How to Analyze Your Ads for Profitability 📈

Hello, guys.

What's up?

Hope you guys are having a good day.

Welcome to the ads analyzing video.

In this video, I'm going to teach you guys and show you guys how to analyze ads.

And I have a real life example right here.

This is one of my old brands that I used to run.

So, if you find the product, if you want to test this product, like, I don't care.

I don't run this brand anymore.

I quit running the brand for a reason.

But if one of you guys sees a product and decides to pick it up, feel, free.

I don't have any ties to it anymore.

But anyway, let's get into the video.

Basically, in this, guys, we're gonna, in this video, I'm gonna be showing you guys how to analyze your ads, your ad account, the best, columns to have, and like, the teach you guys how to think about ads and how to, like, look at them and be like, yeah, this is what, what's working and this is what's not working.

So basically what I want to start with is I'm gonna go over my columns.

The columns is what you see over here.

So the reach, cpm, cost per click, ctr, all of these stuff.

I'm going to go over them and I want you guys to pause the video and copy these, these exact same columns because this is what you're going to be using to read your data, okay?

So copy them in the exact same way.

Scroll through right now you guys just pause the video in between, okay?

Boom.

And you can, like, swipe them to your preference.

But these are the only ones you need.

Okay?

In my opinion, these are the only ones you need.

If somebody tells you, tells you otherwise, ask them if they have the same CPA as me.

So let's get into the video, guys.

so basically this anacon was for my old brand.

It's called Babula.

I had a baby brand and I was selling like, baby products.

And I had one super viral product on here, which is the dad shirt, as you can see here.

So that's what we're gonna get into.

I'm going to divide the video into two small sections, but it's still going to be one video.

So I'm going to divide the video into the easy part and into the hard part.

The easy part is understanding these columns.

The harder part is thinking about how to, like, look at the ads.

So basically you have a lot of different columns here, right?

You got like CTR clicks, link clicks, all of this.

The only thing that I care about personally is cost per purchase and roas.

And I think this is the only thing that you guys should care about because end of the day you can have a really high cost per click, you can have a really high ctr, you can have super expensive cpm, whatever the fuck.

If your cost per purchase is profitable and your ROAS is profitable over a long period of time, then it doesn't matter that all of these stats are expensive.

I got real life examples here as well.

So for example, as you can see here, I had a 53 cent cost per click with a $17 cost per purchase.

But here I had a €1 and 16 cent cost per click with a €19 cost per purchase.

It's literally double the cost per click.

But the cost per purchase is basically the same.

So that just proves that these stats are good indicators of what your ad is doing, what the engagement is saying, all of that stuff.

But end of the day it's about profitability.

So I would never ever, ever tell you to turn off an ad if the cost per click is high.

But the ROAS is good, if that makes sense.

I think that's pretty obvious, but a lot of people still think that all these metrics matter.

they don't.

This matters.

These are the only two that matters.

But to get into the.

I am going to go into it because it's important to know, especially when you get into like, when you start building more experience and you start launching a lot of ads, it is helpful to be able to read this and know what it means.

So we are going to get into it right now.

So basically what I usually look at first is I put it on amount spend and I put it on the highest because I want to see the top spenders obviously.

And I'll look at like CPM for example.

Okay.

CPM basically tells you how expensive it is to show your ad to a thousand people.

As you can see this one here at like on average we had a €9 CPM, which is crazy, you're not going to be able to see that anymore in the way Facebook is shaped right now.

Like we had really good stats back here in this time.

So this, it costed me for this ad.

It costed me €7, for this campaign.

I mean it costed me €7 to show the video to a thousand people.

That's what CPM means.

Then we get into cost per link click.

You got cost per link click and cost per click.

Okay, cost per click is irrelevant.

I don't give a fuck about cost per click because it doesn't really tell you anything about the ad.

It literally means how many people clicked your ad.

So it doesn't matter.

Cost per link click on the other hand, tells you how many people, I mean cost per link click tells you how much it costs for one person to click the link, in your ad.

So to your product page, to your landing page, whatever it may be.

In this case it was $0.59 per person, which is extremely low by the way.

when you go to European markets you might see these cost per clicks.

but on average cost per clicks are not this low.

I would say if you're around a dollar, a euro, something like that, you have a really good cost per click.

If you're between one and two euros, it's getting expensive, but it can still be good, especially depending on your aov and anything above, like a three euro, three dollar cost per click is pretty expensive.

But then again if you're still profitable, it doesn't matter.

It does tell you that the ad is expensive though, and that there's probably not a lot of engagement on the ad.

Which is what we're going to get into with ctr.

CTR is the percentage of people clicking your ad basically.

So you can, if you have a higher ctr, basically it's a good sign because it means that like more people are basically clicking your ad.

Like a bigger percentage of people are clicking your ad.

So the higher your ctr, the better the ad is.

I do this on purpose because like I said, let's take an example, right?

This one had a 4% CTR.

okay, the cost per purchase here is also crazy.

Let's take this one.

2.5, 2.6% CTR, €19 cost per purchase.

And then we go down here 1.8.

And this one had a €13 cost per purchase.

So this just proves that all of these stats here are just indicators.

It doesn't mean anything though.

It doesn't mean that your ad is going to be good or bad in any regards.

Okay, here we have the total clicks.

So these are irrelevant.

I don't even know why I have them here to be honest.

But it's like helpful a little bit I guess.

Here we have the link clicks.

This is the only one I care about.

And then these all speak for themselves.

So this is the amount of add to cards, this is the cost per add to cart.

This is the amount of checkouts initiated.

This is pretty helpful to know, to know if people actually have buying intent because People can add to cart but if they're not going to go to the checkout, they don't really have any buying intent.

On average.

I think you want to see like a 50% drop off.

50% drop off from add to cart to checkout to purchases.

So basically I think a healthy store would have like let's say you have 50 add to carts, you'd probably have 25 checkouts and out of those 25 checkouts you'd probably have like between 15 and 12 sales, something like that.

Then you have like a healthy drop off rate.

It could be a lot higher.

It could be a lot lower.

Again, profitability is all that matters.

You can have a 90% drop off rate.

You could have 100 add to carts and only 10 sales.

But if those 10 sales are profitable over a long period of time, it doesn't matter.

Okay, purchases obviously cost per purchase.

So cost per purchase and ROAS are the two that I said were the most important reason being that these indicate your margins and your performance basically.

So for example if my AOV is 50, right?

My AOV is 50 and I have a Let's, let's keep it easier because I'm not really good at math.

My AOV is 40 and I have a $20 cost per purchase.

That would mean that my ROAS is 2 because you spend 20 and you get back 40.

That's a 2x so that's a 2 row s basically.

Imagine if my cost per purchase was $20 and my AOV is also $20 then I would have a 1 ROAS meaning I'm like completely break even.

Which doesn't have to be bad if you have like a subscription model.

For example, I was running a brand with my business partner, a subscription based brand and at some point we were scaling like 0.7 ROAS and you would think her that's fucking stupid because you're like really unprofitable.

Not if those people come back a second, a third, a fourth and a fifth time, then you're not unprofitable anymore.

So you need to be in a position to be able to do that.

So even roas, even Roas is not really important when it comes to like when you have a high LTV brand then ROAS is not important.

As a matter of fact if you're sc, if you're trying to scale your brand, you shouldn't even look at roe.

ROAS shouldn't even be a factor.

If you're scaling and you're trying to get money off of like subscriptions and LTV and stuff like that.

You just want as many customers as possible.

You shouldn't look at Roas in, in that case.

But the reason that I say that Roas is still really important is because especially for if you're beginning or you just got into E Comm or you're just starting out the brand and you don't have unlimited capital, obviously you want to be profitable on first purchase.

So for example, if your break even ROAS is 1.3, then I would suggest you to at least try and hit two Roas so you're like safe.

So maybe some days you have a bit worse performance.

You might have like 0.8, I mean 1.8 and other days you might hit like three roas on average.

I think two would be really healthy.

If 1.3 is your break even Roas, which is like pretty common, a lot of brands also have higher.

But that's basically what Roas and cost per purchase mean.

Like I said, these are the only ones I look at.

These are the only important ones for me.

The rest I don't give a about.

But they can indicate if an ad is like going a right direction or the wrong direction.

Or maybe your performance is like really bad.

But you do have a lot of add to carts and stuff.

It can tell you something about the ad in general.

So it is helpful to.

It's not that I never look at these metrics.

I do look at these metrics and it tells me a lot about the ad.

I'm just saying if this is good then I don't care.

That's all.

So, that's it for this part.

And then we got one more part over here which is the video plays and frequency video plays at 95% is one that I do like.

This is important because it literally tells you if your video is good or not.

If you don't have a lot of video plays at 95%, you can also put a percentage, you can have like a percentage of people that reach 90%, for example.

I don't have that here.

Maybe I should, but I don't.

but this basically tells me that out of all the people that saw this ad, 34,000 looked at 95% of the video, which is almost the entire video.

So it just tells me, the video is engaging.

All of these people are looking like what is the.

This video had a reach of 364,000 and out of those almost 35,000 looked at the entire video.

That's 10%.

That's a lot.

If 10% of the people who see your video finish the entire video, you have extremely good engagement.

Really good.

I think normally you're looking at like between 3 and 8%.

Something like that is like, healthy.

It could even be lower.

Like I said, only this matters.

So, and frequency.

This one is also.

This one is important though.

This is what I look at a lot.

Because frequency basically tells you how many times your ad has been shown to the same people.

So if your frequency is one, even over.

Imagine if you spend 100,000 on one A.D.

and your frequency is still one, then that means that your ad is being shown to only one time to the same person.

Meaning that your ad is going out to a lot of new people, to new people every day, as a matter of fact, which is a really good sign.

It means that your ad is like getting a lot of engagement and that Facebook likes your ad and wants to push it to as many different people as possible.

When your frequency goes to like 2, 3, 4, it means that your, ad is being shown 2, 3, 4 times on average to the same person.

Is that a bad thing?

It doesn't have to be a bad thing, but if you want new customers and you want to scale your brand further from your existing customers, then it's important to keep your frequency as low as possible.

How do you do that?

You need really good ads.

You need creatives that are engaging.

So Facebook is going to push it to a broader audience.

So that's what frequency is.

So this one is pretty important.

Usually you'll see that like retargeting ads have like, the frequency can reach up to like 8 or 10 even.

So people get shown that like 10 times.

But you gotta imagine people are scrolling through Instagram and Facebook like all day.

So in the morning they could see your ad.

During the day they could see your ad.

Maybe at night when they're on the toilet, they see your ad three times in the same sitting, and then after that maybe they'll buy.

So it doesn't really matter that much if you're retargeting ads at a high frequency.

It just means that people, that it's like that people see the ad a lot, but as long as it's profitable, then it doesn't matter.

Usually those type of ads also have like, higher CPCs, higher CTRs as well because they get shown to a smaller audience.

But the cost per purchase is usually really low on those ads.

So that's it for this part of the video.

That's it for, like, the ads manager part?

Right now we are going to get into the ads, okay?