Facebook has created excellent tools that allow businesses to obtain essential data on how their advertisements are performing. These include metrics such as Cost-Per-Click, Impressions, Cost-Per-Conversion, Cost-Per-Adds-To-Carts, Return on Ad Spend, and much more. All of these will help you understand how relevant your ad is and whether it is cost-effective to continue running them or scale them. This is very important such that your business can continue to grow sustainably without you running the risk of burning through your starting capital before your business reaches profitability.

Testing Ads

There are no definite rules on how much you should spend per ad as each business runs with a different amount of capital available and varying growth goals. For the following example, we will be assuming that your business has $1,000 budgeted for advertising, and the best way to use that amount of money to grow your business will be recommended.

To start, each new ad can be tested with an ad spend of $10 per day. You can then duplicate your ad sets to target different niches you think will be relevant for your product. With four ads per ad set and three ad sets for your first campaign, you will be spending $120 on ads per day. It is recommended that you continue testing for about three days before deciding which ads or ad set you should shut down while scaling the more successful ones.

Important Starting Metrics to Lookout for

The most important metric is the cost-per-click of each ad. Too high, and you will be left with too little traffic to your site, which converts on an industry average of 3%. You can do some research on the average cost-per-click for your niche and shut down the ads or ad sets that are performing poorly.

Following that, look at the number of conversions and adds-to-carts to see if your ads are actually converting visitors into paying customers. Ads and ad sets that are not converting should be shut down. After that, look at whether the return on ad spend is more than a value of 1.0. If it falls below 1.0, you run the advertisement at a loss and consider shutting it down.

Scaling

Upon eliminating all poorly performing advertisements, you are left with the more successful ads you can choose to scale. You can begin to scale gradually to see if your ad continues to perform well at scale. There will be a point where the law of diminishing returns set in, and the only way to find out where that is will be through further testing. If you are unable to scale your ads sustainably, it might be a sign that your product is not a winning product, and you have successfully tested for the viability of this product. This will allow you to cut your losses and move on to the next product in your niche.