Evaluating Metrics Against Your Target Goal Flashcards
SMART GOALS?
Specific Measurable Achievable Relevant Time-Bound
KPI?
Key Performance Indicator: Metric or set of metrics that you use to evaluate if you have met your goal.
It should be:
MEASURABLE (a number)
DIRECTIONAL (could go up or down)
RELATE TO YOUR GOAL (be relevant to what you are trying to achieve with your SMART goal ad objective)
What are the THREE things your KPI should be?
Measurable
Directional
Relevant to your Goal
What are the three main categories of KPI’s?
Awareness (Reach, Impressions, Followers) (TOFU)
Consideration/Engagement (Likes, shares, comments, clicks)
Conversion (app download, buy a product)
How do KPI’s and Campaign Objectives work together in ads manager?
In ads manager, you choose a campaign objective that is clearly labeled as one of three options: Awareness, Consideration, Conversion. Underneath these options are different campaigns you can run that will address and measure your different KPI goals
(ie: ads campaign for consideration is traffic, ad campaign for conversions is app downloads, catalogue purchase, ad campaign for awareness is reach)
What 3 things should you align to make sure your ad campaign is successful?
Campaign Objective, KPI’s, and SMART goals.
What is ROAS?
Think of it as the revenue generated from a specific ad campaign.
It is technically Return on Ad Spend (for a specific campaign). Important to make that distinction because it is different than ROI (Return on Investment). ROI includes everything involved with product costs too.
What is formula for ROAS?
ROAS = Revenue (earned from ads) / Ad Costs
What does ROAS tell you?
if your campaign is profitable.
What is a good ROAS number?
Should always be over 1. One means it equals the cost of your ads.
ROAS vs ROI
ROAS is the revenue from ONE ad campaign, ROI looks at bigger picture spending and profit and takes into account the total costs involved with advertising and sales and product costs.
Ex: If your ROAS was 3, because you had a revenue of $750 on an ad spend of $250, BUT you had a product cost of $500… then you have a ROI of $250 which is what your ad cost, so you didn’t really make any net profit.
Formula for ROI:
ROI = (Revenue - Investments) / (those investments)
investments include the money you spent on advertising and sales PLUS the cost of goods sold
What are the only two ways you can increase ROAS?
- either lower the cost of your ads
2. increase the revenue you generate
What is the result?
the result is the action we want people to take based on the objective we set for our campaign (which is based on our goals).
What is the Cost Per Result?
How much we paid to get a desired action to happen.
What is the CPR formula (Cost Per Result)?
Total amount spent on campaign / # of results you achieved.
Zigtebra ROI example:
Say we spent $500 to buy 50 $10 tee shirts and sold all fifty tee shirts for $20 each, we made $1000. So what its our ROI? 1000-500 = 500/500 = 1. 1 = 100% ROI
What is CAC?
Customer Acquisition Cost: the total marketing cost of getting one new customer.
What is LTV?
Lifetime Value: How much your customer will spend with your business over the lifetime of their relationship with you.
Calcuated by multiplying the Average Customer Value times the Average Customer Lifespan.
How can FB Ads Manager help you manage your CPR Cost Per Result?
Fb Ads Manager can let you set a rule where it will flag you if your CPR goes past a certain point that you specify.
Average Purchase Value?
Average amount a customer spends per purchase
How do you calculate the Average Purchase Value?
Divide the Total Revenue by Total Purchases
What is the Average Purchase Frequency Rate?
How many purchases you typically get from one customer
How do you calculate the Average Purchase Frequency Rate?
Divide the number of purchases by the number of customers. # of Purchases / # of Customers
How do you calculate the Average Customer Value?
Multiply the Average Purchase Value by the Average Purchase Frequency Rate.
What is the Average Customer Lifespan?
How long a customer relationship typically lasts with your company.
So how do you calculate the LTV (Lifetime Value) of a customer?
Average Purchase Value x Average Purchase Frequency Rate x Average Customer Lifespan = Lifetime Customer Value
How is LTV related to CAC?
Knowing your LTV helps you evaluate your CAC (customer acquisition cost) and maybe reconsider what it’s worth to you to acquire a new customer considering how much they might be worth to you over a lifetime.
What can you do with LTV data?
Use high LTV audiences to create NEW Lookalike Audiences.
Compare LTV data between segments. If there is a low LTV segment and high LTV segment… compare them.
What is the benefit of considering the LTV?
It fosters big picture thinking. you’re looking at customers value across the lifetime relationship with your business.
It can help you reconsider how you manage and continue customer relationships if your LTV is low.
To increase LTV:
= improve customer service across all channels = create better content = improve your listening = add a loyalty program or rewards = change to an annual membership
CAC includes what?
All the spending done to acquire one individual.
What can affect your CPR (Cost Per Result)?
Audience chosen
placements being too narrowed
Creative
Schedule
Brrainstorm Freestyle looking at LTV
Lifetime Value is important because you might realize that a certain segment has a high Average Purchase Value x Average Purchase Frequency Rate, over a long period of purchasing from you: Average Customer Lifespan, and all of that results in spending more with you over time (LTV). If you look into the LTV data, you may realize which segments are most valuable (over time) for you to focus on acquiring in the first place (assuming the cost of acquiring each segment’s business is factored in).
