Quick! What was your CAC (cost of customer acquisition) for that Facebook ad you ran? No idea? You're not alone. Few people realize that Facebook, and other social media platforms, have powerful sales-tracking tools built in – tools you can use to make a quick assessment of whether your ad campaign is bringing you more money than you're spending on ads.
Let's imagine you sell light bulbs. You sell each light bulb on your website for $50 (you greedy illumination magnate). To get people to your site, you've been paying for Facebook ads. And Facebook is reporting that those ads are costing you $2 per click.
Should you care about this $2-per-click price? No, you should not. Because you don't care about clicks. You care about purchases. To put it another way, if every single person who clicks to your site goes on to buy a light bulb, this is a great campaign. But what if only one out of 25 people who visit your site actually buys a bulb? That means you're paying $50 for each purchase (25 clicks required for sale times $2 per click). Considering $50 is what your product costs, you're basically running ads and not seeing any tangible return on investment (other than some soft goals such as brand awareness and perhaps opt-in to a customer list).
Facebook will tell you what each click is costing you, and without a little bit of work on your part, Facebook will also tell you how much each click is earning you. Some simple math (spoiler: earnings minus cost) will tell you your cost of customer acquisition.
And it's all possible because of the relatively new "Facebook pixel" – a bit of website code that your visitors never see.
To understand how it works, we need to get a bit geeky. You'll need to place the code for this Facebook pixel on your website. You can get the code for your own Facebook ad account at facebook.com/ads/manager/pixel/ (click Actions, then View Pixel Code). Then, place this code on every page of your website. (If you use WordPress, I recommend Tracking Code Manager to keep these organized, and make sure the code isn't obliterated when your theme or site is updated.)
Then, in Facebook's ad manager, you tell it what Web page of yours is the "success" page – the one you send people to after they purchase. (You've seen these before when you've bought something online. It usually says things like "Thank you for purchasing!") Finally, you tell Facebook what each sale is worth (Facebook calls this a "conversion value") – in the case of the light bulb, the conversion value is $2.
But what if your business goal isn't direct online sales, specifically, but leads? Or quote requests? Or appointment bookings? You can still track each completion of these events on your site and, if you like, apply a conversion value.
Imagine you run a nail salon. You know what each average appointment generates in terms of revenue (say, $70). But you also know that 50 per cent of those appointments are no-shows. So, your conversion value is around $35. It's certainly not going to be as precise as when the sales happens right online, but it's still valuable.
Or say you're a real estate agent who makes an average of $9,500 per sale. You advertise for visits to your Contact Me page. You know that only one out of 10 people who submit that form actually go on to become a client who generates revenue. Thus, the conversion value is $950.
This same pixel also will let you advertise to people who have visited your website in the past, people who have purchased from you in the past, or people who visited once but haven't been back in a few months.
There are, of course, many other ways to use the Facebook pixel, including tracking the value of leads and specialized events. And I've put a full video walk-through and tutorial on my website at todmaffin.com/facebookpixel if you would like to learn more.
But, without a doubt, placing this invisible code on your website may be one of the most important five-minute tasks you do all year.
Tod Maffin is president of engageQ digital, a Vancouver- and Toronto-based digital marketing agency, specializing in online advertising, digital marketing, and social engagement. His website, todmaffin.com, has many more resources.