The Ultimate Guide: What do when your Meta Ads ROAS drops by half?

As per Meta, Automated ad targeting tools have driven a 32% increase in ROAS, so if your campaigns are still failing, dig deeper.

Experiencing a significant drop in Return on Ad Spend (ROAS) can be of course concerning for any business. It indicates that your advertising efforts are not generating the same level of revenue as before. As per Meta,

Examine your funnel week-on-week and analyze where the drop is happening. Is it a CPM, CTR, or conversion rate issue?

Here are the key steps you can take to address this issue and improve your ROAS:

1. How to deal with the drop in CTR (clickthrough rate)?

It’s important to understand CTR is heavily dependent on your niche (vertical). Beauty verticals might attract more clicks with visuals, while healthcare relies on informational content, affecting clickthrough rates.

We hear this quite often during our discovery calls:

We aim for a 1% CTR, but some accounts have 0.5% while others exceed 2%.

a. CTR is low from the start (image/thumbnail)

It means visual is not attracting the users and getting the attention OR there's an audience mismatch or you are speaking to the audience in the wrong way

Here are a few ways you can fix

- Analyse your competitors' ads

- Create net new concepts (Us vs. Them, Before & After, 3 Reasons Why, etc.)

- Change your messaging strategy

b. CTR is low from the start (video)

The creative isn't grabbing the attention or

Your hook is too clickbaity or

There's no clear CTA

Solution:

- Rework your hook and make it aligned with the rest of the video

- Check the "hold rate" custom metric

- Introduce a stronger CTA

c. CTR dropping week-on-week

The frequency is high. When users see the same ad can multiple times, it can frustrating for them.

The frequency on the ad set level is okay if there are multiple ads within the ad set, but the issue is when it's high on the AD level.

Ensure, that your prospecting ads’ weekly frequency is less than 2 and monthly frequency is less than 8.

For retargeting we can keep a bigger threshold - weekly frequency < 4 and monthly frequency < 8.

Few proven solutions to fix the drop in CTR

- Introduce new ads

- Introduce urgency/scarcity

- Agitate more pain points

- Include more social proof

2. How to deal with high CPM on Meta ads?

Two main factors determine your Facebook ads CPM:

a. Supply and demand

b. Customer experience

Here's how we lower our clients' CPMs:

- Consolidate your campaigns, ad sets and ads: Don't oversegment, instead consolidate. This helps Meta's algorithm collect signals (postbacks) quickly and expedite learnings. Don't run at max more than 5 campaigns, 3 ad sets, and 5 ads.

- Keep a watch on your ad frequency, if ads have more than 2 frequency in last 7 days or more than 4 in last 30 days, you will be paying a premium.

- Enable all placements. Oversegmentation doesn't work anymore, as the algorithm needs additional signals.

- Use Stop-motion videos: It works due the gamification. Users try to find a perfect moment, Meta considers this as engagement when users scroll back the video. This eventually lowers CPMs

- Long-form carousels: It’s basically 1 image divided into 4-5 images, while each image is on a different card. It creates a unique experience for users while browsing through the feed Users swipe to see the full image, and FB counts each swipe as an engagement

- Ensure your ads don't get rejected too frequently else Meta penalizes you (we don't have data on this, but we've seen this from our experience) 

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3. How to deal with drop in conversion rates?

Analyse whether the problem is just with Meta ads or across the board on other channels (like organic, direct) via Google Analytics reports.

- Assume the issue is only with Meta ads, dig deeper at the ad set and ad level which ads are driving these lower CVR%?

- If the issue is with all the ads, recirculate some of the best unicorn ads whcih have the expectation of improving CVR% and overall performance.

- Review your landing page design and messaging. Is the messaging on the ads aligned with that on the landing pages?

- Use session recording tools like Hotjar, or Microsoft Clarity. Understand where exactly users drop?

- Where exact do you see the biggest drop, is on Add-to-cart rate (ATC/Click), or Checkout rate (add-to-cart/checkout)? Here's our guide on how to set up these Meta ads custom metrics.

To summarize:

1. Analyze the Data: Start by digging into the data to understand the reasons behind the drop in ROAS. Look for any changes in your advertising campaigns, target audience, or market conditions that could have contributed to the decline.

2. Review Ad Campaigns: Evaluate your ad campaigns to ensure they are still aligned with your business goals and target audience. Check if there are any issues with ad copy, targeting, or bidding strategies that could be affecting your ROAS.

3. Optimize Landing Pages: Examine your landing pages to ensure they are optimized for conversions. Make sure they provide a clear value proposition, have a strong call-to-action, and are user-friendly across different devices.

4. Refine Targeting: Review your target audience and make adjustments if necessary. Ensure that your ads are reaching the right people who are more likely to convert, thus improving your ROAS.

4. Test Different Ad Formats: Experiment with different ad formats, such as video or carousel ads, to see if they perform better and help improve your ROAS. Also, different creative themes as we mentioned above.

5. Monitor Competition: Keep an eye on your competitors' advertising strategies and adjust your approach accordingly. Stay updated with industry trends and adapt your campaigns to stay competitive.

6. Seek Expert Advice: If you are struggling to improve your ROAS, consider consulting with digital marketing experts or agencies who specialize in optimizing ad campaigns. We can provide valuable insights and help you make data-driven decisions.