Ecom Today Blog | July 23, 2021

Improving ROAS on Facebook: How to turn $100 into $500?

Improving ROAS on Facebook: How to turn $100 into $500?
Improving ROAS on Facebook: How to turn $100 into $500?
We bet every entrepreneur desires to find a universal method to get more sales with less investment in advertising. It may sound quite utopian considering the current Facebook and Instagram algorithms. Dropshippers are literally forced to use a variety of marketing tricks to generate solid traffic with minimal costs.

In this article, we will provide a simple mechanic that will allow you to generate a higher return on ad spend by maximizing the performance of every ad campaign. We will take a Shopify online store as an example to illustrate the process.
We bet every entrepreneur desires to find a universal method to get more sales with less investment in advertising. It may sound quite utopian considering the current Facebook and Instagram algorithms. Dropshippers are literally forced to use a variety of marketing tricks to generate solid traffic with minimal costs.

In this article, we will provide a simple mechanic that will allow you to generate a higher return on ad spend by maximizing the performance of every ad campaign. We will take a Shopify online store as an example to illustrate the process.

Main terms

Before we move on firmly to the calculations, we will highlight the main terms we will use:

  • Ad spend – the amount of money you spend on advertising the product;
  • CPM (Cost per mille) – the cost of 1000 ad impressions. Calculated by the formula: CPM = (total amount spent/ total measured impressions) * 1000;
  • Impressions – shows how many times your ad was viewed;
  • CTR (Link Click-Through Rate). Calculated by the formula: CTR = (total measured clicks/total measured impressions) * 100%;
  • Clicks – the number of people who visited the landing page as they clicked on the ad;
  • Orders – the number of completed purchases;
  • Conversion Rate, CR – the percentage of visitors who make an order. CR = (number of completed orders / number of visits) * 100%;
  • ROAS (Return on Ad Spend).
Main terms
Before we move on firmly to the calculations, we will highlight the main terms we will use:

  • Ad spend – the amount of money you spend on advertising the product;
  • CPM (Cost per mille) – the cost of 1000 ad impressions. Calculated by the formula: CPM = (total amount spent/ total measured impressions) * 1000;
  • Impressions – shows how many times your ad was viewed;
  • CTR (Link Click-Through Rate). Calculated by the formula: CTR = (total measured clicks/total measured impressions) * 100%;
  • Clicks – the number of people who visited the landing page as they clicked on the ad;
  • Orders – the number of completed purchases;
  • Conversion Rate, CR – the percentage of visitors who make an order. CR = (number of completed orders / number of visits) * 100%;
  • ROAS (Return on Ad Spend).
Conversion Rate, CR – the percentage of visitors who make an order

Example for illustration

Now as we are familiar with the main terms, let's study the exemplary case. It shows the mechanism of increasing the number of sales with the same ad costs.

Suppose we have a store and decide to allocate $100 to advertise a specific product. What we plan is:

  • Advertising costs – $100. The number of ad views – 10,000.
  • The number of impressions – 10,000. As a result, the CPM is $10.
  • CPM – $10.
Let's say 100 people clicked on the "Shop Now" button or followed the link in the ad. This gives our ad a 1% CTR.

  • Number of visitors – 100;
  • CTR – 1%.
The conversion rate for our store is 1% (most often it is higher). Imagine we get one sale of $100.

  • Conversion – 1%;
  • Number of sales – 1 with a revenue of $100;
  • ROAS – 1.
We have collected the required data for calculations. We can control practically all the indicators. Let's move on to answering the main question…
Example for illustration
Now as we are familiar with the main terms, let's study the exemplary case. It shows the mechanism of increasing the number of sales with the same ad costs.

Suppose we have a store and decide to allocate $100 to advertise a specific product. What we plan is:

  • Advertising costs – $100. The number of ad views – 10,000.
  • The number of impressions – 10,000. As a result, the CPM is $10.
  • CPM – $10.
Let's say 100 people clicked on the "Shop Now" button or followed the link in the ad. This gives our ad a 1% CTR.

  • Number of visitors – 100;
  • CTR – 1%.
The conversion rate for our store is 1% (most often it is higher). Imagine we get one sale of $100.

  • Conversion – 1%;
  • Number of sales – 1 with a revenue of $100;
  • ROAS – 1.
We have collected the required data for calculations. We can control practically all the indicators. Let's move on to answering the main question…

How do I turn $100 spent on ads into $500 revenue?

The main condition is to use the same ad budget of $100 to turn it into $500. In order to increase sales revenue 5 times, we need to change only one indicator which is under our control. This indicator is Link-CTR. What we have is:

  • Advertising costs stays the same – $100;
  • The number of impressions doesn't change either – 10,000 people;
  • CPM - $10 (this number is controlled by Facebook. So we cannot change it manually).
Now let's write down our final desired result:

  • Conversion remains the same – 1%;
  • Number of sales – 5 with revenue of $500;
  • ROAS - 5.
What do we do with the CTR? If we increase the click-through rate to 5%, we will gain 500 clicks instead of 100. Thus, with the same 1% conversion, all other things being equal (GEO, placements, and other settings), we will get 5 sales for $500 instead of 1 for $100. Looks pretty nice, but how do we achieve this? Now it's time for magic.
How do I turn $100 spent on ads into $500 revenue?
The main condition is to use the same ad budget of $100 to turn it into $500. In order to increase sales revenue 5 times, we need to change only one indicator which is under our control. This indicator is Link-CTR. What we have is:

  • Advertising costs stays the same – $100;
  • The number of impressions doesn't change either – 10,000 people;
  • CPM - $10 (this number is controlled by Facebook. So we cannot change it manually).
Now let's write down our final desired result:

  • Conversion remains the same – 1%;
  • Number of sales – 5 with revenue of $500;
  • ROAS - 5.
What do we do with the CTR? If we increase the click-through rate to 5%, we will gain 500 clicks instead of 100. Thus, with the same 1% conversion, all other things being equal (GEO, placements, and other settings), we will get 5 sales for $500 instead of 1 for $100. Looks pretty nice, but how do we achieve this? Now it's time for magic.
How do I turn $100 spent on ads into $500 revenue?

How to increase the CTR by 5 times?

To get 5 times more clicks on your ad, we need to seriously work on the thumbnail, the video ad creative, and the ad text itself.

We've already shared some helpful tips for creating engaging ad creatives with a high CTR in one of our articles. We have given the answers to popular questions:

  • Why do videos sell better than images?
  • What is the structure of a creative idea?
  • How to create a video by yourself
The secret is revealed. The most important part is making the engaging ad creative. We recommend launching at least 3 versions of the creative that vary in the first 3-5 seconds. Also, various creatives need to highlight various "pain points" and show different problems the product solves.

When testing ads, you need to change only 1 parameter (thumbnail / the video/ad text while using the same settings (GEO, interests, placements, etc.). Thus, we test 3 videos and choose the best one. We also test different thumbnails to choose the best one of them. We do the same thing with texts.

Following this algorithm, we gradually refine the initial creative and increase its click-through rate.

After testing and tweaking your ads, you can increase your CTR from 1% to 3%, and then up to 5% in a few days, depending on your ad budget. So, if you manage to achieve 5% CTR (which is quite likely) while maintaining 1% conversion, you will increase the number of sales by 5 times.

Based on the above stated, we recommend that you first test the creatives, and then move on to search for your target audience.

The example described above is more theoretical in nature, and in reality, all of the listed indicators can vary greatly. The main goal of this article is to show how important creatives are, and what results you can gain if you improve this aspect.
How to increase the CTR by 5 times?
To get 5 times more clicks on your ad, we need to seriously work on the thumbnail, the video ad creative, and the ad text itself.

We've already shared some helpful tips for creating engaging ad creatives with a high CTR in one of our articles. We have given the answers to popular questions:

  • Why do videos sell better than images?
  • What is the structure of a creative idea?
  • How to create a video by yourself
The secret is revealed. The most important part is making the engaging ad creative. We recommend launching at least 3 versions of the creative that vary in the first 3-5 seconds. Also, various creatives need to highlight various "pain points" and show different problems the product solves.

When testing ads, you need to change only 1 parameter (thumbnail / the video/ad text while using the same settings (GEO, interests, placements, etc.). Thus, we test 3 videos and choose the best one. We also test different thumbnails to choose the best one of them. We do the same thing with texts.

Following this algorithm, we gradually refine the initial creative and increase its click-through rate.

After testing and tweaking your ads, you can increase your CTR from 1% to 3%, and then up to 5% in a few days, depending on your ad budget. So, if you manage to achieve 5% CTR (which is quite likely) while maintaining 1% conversion, you will increase the number of sales by 5 times.

Based on the above stated, we recommend that you first test the creatives, and then move on to search for your target audience.

The example described above is more theoretical in nature, and in reality, all of the listed indicators can vary greatly. The main goal of this article is to show how important creatives are, and what results you can gain if you improve this aspect.

How can I implement it?

We do understand how tough and time-consuming the process of making the ad creative is. If you do not have enough experience or want to save your time and effort, you can address our specialists.

We will analyze winning competitors' creatives, search for suitable videos, compose the video structure that will help you sell the product, select music, create a thumbnail, and insert a watermark. The video ad you get is guaranteed to meet all Facebook requirements and show a high CTR.

You can leave a request on our website or contact us on Telegram.
How can I implement it?
We do understand how tough and time-consuming the process of making the ad creative is. If you do not have enough experience or want to save your time and effort, you can address our specialists.

We will analyze winning competitors' creatives, search for suitable videos, compose the video structure that will help you sell the product, select music, create a thumbnail, and insert a watermark. The video ad you get is guaranteed to meet all Facebook requirements and show a high CTR.

You can leave a request on our website or contact us on Telegram.
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ecomlife.pro/services – prebuilt dropshipping stores, Shopify store development, store review, video editing and other services.

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Useful links

ecomlife.pro/services – prebuilt dropshipping stores, Shopify store development, store review, video editing and other services.

@shopifyeasy – our fast-growing Ecommerce & Dropshipping community.

@ecomtoday_en – information channel with useful articles and topical news.

In our Ecommerce Community, we unite everyone who shares an interest in selling items online and wants to enhance knowledge in this area.
In our Ecommerce Community, we unite everyone who shares an interest in selling items online and wants to enhance knowledge in this area.