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Data insights from Popsixle and Triple Whale’s platform & data.

Facebook Ads: Decoding ROAS, CPA, and Purchase Volume 🧩 

We’ve analyzed data from Triple Whale and Popsixle, focusing on how purchase volume and industry impact return on ad spend (ROAS) and cost per acquisition (CPA).

Impact of Purchase Volume on ROAS & CPA πŸ’‘

We wanted to better understand the relationship between the number of weekly purchases driven by Facebook and ROAS.

So, we analyzed data from over 300 Facebook Ads accounts.

We found that there is indeed a correlation between the number of weekly purchases an account gets on Facebook and its cost per acquisition (CPA) and return on ad spend (ROAS).

We divided the accounts into 5 groups based on their weekly purchases: 0-20, 20-40, 40-60, 60-100, and 100+. These numbers represent the number of purchases Facebook Ads drove per week.

Accounts with between 0 and 40 purchases per week had an average ROAS of 1.55. Their average CPA, or the cost to acquire a new customer, was $64. πŸ’΅

Accounts with 40-100+ purchases per week had an average ROAS of 2.5. Their CPA was $49. πŸ’°

There is an inflection point at ~40 purchases per week for  CPA and ROAS.

Accounts with 40-60 purchases/week had a 56% higher average ROAS than accounts with 0-40 purchases/week. 🌟

Weekly PurchasesCPAROAS
0-20$71.951.6
20-40$55.231.6
40-60$41.242.4
60-100$43.342.8
100+$61.192.2

It’s important to note that we observed a correlation, not definitive causation.

It could be that accounts with a poor ROAS spend less than the cost to drive 40 purchases/week because they have a worse ROAS.

But, if that was the case, you would expect the data to show a linear correlation between a decline in ad spend and a decline in ROAS.

That’s not what we found. We found that 40 purchases is the inflection point. We believe the most logical explanation is that at 40 purchases/week, Facebook’s machine-learning algorithms become more effective, resulting in lower CPAs and higher ROAS. 

40 purchases per week is not a miracle threshold. If a brand drives fewer than 40 purchases/week through Facebook Ads and has a terrible ROAS, it should not increase ad spend until ROAS is improved.

However, if a brand drives 40 purchases/week and has a ROAS that would be profitable if it were ~56% higher, it may be worth it to increase ad spend. This is a solid test to see if there’s a substantial improvement in ROAS and CPA.

The average CPA of the 40-60 purchases/week group was 25% lower than the 20-40 group. So, the amount a brand needs to spend to drive 40 purchases/week is their CPA * .75% * 40.

The average brand in the 20-40 group has a $55 CPA. So a brand in this bucket would need to spend at least $1,650/week to see the benefit of joining the 40-60 bucket.

The ROAS a brand can reasonably expect also depends on what industry they are in. So let’s take a look at recent ROAS by industry data. 🎁

Industry Breakdown of ROAS 🌐

We’ve pulled industry insights from the last 90 days (4/4/23 – 7 /2/23) to provide benchmarks for what your ROAS should be.

  • Art: 1.99 🎨 
  • Automotive: 1.78 πŸš— 
  • Baby: 2.62 πŸ‘Ά 
  • Books: 1.78 πŸ“š 
  • Car & Truck Parts: 3.33 πŸš› 
  • Clothing: 2.56 πŸ‘• 
  • Collectibles: 1.9 🏺 
  • Computers: 3.28 πŸ’» 
  • Crafts: 1.99 🧡 
  • Digital Products: 3.28 πŸ“± 
  • Electronics: 3.28 πŸ“Ί 
  • Fashion Accessories: 2.07 πŸ‘’ 
  • Food & Beverages: 1.63 πŸ” 
  • Hair & Braids: 2.07 πŸ’‡β€β™€οΈ 
  • Health & Beauty: 1.71 πŸ’„ 
  • Home & Garden: 2.25 🏑 
  • Jewelry & Watches: 2.07 ⌚ 
  • Office Products: 1.84 πŸ“Ž 
  • Other: 1.78 🎲 
  • Pet Supplies: 1.39 🐾 
  • Shoes: 2.56 πŸ‘Ÿ 
  • Sporting & Goods: 2.56 ⚽ 
  • Toys & Hobbies: 1.9 🧸

Would the average ROAS for your industry be profitable for your brand?

If not, there are 3 options:

  1. Improve profitability by working to reduce COGs, increase repeat orders and raise average order value.
  2. Know you need to execute better on your Facebook advertising than your competitors and make creative and conversion rate optimization a priority.
  3. Don’t advertise on Facebook Ads.

Is your ROAS lower than the industry average?

This signals the need to adjust your advertising strategy. 🚦 

Work to improve your offer, creative, and conversion rate optimization. πŸ’Έ 

Have questions about how to improve your ROAS? Reach out to Intensify for a free Facebook ads consultation today!

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