If you are currently losing money on your Facebook campaigns, you are probably being affected by the new algorithm changes recently implemented by Facebook.
As an adwords advertiser, you need to continually monitor your campaign performance and adjust and scale your ad set to optimize profitability.
Facebook constantly makes changes to its algorithm, this is inevitable and part of the challenges of doing business online.
The key thing to do when Facebook makes changes is to figure out what changes has been made and to reset your ad campaigns so that the new algorithm will synchronize with your new ad campaign. This is an essential adjustment to prevent your campaign from remaining in a glitch.
The new changes within Facebook requires an advertiser to master the skill of achieving a campaign sweet spot. This is a point where your budget and cost per conversion is aligned to produce your expected click through rate, and ultimately orders.
The costs to watch on a Facebook campaign are cost per click and cost per conversion. If these are low then your margins will be high, provided that your selling price is good.
Your sweet spot will be the quantity of orders (Budget divided by cost per conversion) which enable your campaign to achieve order volumes that brings about a net profit.
Facebook has implemented a scale of 1 to 10 that determined the target audience that the ad will be served to.
This scale is calculated according to quality, that is, a person who does not know what he is doing and thus can’t transact profitably within Facebook is tagged with 1; and a person who consistently buys within Facebook and know his way around Facebook will be given a 10.
Facebook algorithm collects data on what kind of events users trigger when their on Facebook, people that regularly trigger purchase pixel event are allocate a higher quality 10 and people that are basically non active on facebook get a 1, or a low score along the continuum of 1 to 10.
So when you set your campaign at a $5 budget, Facebook will serve your ad to people on the low score and vice versa.
However, just because you ad is served at people who are categorized by Facebook as having a low score; it does not mean your ad will not convert.
There is nothing an advertiser can do about this, except doing a trial and error method of adjusting your budget until you find your advertising sweet spot.
As explained, your sweet spot is a point where your cost per click and conversion is just generating the right amount of orders that correlates with your sales forecast figures.
It behooves every marketer then to prepare a sales forecast prior to adverting on Facebook, otherwise, you are set to lose a lot of money. This by far the big new change on Facebook.
Again let me repeat by saying that if your campaign is losing money now and it was launched before the algorithm changes, then you have to reset your ad set and launch again with your original settings and work on finding your sweet spot.
Furthermore, for those who have a Shopify ecommerce site like me, the changes will affect the ability of the Facebook pixel to give accurate data when tracking the sales funnel process of your prospects.
Be aware that when analyzing your sales funnel data inside your Shopify site, there may very well be anomalies if your standard event setting on your Facebook ad set is set to trigger a purchase event. That is, if your website objective is for Facebook to optimize for purchase.
This is because the funnel process on Shopify which is: view content→add to cart→initiate checkout→add payment info→purchase; is flawed.
It is flawed not because of a technical deficiency, but because the advertiser will not be able to glean an accurate picture of the activities of the prospects journey inside Shopify due to the way the pixel work.
At the point of ‘add payment info’, many Shopify users have payment gateways that are fulfilled outside of the Shopify environment (for example, Apple pay, Amazon payments and Paypal).
Therefore, consumers that complete a process outside of these environment do not always get back to Shopify to complete purchase; hence the purchase pixel does not fire (and why the data is skewed) to register purchase.
So what you need to do is still aim for the purchase event when you set up your ad but use ‘add payment info’ metric when analyzing your report, assume that the pixel did not fire the purchase event.
The ‘add to payment info’ metric give accurate data, and it is reliable for gauging whether your campaign is profitable or making losses. This where you will either pause the ad sets that are losing money and keep those that are profitable according to your sweet spot.
Moreover, you need to be aware of Facebook changes in the user interface, particularly, in the sections of detailed targeting, placements and overlapping audiences.
In detailed targeting, Facebook will now automatically expand your interests if there is a chance to reach more people, this sound like an excellent change; but the drawback with this new feature is that your traffic data will not give you an accurate picture of how your precise target market is responding to your ad.
It is important to understand the dynamics in one market before moving on to another market. When setting up your targeting, turn off this feature because Facebook is forcing you to expand your market prematurely.
Additionally, there is a change in the placements. When you edit the placement you will notice that under the devices type tab you can only choice either mobile or desktop, not both.
If you choice mobile, I recommend that you always go for mobile first. Then, under platforms my recommendation is that you turn off Instagram and audience network.
Then choose ‘specific mobile devices and systems’ and click wifi. Do yourself a favor, always target mobile audiences first, mobile is hot right now.
Cost per click on mobile are lower that desktop, this is because more Facebook users are accessing Facebook through their mobile devices and Facebook is rewarding advertisers targeting this segment.
Additionally, should you go after desktop placement ensure that you specify the platforms by clicking on the Facebook tab to reveal a feed or right column, by default Facebook will serve your ad on both feed and right column placements.
My recommendation is feed placement. Right hand column ad will increase your frequency (cpm-cost per thousand views) of serves and you costs will be high, remember you want to watch your costs to ensure that your bottom line is higher.
Moreover, the overlapping detailed target audience function has been modified. Facebook used to allow an advertiser to ‘include people who at least match one of the following’ and ‘must also match at least one of the following’ and ‘exclude people who match at least one of the following’ this is where the overlapping audience used to be defined.
The new changes only allow ‘people who at least match one of the following’ and ‘exclude people or narrow your audiences’.
The challenge with this new feature is that your interests that you use for ‘exclusion’ may end up overlapping in psychographic variables, for example, I can’t target the interests of Backpacker Magazine and exclude American Hiking Society for overlap because there are similarities that will clash, and when a conflict arises Facebook costs will skyrocket, you will be bidding against yourself.
Furthermore, you will notice that the ad format section includes video, slideshow and carousel. This gives a marketer the opportunity to split test creatives, which is a good thing.
I know that this piece has been long, but do note this Facebook changes so that your return on investment is secure.