Wednesday, 30 December 2015

What is the average CTR on Facebook ads?

What is the average CTR on Facebook ads?
This is a simple question with a complex answer. I'll break down my answer in a few parts:
Can you take CTR to the Bank?
Why You'd Want to Intentionally Want a Low CTR (sometimes).
CTR is Relative to Your Competition.
Some General Rules of Thumb for Ad Engagement
1. Can You Take CTR to the Bank?

No, you can't. I often hear people bragging about incredible CTR's, low CPC's, or other simply wonderful non-commercial aspects of their ads. Welcome my friend to the world of: Vanity Metrics. A vanity metric is something that may make your ads look good, but actually have only indirect relationship to actual commercial success.
You can't go to the bank with a great CTR. I can write the most juicy, engaging, and seductive ad in the universe, achieving a Zeus-Like CTR of 100%, but if no one buys anything: It would be more Achilles' Heel than Lightning Bolt. My time spent optimize just for CTR would be a poor investment of my time.
ROAS: Return on Ad Spend: the only metric you need.
In the world of PPC metrics, only one matters: How much money you made from your ads, and how much they cost. This can be represented by ROAS (Return on ad spend), which is (Revenue from ads - cost) / cost. Or cost over revenue (cost / revenue). Or revenue over cost (revenue / cost). In any discussion of any metric, make sure you are optimizing for ROAS, not CTR. Chasing CTR without attention to ROAS is a fool's errand, because CTR has only an indirect link to ROAS.

2. Why You'd Want to Tank Your CTR Sometimes.
When you pay for ads in an oCPM or CPM manner, a high CTR is fantastic. It means you're getting more clicks, for less money. If you pay 1 dollar for 1,000 impressions, you absolutely want as many clicks with those 1,000 impressions, because your cost doesn't change if 1,000 people click or 1 person clicks. That's great, but what about the bottom line?
What's better, bidding oCPM and getting a 5% CTR with a ROAS of 200%, or bidding CPC, getting a 1% CTR with an ROAS of 400%. Hopefully you know the answer here.
Let's say you're targeting dentists with FB Ads. You offer marketing services and want new clients. You could write a really great ad about a story of a dentist who gets 100 new patients a month. You get a huge CTR, but you realize you're getting a lot of low quality leads, maybe from dental students, or dental hygienists who can't make the executive decisions the actual head of practice can make. It's fine if your goal is branding and awareness, it's not great if you're trying to convert sales. High CTR, potentially bad ROAS.
Alternatively, what if we included the terms: "Attention Dentists" or "Running a Dental Practice?" As long as you are obeying FB ad guidelines, you can pre-qualify anyone from clicking on your ad in the first place. Leaving all the non-dentsits from being interested in your ad. Low CTR, high ROAS.
The classic example of this is including price, to prevent those people who aren't willing to spend that much on a product from converting.
3. CTR is Very Relative.
Let's start with very real situations:
I got a CTR of 10% one time. Is that good? Not if my competition was getting 15%.
I got a CTR of 5% on my retargeting ads, and 1% on my interests campaign. Is that bad? Let's discuss!
On FB, there are so many different layers.
Interest targeting
Interest + friends of fan targeting
Interest + friends of fan + behavioral (like home value over 500,000)
Retargeting users who have visited your checkout page
Lookalikes to visitors
lookalike to customers
Email list
Top of sales funnel lead generation
Bottom of Sales Funnel "Close" ads
the list goes on...
What's my point? If you expect the same CTR across all your ads and campaigns,....well, don't. Just like I wouldn't expect my AdWords branded CTR to be the same as a one word competitive term, don't expect the same CTR across the board.

4. Some Rules of Thumb for FB CTR (Since you asked).
Again, a suitable CTR is an indirect measure of success. assuming you have a healthy ROAS, you'll want to attract more people to your landing page.
This is where CTR is useful, when you are trying to use it to increase your ROAS, not using it to start obtaining an ROAS.
If you have a CTR of less than 1% on the newsfeed, it's time to work on your ad.
If you have a CTR of less than 0.5% on the Right-Hand-Side (RHS), it's time to work on your ad.
If you have a CTR of less than 3% with a multi-product ad, it's time to work on your ad.
In my experience, an average CTR on the newsfeed is 2%, and average CTR on the RHS is about 0.75%, average CTR of a multi-product ad is about 5%.
When you increase the relationship (interest to lookalike to retargeting) You should expect an CTR increase of at least one. i.e. If i get a 1% CTR from same ad being served to cold traffic in an interest campaign, I should try to see 2% from a lookalike campaign, and a 3% in a retargeting campaign. That said, what are you doing running the same ad to all these different people?

Bonus: #5: What you start with, shouldn't be what you end with.
If your starting CTR on day 1 is the same as your CTR on the 5th day of running the ad is the same, you're doing it wrong. Everyday, you should be going in there and pausing poor performing ad copy, images, headlines, etc. Because PPC isn't about perfection, it's about improvement.

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