Facebook Advertising For Beginners — Why The Click Through Rate Doesn’t Matter | TBS #199

I see a lot of people obsessing about their click through rates, wondering what a good click through rate is and how to improve it. And in fact, I don’t even know what a good click through rate is.

Why?

Because I get rid of that metric in my Facebook ad manager. The first thing I do when running ads for myself or a client is I customise the columns and get rid of any metrics that don’t really matter. This includes the click through rate, general CPC and some others.

I replace those metrics with the following ones:

– Link Clicks
– CPC (Link)
– Add To Carts
– Purchases
– Cost Per Purchase

That’s pretty much all I need when running Facebook ads. If I’m running a campaign for app installs or leads, things slightly change, but I always make sure to display the metrics that indicate results.

So why does the click through rate not matter?

First of all, because you can run insanely profitable Facebook ads without ever knowing your click through rate. You don’t need the metric to know if your ad is doing well or not. I run profitable ads for myself and clients every day without knowing the click through rate.

I need to know how much I’m paying for a click, I need to know if people are adding the item to the cart and if they’re buying. And I certainly need to know my exact cost per purchase to run ads.

All of those metrics are focused on profitability.

They indicate to me if I’m making money or if I’m losing money. The click through rate or general CPC have nothing to do with profitability.

Let me explain:

If you have a click through rate of 1%, it means for a reach of 10,000 you get 100 clicks. If those 100 clicks result in $200 dollars revenue, and you’ve got a CPC of $0.30, you’ve spent $30 and made $200.

Now let’s say you have a click through rate of 0.2% but your offer has a high conversion rate. So for a reach of 10,000 you get 20 clicks. Let’s say your CPC is $1.50. But instead of a $10 free plus shipping offer you’re selling an animated explainer video worth $500.

From those 20 people, one of them orders an explainer video for $500 since your ad campaign is highly targeted. Now you’ve spent $30 on ads and made $500 in revenue. Your click through rate was significantly lower, but you made more money from your campaign.

In the first example:

Click through rate of 1% = $200 revenue

In the second example:

Click through rate of 0.20% = $500 revenue

As you can see the click through rate is simply a metric that doesn’t matter. What matters are the metrics that indicate the ROI.