How to Calculate Your Facebook ROI and Drive More Sales

Measuring your Facebook ROI allows you to assess what works–and what doesn’t–so that you can focus on the campaigns that have the potential to drive more sales.

Facebook advertisers are being held increasingly accountable for the need to connect their efforts with revenue focussed metrics.

It’s so easy to get distracted by vanity metrics, such as likes, comments and social shares.

And, in all honesty, these metrics can be useful in gauging what your audience thinks of your content, and to that extent, can inform the rest of your marketing strategy.

However, this data doesn’t provide you with the insight you need to calculate the ROI of your Facebook campaigns.

The end result for most advertising campaigns is increased revenue, and if your boss or clients aren’t seeing a financial return, then you’re going to struggle to secure more budget for future campaigns.

On that note, marketers need a way of proving how Facebook is impacting lead generation efforts, as well as how it translates into revenue.

So, for this article, we’ll discuss:

  • Facebook ROI definition
  • Traditional way to track Facebook ROI
  • The problem measuring Facebook ROI for lead generation
  • More effective way to track revenue from Facebook.
Editor’s note: Do you want to prove the value of your Facebook ads, but not sure how to do it? With this guide, you’ll learn how to get smarter with attribution, on and off Facebook, so that you can gain a more unified view of your marketing performance. Download the eBook to learn more.

Facebook attribution - banner - www.ruleranalytics.com

 

Traditional way to calculate ROI from Facebook

The following step-by-step is the most basic way of tracking the ROI of your Facebook Ads and is commonly used by advertisers who sell products online.

If this isn’t what you do, don’t worry!

We’ll show you how to track the ROI of your Facebook leads shortly. For now, let’s take a look at this traditional method to track Facebook ROI.

 

Set up custom URLs

You’ll need to set up custom URL parameters so that you can track where your conversions or sales are coming from in tools like Google Analytics.

UTM codes allow you to add tags to your URLs such as source, medium and campaign so that you can track each visit.

Best way to build custom URLs is with Google’s URL creator.

When you build your ads on Facebook, you will add this custom URL to your ad so that you can see exactly what campaign is driving your traffic.

 

Create Facebook Tracking Pixel

A Facebook pixel allows you to tie Facebook traffic to certain events on your website, like a sale or download.

Here’s how to create Facebook Pixel:

Step 1: Go to “Events Manager”, click “connect data sources” and select “Web”.

Step 2: Select “Facebook pixel” and click “Connect”.

Step 3: Add your pixel name.

Step 4: Add your website domain to check for easy setup options, then click “Continue”.

Step 5: Once you’ve created your pixel, you’re now ready to upload it to your website. There are three methods you can use. You can learn more about those here.

Once you’ve successfully added the pixel to your website, you can set up events to start tracking actions made on your website.

There are 17 standard Facebook pixel events for which you track, and you can create your own custom conversion if there isn’t one available that suits your objective.

To get all the details, head on over to this guide on Facebook tracking pixels.

 

Tracking the ROI of Facebook Ads

If you’ve correctly followed these steps, then the measurement of ROI should be relatively simple.

Look at the cost of your ads and then take the revenue made from your conversions and use the following formula.

Let’s say you spent £1,000 on Facebook Ads in the space of 30-days and generated £3,000 in sales.

Your return on investment would be: £2,000.

Sounds simple, right?

 

The problem measuring Facebook ROI for lead generation

Calculating ROI is relatively straightforward if you’re managing Facebook advertising for an eCommerce site and selling products online.

But what if your objective is to drive high-quality leads in the hope that they’ll close into revenue one day?

Well, this is where things get tricky.

Generally speaking, marketers don’t know the quality of a lead until it is qualified or processed which can take time depending on the length of the sales cycle.

As we’ve already discussed, Facebook campaigns are often measured and optimised based on conversions or goals, and this is where the cracks begin to show between sales and marketing.

The problem with relying solely on conversions is that you have no insight on what your users did after they convert into a lead.

More specifically, whether or not they closed into revenue.

In order to solve this problem, you need to stop measuring and optimising for conversions and goals and get to the real detail which is the lead itself.

This involves matching your real leads to the exact campaign, ad set or ad that created them.

 

Using Closed-Loop Analytics to Track Facebook ROI

To calculate ROI for a company with both online and offline conversions, you need an analytics tool that enables closed-loop marketing.

A closed-loop marketing analytics tool like Ruler Analytics connects your marketing analytics to the sales team’s CRM, allowing you to access details about customer behaviours across the entire buyer’s journey.

Here’s how it works:

Additional Note: Download the Closed-Loop Framework for more information on how Ruler Analytics connects CRM sales revenue with marketing activity data.

1. You run a Facebook campaign, and a user clicks on your ad. Ruler begins tracking that user’s journey with the ad recorded as the point of origin.

2. The user may visit your website again via another channel such as organic search or Google Paid. Ruler will track all of those interactions to create a customer journey.

3. Whenever a visitor converts into a lead via phone call, form fill or live-chat enquiry, Ruler will match the user’s contact information with their unique touchpoints and this data is then sent to your CRM. This information will help your sales team learn more about the users interests before reaching out to them.

Important Note: While we’re on the subject, Ruler is capable of tracking your offline conversions on Facebook. We have a whole guide dedicated to how it works which you can find here.

4. Whenever a salesperson logs the lead as won in the CRM, revenue data is passed back to Ruler Analytics and the revenue generated is attributed back to the originating ad campaign.

5. Ruler Analytics can integrate with 1,000+ tools, which means that you can pass revenue data from your Ruler Analytics account to tools like Facebook Ad Manager and Google Analytics.

This gives marketers a complete view of how many conversions they’re generating and exactly how much revenue those conversions brought in. You can see exactly how much revenue different channels and campaigns generate.

 

Importance of Focusing on Revenue

We’ve added a use case to demonstrate just how important it is to optimise your campaigns for revenue and not just “goals”.

As you can see in the screenshot above, Facebook drove the most conversions and revenue. Although, if you compare Instagram and Twitter, you can see that Twitter had significantly fewer conversions but drove 6x more revenue than Instagram.

 

Benefits of Closed-Loop Marketing Analytics

If the use case was not enough to persuade you, then here are more benefits of using closed-loop analytics to help measure your ROI.

Better Sales and Marketing Alignment: With closed-loop reporting, both sales and marketing can form an alliance. Sales can benefit from the data marketing feed into the CRM and see which content, products and features leads are most interested in.

Ability to Make More Informed Decisions: With closed-loop reporting, you can allocate budget into the areas that have the potential to drive more value.

Reduced Marketing Costs: As well as showing you which Facebook ads are driving the most revenue, closed loop reporting provides you with the insight you need to reduce your budget on under-performing campaigns.

 

Final Thoughts

If you use Facebook advertising as part of your marketing strategy, then tracking your ROI is an absolute necessity.

It’s the best indicator for determining whether or not your campaigns are generating revenue for your business.

Ruler Analytics offers a complete solution that can give you all the metrics you need to prove the ROI of your advertising campaigns.

If you would like to see benefits for yourself, then feel free to book a demo with our analytics experts.

Written by

Digital Marketing Manager at Ruler Analytics with a background in SEO, analytics, content marketing and paid social. I help people (like me) close the loop between marketing-generated leads and revenue.