1M Facebook ads showed that the audience who sees an ad once, clicks on it 11x more often compared to the audience who is exposed to the same ad twice. This means that the right ad frequency can contribute to achieving a higher CTR and, consequently, lower advertising costs.
Hero Status occurs when your total spend, audience engagement, and content performance are high while your ad costs are low.
It looks like you’ve mastered the art of Facebook advertising. You are spending a lot and your investments bring great results – your content performs very well and effectively engages your audience. You’re doing great, keep it up!
Trial Run occurs when your ad costs are high, and your total spend, audience engagement, and content performance are low.
You’re likely starting to run your Facebook ads. At this stage, it’s crucial to test everything you do and quickly optimize your strategy to be able to prove the value of your investments.
Some marketers view social media engagement as a vanity metric that doesn’t contribute much to companies’ overall business results. In reality, however, the interactions number can become one of the key drivers of your social media ROI – which is why you should prioritize creating highly engaging content.
Every Facebook reaction, comment or share is a proof of users’ interest in your company. It is also a bridge between you and your audience that can help you gain new customers. The information about who and how often interacted with your content is especially valuable, as it allows you to single out a particular group of users and turn them into a more specified target audience for your next campaign. This way, you’re able to advertise to people who have already signaled they’re keen on your business, which can greatly increase your social media ROI.
Improving your content, cost, and engagement is the key to successfully optimizing your Facebook advertising strategy. Focusing on each of these aspects and refining them with the help of our recommendations will allow you to produce high-quality, cost-effective ads that will effectively engage your audience, and put you ahead of the game.
If you’re using Socialbakers Ads Benchmarks, the tips outlined in this guide will also enable you to work on these areas of your strategy that are weaker compared to the competition. Whether your scenario is Content Red Flags, Missed Opportunities or Trial Run, we will help you achieve the Hero Status in no time!
Without a doubt, Facebook has a huge marketing potential that marketers can capitalize on with the help of smart, optimized advertising strategies. Building these is a two-step process starting with improving one’s content, cost, and engagement. Next, marketers should analyze their ads’ results – not only in the context of their own historical data but most of all by comparing their performance against the competition. This way, businesses advertising on Facebook can get a complete picture of where they stand, which is crucial for making strategic budget decisions and getting more value from their investments on the platform.
Do you know how your advertising strategy falls within the competitive context? Find out now with Ads Benchmarks in Socialbakers Suite!