You guys really kill ads at >$1 per click?

[Mo-Flynn]

Question for Facebook ads experts. I saw this guru yesterday talking that he kills ads if the cost /unique click was more than $1. 

I wanted to check how true that was.

Can you confirm this?

[iq200 · Accepted solution]

He's talking gibberish.

Your CPC will vary on a daily basis and different products and ads will have different CPC's. There's no set way for everyone to manage their ads.

When you kill an ad depends on your target CPA and how much money you can spend per conversion. You need to know your numbers and profit margin per product and base your decisions off of that.

Not how much you are paying for a click, no one who's advanced looks at CPC that much at all, it's a vague metric that doesn't tell you much.

Obviously, if your ads are getting $8 CPC then kill it because I doubt you can afford to pay that much and stay under your target CPA.

[Mo-Flynn]

Yeah, If I can summarize your words; there’s more depth to facebook marketing than relying on a single metric. Is that right?

This quote really caught my attention tho: “you need to know your numbers”. How does the break even point relate to calculating the campaign budget?

That’s enough I don’t want to exaggerate my questions.

Thank you

[AndrewWalters]

I think the overall ad budget relates more to how much you have available to spend right now.

For a campaign, it's cash-positive if the cost per click is less than your average profit per click.

For example, you have a $50 product and you make $35 for each sale. If 100 clicks gets you one sale, a $0.35 CPC is break-even. (I hope that math is right haha)

But it gets complicated quickly. If you get followers and post often, those followers will eventually lead to more sales. You might have a funnel to an e-mail list, and you might get more sign-ups than direct purchases. So if 5% of your e-mail list ends up making a purchase over a couple months, that has to be factored in as well.

And, last, if you nail the ad on your first try, you might hit break-even or cash-positive, but for most people, it takes a bit of struggling to get the copy, audience, etc, right.

[iq200]

Here's a simple example:

Product cost: $50

AOV: $50 (so people buy 1 item on average)

COGS: 20%

Other expenses: $9 (payment processor, shipping, fulfillment, etc.)

Your target margin: This is how much you'd like to make per sale, let's say 20%

Your overall profit would be $31 (AOV minus all expenses and COGS)

Your target CPA would be $21 (Profit - Target Net $ = CPA Target)

You see there's some math to it but you'll be shooting in the dark if you don't know this.

So, in this case, you'd need to shoot for $21 CPA or less to hit your 20% profit margin goal.

For the campaign budget, you'd usually want to spend at least 1x CPA or some people do 1x AOV per ad before deciding to let it run more or kill it. That's a good starting point. In that example, if your target CPA is $21, my advice is to put at least that much per day. Ideally, 2-4x CPA per day per ad set.

[DeepVarnish]

Agree with what's already been said. Although it's always great to get your cost per click as low as possible and the same with your cost per conversion, it's just one of many factors to look at. In most cases, it all starts with your cost per conversion and whether your ads are converting--especially since Facebook's algorithm has trouble optimizing if you don't generate enough conversions in a fairly short window. Inexpensive clicks are great, but they can add up quickly. 

Shawn

https://experts.shopify.com/shawn-graham