Simple Math Trick That Predicts Profitable Facebook Ad Campaigns

What if you could accurately predict your profits?

I’m no “genie in a bottle” so I can’t guarantee sales, and I can’t tell you for 100% certainty what I’ll say next is going to give you a profitable campaign.

But I can tell you how I’m starting campaigns where the probability of success is in my favor.

Over the last few months, I’ve been able to predict profitable campaigns by just looking for a few key metrics.

I’ve broken down the system I’m using here in this post.

Before I hop into that formula, let me first give you some industry benchmarks that will give you a baseline to use in this process.

What’s a Good Click Price?

It’s possible to get $0.20 — $0.40 clicks with a good ad, and less than $0.20 clicks with a great ad. In extremely good cases you’ll pay just pennies per click.

However, if you’re using a mediocre ad or your targeting is too specific then you’ll see click prices at $0.50 and higher.

There are Industry Benchmarks that other industry leaders are seeing, and are the metrics we use with all first time Facebook test campaigns (and what you should expect with your first go’round).

  1. Click Through Rates: An average of 1% with a newsfeed ad
  2. Click Price: $0.40 is very achievable.
  3. Conversion Rate: An average of 1%
DISCLAIMER: I want to make it clear that I understand there will ALWAYS be an outlier (an exception) that breaks benchmark standards. I know there will be a comment that says “I regularly get 1000% better results than that” …and that’s ok. For my sanity’s sake, I’m going to use industry benchmarks for this post, since many readers won’t knock it out of the park on their first try.

Formula for Predicting Profitability

Now that you have the benchmark standards above, the next thing you need to factor in is your product price. With these 4 metrics I can play around with imaginary numbers to create success on paper first. Here’s step-by-step how I do that:

Scenario 1 Metrics:

  • CTR = 1%
  • Click Price = $0.40
  • Conversion Rate = 1%
  • Product Price = $27

Scenario 1 Results:

  • If I send 1,000 clicks, my cost will be $400. (1000 x 0.40 = $400)
  • I’ll make 10 sales with a 1% conversion rate, which means I’ll earn $270
    ($27 product price x 10 conversions)
  • Therefor I can predict this campaign will most likely be un-profitable.
    ($400 cost is greater than $270 earnings)

What now?

Well, If I just play with the numbers a little, then I can identify what needs to happen to make the campaign profitable.

Let’s say my product price or my average cart value was $100 instead of $27.

Scenario 2 Metrics:

  • CTR = 1%
  • Click Price = $0.40
  • Conversion Rate = 1%
  • Product Price = $100

Scenario 2 Results:

  • If I send 1,000 clicks, my cost will be $400. (1000 x 0.40 = $400)
  • I’ll make 10 sales with a 1% conversion rate, which means I’ll earn $1000 ($100 product price x 10 conversions)
  • Therefor I can predict this campaign will most likely be profitable!
    ($400 cost is less than $1000 earnings)
It’s possible that if you raised your price from $27 to $100 you might make less sales because of the higher price. However, even if you had a 0.5% conversion rate — you would still make $500 and the campaign would still be profitable.

You don’t always have to change your price. Another way you can earn more money per customer is to increase your average order value. You can do this by offering upsells, adding backend offers, and creating an email follow up series that sends to referral offers within days after registration.

You could also increase your conversion rate from 1% to 2% on the original sales page. Let’s see how that scenario plays out

Scenario 3 Metrics:

  • CTR = 1%
  • Click Price = $0.40
  • Conversion Rate = 2%
  • Product Price = $27

Scenario 3 Results:

  • If I send 1,000 clicks, my cost will be $400. (1000 x 0.40 = $400)
  • I’ll make 20 sales with a 2% conversion rate, which means I’ll earn $540 ($27 product price x 20 conversions)
  • Therefor I can predict this campaign will most likely be profitable!
    ($400 cost is less than $540 earnings)

I know you’re probably still second guessing yourself — so here’s one more.

What if you optimized your ad — and split tested a few different ones? And of those ads is so good, you end up only paying a $0.22 cost per click.

Scenario 4 Metrics:

  • CTR = 1%
  • Click Price = $0.22
  • Conversion Rate = 1%
  • Product Price = $27

Scenario 4 Results:

  • If I send 1,000 clicks, my cost will be $220.
  • I’ll make 10 sales with a 1% conversion rate, which means I’ll earn $270 ($27 product price x 10 conversions)
  • Therefor I can predict this campaign will most likely be profitable!
    ($220 cost is less than $270 earnings)

What are you waiting for?

as you can see.. just a little bit of math and forecasting in the beginning can go a LONG way with predicting how profitable your Facebook campaign will/can be.

Thanks for reading! :) If you enjoyed it, hit that heart button below. Would mean a lot to me and it helps other people see the story.

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