Mary: I want to add that if you aren't tracking your conversions, you're flying blind with your ads. I've seen a lot of people that have no conversions set up, so they're just kind of throwing things out there and hoping it does well and they can't tell me you know, what their ads are actually doing for them. Your conversion rate is the best way to determine whether or not your ads are effective.

Austin: Welcome to the Growth Made Simple podcast where we believe friction in your organization slows your growth, but simplicity will build momentum. This podcast is designed to educate you, challenge you, and inspire you all in under 20 minutes. That's five minutes shorter than the average commute to work, so you'll still have plenty of time to belt out a song or two before you put the car in park.

Brian: Welcome back to another episode of the Growth Made Simple podcast where we believe friction in your organization slows your growth, but simplicity builds momentum. The Growth Made Simple podcast is for entrepreneurs, business owners, marketing managers and the like. If you're passionate about helping your organization grow, then we welcome you to join us on this journey. I'm your host, Brian and I'm joined by my co-host, Mary

Mary: Yeah. That's me.

Brian: So Mary, we're on episode four. Can you believe it?

Mary: No. This has been a crazy journey and I look forward to many more. So, in case you didn't chime in with us last week or last episode, what did we talk about?

Brian: We talked about the beginning stages of data and we talked about what meant to be 'data-driven' and how being data-driven is going to be important to your business. It actually began a whole new mini-series within our podcast focused on data.

Mary: So this week we're looking at what it means to be data-driven with your paid ads. Whether you're doing Facebook ads, Google ads, LinkedIn - whatever you're looking at -   good ways to be data-driven with ads and there are ways that you shouldn't be dealing with your data.

Brian: So with today's podcast what's the subject matter? Where are we going to begin and where we are going to end?

Mary: We're going to take a look at two things. All across the board, we are going to look at your metrics, what metrics you should be looking at with your paid ads. We're going to start with what you shouldn't be looking at, things called vanity metrics, and why those are not something that you should be paying attention to and what happens if you do look at them. Then after that, we're going to look at what you should be looking at and why it's important.

Brian: Great! Why don't we jump right into vanity metrics? Tell the audience what a vanity metric is.

Mary: No one wants to be considered vain. A vanity metrics, much like plain old vanity, might look good but they really lack any depth. Two metrics I'm going to talk about this morning are metrics that might have large numbers, but those large numbers don't necessarily tell you anything or mean anything.

Brian: So what are some of the vanity metrics that marketers tend to focus on, maybe when they don't know any better?

Mary: There are two big pitfalls, especially with Facebook ads and Google ads that people look at. They tend to get hung up these and they don't really tell you much in the long run. The first one is likes, so page likes, shares, comments, I can't tell you how many ads I see per day that say, 'hey, leave us a comment if blah, blah, blah.' Or 'like this post. If you want to see more like it!' I'm sure you've seen the same. They don't do anything for you. At the end of the day, they're not helping your business grow. They might help you reach a few more people, but at the end of the day, it's a vanity metric that you don't necessarily want to be measuring the success of your ads. Definitely pay attention to your engagement and respond to comments, but just don't let those ad likes and comments be the driving to factor in determining whether or not your ad is doing well. Some of my best-performing ads have zero engagement.

Brian: Wow. That's impressive. You know likes are definitely something on Facebook, but I'm assuming this extends across all different types of social media, whether you're talking about, you know, Twitter or Instagram or even LinkedIn.

Mary: Definitely. If you're doing paid ads on any social media platforms, like look nice. It's great to be able to say, 'hey, people are engaging with this content' but at the end of the day are likes getting you sales? Are likes getting you more conversions? Not necessarily.

Brian: What's another vanity metric that we find marketers tend to focus on?

Mary: The next vanity metric I'm going to talk about is called 'reach' or 'impressions'. And you might think that showing your ad to more people is going to be better, but that's not necessarily the case. Especially, if you're approaching it from an inbound marketing perspective. I would rather show one ad to 10 people who are definitely going to convert than a thousand people who might convert. Reach doesn't necessarily mean 'more is better.'

Brian: For those that have never heard the phrase 'reach,' can you talk to us a little bit about what each means as it relates to ad demographics?

Mary: Reach tends to be the number of people who the ad is reaching. So that's usually a larger number. That's usually upwards of a thousand or more depending on your budget. It can get quite high sometimes. And it's basically telling you how many people are seeing your ad, how far that ad is getting out there.

Brian: Well, isn't more the merrier?

Mary: See, you would think that, but not necessarily. If I'm advertising my cake shop and I advertise to people who don't like sweets, is that necessarily better? Even if a million people who don't like sweets see my ad, it's not doing any good.

Brian: Good point, but who doesn't like sweets?

Mary: Some weird people out there.

Brian: Okay. Not me.

Brian: Definitely I like my chocolate. Alright Mary, thanks for helping us understand what vanity metrics are. So we're going to take a quick commercial break and we'll be right back.

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Brian: Welcome back from our commercial break, we're talking today about being data-driven, specifically around paid ads. And so before the break, we talked about vanity metrics. What are we gonna talk about now?

Mary: So we've talked about some metrics that you shouldn't necessarily be paying too much attention to and giving too much weight. But you know, that's not what most people want to know. They want to know, what should I be looking at, what, what does carry weight. So now we're going to look at a few metrics that you definitely should be watching.

Brian: Well, great. So if I'm an employee and my boss is asking me to report and do some ads. What are some things that the owner or your boss is going to be most interested in as it relates to ad?

Mary: I would say the number one thing that your boss is going to care about is your conversion rate.

Brian: What's a conversion rate?

Mary: The conversion rate is basically the percentage of people who see the ad that leads to a conversion. If my ad appears to a hundred people and you get two people who actually convert, that's a 2% conversion rate.

Brian: Can conversion rates be something more than just a purchase?

Mary: Definitely. You define your own conversions. It can be something like a purchase. It can be something as simple like a page view. It could be a form submission if you don't necessarily have a product. It could be just about anything. Anything that you count as a conversion, you can set that up to count on your conversion rates. And I want to add that if you aren't tracking your conversions, you're flying blind with your ads. I've seen a lot of people who, when I take over their accounts, have no conversions set up. They're just kind of throwing things out there and hoping it does well and they can't tell me what their ads actually doing for them. Your conversion rate is the best way to determine whether or not your ads are effective.

Brian: If I'm using a platform like Facebook ads, does Facebook automatically track the conversion rate or do we have to do something specific?

Mary: No, so we are going to set that up. Facebook has what's called the Facebook Pixel, which is a small snippet of code that you put on your website and that's going to track when people go from your ad to your website and vice versa. Also, you can go into your Facebook pixel and determined conversions and set those up as well using the Facebook business manager and the ads manager.

Brian: Awesome. So what are some of the data points that we should be watching?

Mary: I know right before the break we talked about how reach and impressions shouldn't be something that you necessarily pay attention to. I'm actually going to turn that around and say you should definitely be looking at your impressions now and again.

Brian: Okay, why is there a why is it a both/and?

Mary: One of my favorite professors at App State used to tell us that when it came to rules for every no, no there's a yes, yes. I use that in everything. While he was talking about creative writing, I think it applies here. Impressions, while they're not necessarily going to talk about the success of your are one example of how certain metrics can play off of each other and indicate whether or not your ad is actually functioning. So if you have an ad that you put, we'll say $50 a day on, and you've set it to publish and you go back after a weekend and the impression rate is very low or almost nothing, you're gonna want to look at that. That's saying that my ad is not getting out there, not getting out and being seen by people. What I'm going to do is look at things like: is my ad running, is my audience too narrow? Is there something wrong with the ad? Maybe it wasn't even published for some reason. Facebook and Google and other platforms all have some pretty strict guidelines on what you can and can't publish. So maybe it wasn't even being published in the first place. Impressions, while you shouldn't necessarily talk about why this is a great ad or not, you can look at it as 'is this ad functional or not?'

Brian: That's a great point. So, the concept of setting it and forgetting it as it relates to your ad campaign - is that a good idea?

Mary: Definitely not. One thing I love about ads with data is the data is almost real time. It's updated pretty much on the hour no matter what platform you're using. So you can go in and you can look at how your address is performing hours after it's been published and get that information and make some decisions based on whether or not you want to keep it, whether you want to adjust it, whatever you need to do to make it the best it can be.

Brian: Alright. So we began talking about impressions as being something that you shouldn't spend some time on and then we circled back around about how impressions are something that we need to be paying attention to as a yes, yes. what's the next data point that you want to cover?

Mary: Next thing I would look at is the click-through rate. While that's not necessarily another metric that you are going to give a ton of weight to, as to whether or not this ad, you know, definitely not compared to conversion rates. You want to make sure that people are actually clicking on your ads and looking at your landing page, your app, your product, wherever you're sending your ads to. Ideally, if your ad has a click-through rate of 1% or below, then it's not doing so great most likely. And if I haven't already explained it, click through rate is basically out of the impressions that you're getting on your ad, how many of those people are actually clicking on your ad to go through to whatever link you're leading to.

Brian: So, if we're looking at click through rate and the click-through rate's low, what would a low click-through rate tell someone that's making some ads. What are some things that we could determine from that?

Mary: A low CTR, could mean a few things. It could mean that you're just showing it to the wrong people. Maybe you have the wrong audience targeting. So the first thing I would check is you're targeting, your interests. Making sure you haven't chosen some sort of a setting that would limit that potentially. And then I would also look at the ad creative. So the images or video, the ad copy, just see if maybe if it's the most effective that it could be. Maybe it needs to be switched out. One point, especially for Facebook ads - if you have a single image ad then Facebook is going to give that a lower priority over other ads and it might not be serving very well. So, you know, just kind of look at your ad and look at what it's doing and determine whether or not each aspect is the best it can be.

Brian: One of the things I've seen with ads is on Facebook is that you can choose a call to action, and they give you, you know, ten or so to choose from. But sometimes the call action doesn't match the action that you actually want people to take. For example, you know, maybe it's 'sign up; when all you're asking them to do is to download a free book. And so you want to make sure that the call to action, the CTA actually matches the action you're asking them to take.

Mary: Absolutely. Just like we talked about last week how - friction with your website can lead to a lot of drop off. The same thing with ads, you know, if there's confusion, if there's friction, then your ad isn't going to be effective. It's not going to convert people.

Brian: If your click-through rate is low, we can look at the creative that we're using. We can look at the copy text. A great tip would be to put some emojis. Don't go crazy with your emojis, but, it's a great way to engage.

Mary: It's a little more eye-catching.

Brian: Definitely more eye-catching. You want to stay away from text-heavy creatives. Videos are obviously something that Google and Facebook are paying more attention to. Speaking of video, most people are viewing video ads on Facebook and on their mobile device. What's a great tip for those that are using audio with their video?

Mary: I would say I add captions to your video. I know, especially for me, my phone's almost always on silent. Even if a video is automatically playing, if there are no captions, then I just assume it's pretty pictures.

Brian: If you're making a video, a great way to get people to actually listen to what you're saying is to add some captions to do your ads. Let's turn to the third data point.

Mary: Another metric you should definitely be looking at is your CPA, and that's 'cost per acquisition.' That's basically how much is it costing to get those conversions that you've determined. It might be how much is it costing you for someone to make a purchase? How much is it costing you to get a lead? How much is it costing you to get someone to download a resource? Whatever that conversion is, the CPA indicates how much it's going to cost you to get them.

Brian: So we're in tax season, so the CPA's not related to like not your personal accountant. This is related to Facebook ads. It's the cost per acquisition. Knowing how much it costs to actually get a lead or someone that is taking some engagement. Why is that important to a business?

Mary: If you are selling a product, for example, that nets you $5 per purchase and, but it's costing you $15 just to get somebody to make that purchase. You're operating your ads at a loss and you're just throwing money out trying to get people to purchase. That's definitely, that CPA would be way too high for that particular product. On the flip side, if you have a product that's worth $5,000 and it's only costing you $15 per acquisition, that's probably a much better margin.

Brian: Wow. That's a great point. And I knew some businesses even have recurring money. Once they get that first purchase, it may be something like an annual agreement that you're selling, maybe it's a contract that you've sold. While the first month may not be that much, if you add up the annual agreement, it may be worth having a CPA that's pretty high to be able to capture that business.

Mary: Definitely. That's something called the lifetime value of a customer or the LTV. That's definitely something to consider if you have a product or service that's recurring that is getting you more than that one time purchase.

Brian: We've talked about three things so far:" we've talked about impressions, the CTR, which is the click-through rate. We've talked about the CPA, which is not your certified public accountant. It's the cost per acquisition. What's the next item that we are going to talk about?

Mary: So, and we've also talked about conversion rates.

Brian: Oh yeah, definitely.

Mary: The last thing I'm going to talk about is the ROI, the return on investment. Everybody knows what an ROI is. That's what your boss wants to know at the end of the day. And that's going to be your profits versus your ad spend in this case. If your ROI is low or negative, you need to rework those ads. So it's important to set up your ads so that you can actually measure how much you're getting in return for how much you're spending.

Brian: We often talk with business owners that come in and are spending ad money, whether it's through digital marketing or other marketing and they are just looking to cover their expenses. That seems a little odd to me. I mean, aren't ads supposed to make you money?

Mary: Yeah, definitely. A lot of companies, a lot of businesses out there seem to think that just having the ads and having stuff out there is enough and as long as you're making your costs back, then a lot of people don't think that you need to go beyond that. Ads can provide so much value to your business. Why wouldn't you want to optimize that? Why wouldn't you want that to be a good return on investment on your part?

Brian: Well, I think some of this comes from not having knowledge that data can actually prove that your ads are working. I find that many business owners have spent money, they don't have a problem spending money on 'advertising,' but they have not been provided the right data metrics. Maybe they'd been provided the vanity metrics and the click-throughs. What you're saying here on this podcast is that these ad networks are not only able to provide us the data points to make the ads better, but we can actually understand how many people are converting, which is then going to convert into revenue or increased ROI.

Mary: Yup. I think a common misconception is a lot of businesses think that they just need ads and they just need to have them out there and they don't realize just how much the data can tell you. You know, we can go beyond that and we can actually bring in business for you. We can get purchases, we can bring in leads. Looking at these data metrics is going to let you determine how best to do that for your individual business.

Brian: If I'm a business owner and, you know, I've tried Facebook ads and it's not worked, does that mean I should ignore Facebook ads?

Mary: No, definitely not. Facebook ads, especially lately present so many possibilities. Facebook is connected with Instagram now and you can do Instagram stories. There are so many types of formats for both Facebook and Instagram. If Facebook ads aren't working for you, you've probably not tried the right thing yet.

Brian: Okay. Tell me a little about re-targeting. How does re-targeting relate to ads?

Mary: You've probably heard that the average customer has six touches with your business before they convert. And re-targeting ads are a great way to get one of those touches. Have you ever been to a website and then gone onto Facebook and seen an ad for that website later?

Brian: Yes, unfortunately. It's like the site is following me. It's creepy.

Mary: A little bit. That creepiness is actually the Facebook pixel registering when you're on a website and then it's going to go back and saying, hey, Facebook, this person has been on that website. Maybe they want to see an ad about whatever they were looking at. And you can get pretty detailed with it. You can actually re-target people based on certain pages they've seen. For example, with our website, if someone's been to the marketing page, we might serve them a marketing ad versus the sales page. We might serve them a sales ad. If you've got an eCommerce website, you can actually re-target people based on the specific products they've seen. If you've gone in and abandoned your cart, you can have an ad that will serve people the specific products that they added to their cart. And all these are a great way to just keep your business in front of people. I went somewhere and didn't want to make a purchase right away, but later on, I'm thinking about again, I'm like, oh, what was that website? What was that business I was looking for? And then voila, there's a Facebook ad right there for me.

Brian: Wow. So it sounds like retargeting is a great way to get in front of people that are actually interested in your business.

Mary: Exactly.

Brian: That's pretty impressive. Alright, well we've covered a lot of topics. We began before the break and we talked about the vanity metrics. No one wants to be vain. And your boss probably doesn't care about these vanity metrics.

Mary: The big numbers look good, but they ultimately don't really tell you too much.

Brian: We're helping our businesses move away from vanity metrics. On the back half of the podcast, we talked about four different metrics that we want to look at. Can we just recap what those are?

Mary: Of course! We are going to look at (even though we said not to look at impressions), definitely examine impressions. It can help tell where something might be going wrong. Look at your click-through rate. Look at how effectively people are taking in your video, you're creative. Look at how effective your ad is. Look at your CPA or your cost per acquisition. How much money is it costing you to get that conversion? Look at your actual conversion rate. How often are people actually converting from your end? And then look at your ROI. Look at how much return you're actually getting on your ad spend.

Brian: Excellent. Mary, thanks for sharing all your wealth of knowledge around ads. Mary is our in-house director of ads here at Nu. And she spends most of her day helping businesses increase the revenue and conversion rates, through paid ads. So, this is going to be what we call a mini-series around data. And so we began talking about what data is and what it means to be data-driven. We spent the second episode talking about being  data-driven with ads. Our next episode we're going to dive into, and we kind of even hinted at this today, is what data metrics does your boss actually care about. If you're a marketing person and you're doing some reporting, your boss needs to understand the metrics that he actually cares about. We want to make sure that we give you the tools so you can go chase after that. Until next time, remember that friction in your organization slows your growth, but simplicity builds momentum.

Austin: Thanks for listening to growth made simple. We'll be here the first and third Wednesday of every month to bring you the freshest, the smartest, and the newest inbound marketing insight on this side of the Mason Dixon line. Now go find your favorite pump up jams before it's time to get out of the car.



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