← The Foundr Podcast with Nathan Chan
The Foundr Podcast with Nathan Chan
636: (Solo) The Facebook Ads Metrics That Actually Matter When Scaling
00:10:04
Most founders think scaling Facebook ads is about finding one winning ad and spending more behind it. But that's not how it works — especially not anymore.
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- [00:02]
Nathan Chan
Hey, founder fam.
- [00:03]
Omnisend Representative
I want to talk to you about something super exciting. We're officially partnered with Omnisend, the email marketing and SMS platform built specifically for e commerce founders. We've been recommending Omnisend to founder students for a while now because it just works. Whether you're launching your first store or you're scaling to seven figures, it really helps you automate your marketing and get real results. Did you know on average OMNISEND customers make $68 for every one, one dollar they spend, which is an insanely good return on investment. And because you're part of the founder community, you get 50% off your first three months with the code FOUNDER50. Just head to omnisend.com forward/founder without the e to get started. All right, now let's jump back into the show.
- [00:49]
Nathan Chan
Hey, founder fam. Nathan here. Welcome back to another founder to Founder episode. So guys, if you're running Facebook ads or thinking about diving into them or you're stuck, wonder why things aren't scaling. This episode is for you. Now. Over the past decade at Founder and now especially through our new product Founder Operators, which is a membership where we have Nick Shackelford as one of our operators in residence, I've had the chance to see behind the scenes of hundreds of direct to consumer brands. And let me tell you, the ones that scale, they all have one thing in common. They obsess over their numbers. Like Nick, you know, he's a partner at Brezz and he's taking that business from zero to US$70 million in two years. He was showing me a brand that he was working with. He's only been working with them for 45 days and he scaled them from $20,000 a day in paid advertising spend, that's US dollars 20,000 a day to 200 to 250, sometimes US$300,000 a day. And one thing I've found is, you know, he is so big on knowing the metrics. And it's not just roas, it's not just conversion rates. It's definitely not just the data you see in the Facebook ads manager. It's about understanding the full picture from traffic to creative to your business economics. So today I really want to break that down for you. Those core metrics you need to watch like a hawk if you want to scale your Facebook ads. And if you are interested in working with us and applying to our Founder Operators membership, you go to founder.com operator. I'll tell you about that a little more later.
- [02:28]
Podcast Narrator
Hear the stories, the proven Methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder podcast with Nathan Chan.
- [02:42]
Nathan Chan
Let's start with this. Most people think about scaling as finding that one winning ad and then just spending more behind it. But that's not how it works, especially not anymore. Scaling successfully means really understanding how to balance out multiple pillars. So it's about traffic quality, it's about creative performance, it's your conversions, your offer strategy as well, and your business economics. So think of AOV profits margin. So when it comes to buying media like paid advertising, like Facebook ads, Google Ads, TikTok ads, all that kind of stuff, when it comes to your media buying strategy, you need to think like an operator, not just a marketer. And we've spent upwards of a million dollars a month at Founder as well. So, you know, I am not masterful on the Facebook ads platform around how to actually buy ads and all that kind of stuff and all the tactics and tricks. But I know my numbers and I think the best operators know how to scale. So when it comes down to breaking it down into three buckets of metrics, you should be tracking to scale up your performance, I'm going to start with the traffic. I'm going to, I'm going to break it down into these three buckets. So the first one is the traffic metric. So your CPM. So that's your cost per 1,000 impressions. Is your audience too expensive? Your CTR, which is your click through rate, is your creative actually engaging? Your cpc which is your cost per click. You know, are you paying too much to get someone to your site? And if your CTR is low, say under 1%, your ads are not going to be hooking people. If your CPM is high, maybe your targeting is too narrow. And if you're struggling with any of these three, my recommendation is to focus on, you know, improving hooks, headlines, thumb stopping creative, you know, launching more creative. Like I've seen, it's fascinating. I've seen, you know, funnels where we're spending $10,000, $20,000 a day. The difference a couple of or even just one good creative makes and it really changes the game. I've also seen the difference of targeting really, really narrowly and you know, just cost absolutely blowing out. So it really depends on your traffic metrics. These are, these are your leading indicators on whether the platform's working or not. And then, you know, also you need to think about your offer, right? Your offer is a big, big piece of the puzzle, right? If your offer isn't landing, you're gonna see pretty Quickly the marketplace is gonna tell you because I've seen products where, where if you get the product right fundamentally and you crack the offer, all of a sudden CTR just is really strong. Your cost per click is really strong. And you can go broad from an advertising perspective and the platforms will actually just go out and find those people for you. Then we get to the creative and conversion metrics, right? This is where most people focus, but it's still only just a part of the story. We've got roas, which is return on ad spend. You can look at mer, which is what we like to look at as well. So that's your total advertising spend against your sales, so your marketing efficiency ratio. So we prefer to look at MER because what we find is the platforms, as amazing as they are, the multitouch, you know, somebody sees an ad, they click on it. But then they might buy on mobile like all these different things, right? So they might follow you. Like the user journey is so crazy. So if you look at just your marketing spend as an overall, I think it's a better metric. But ROAS is one that you can look at as too as a leading indicator. But we like to look at MER marketing efficiency ratio and then landing page conversion rate, right? Your landing page, what's your conversion rate for your store, your add to cart rate or initiate checkout rate. So if you're seeing, you know, a high click through rate but no conversions, your offer or your page is likely your issue, not your ads, right? So if a lot of people are moving through but a lot of people aren't buying, then you need to look at refining your offer, fixing your landing page, looking at the speed, using tools like hotjar to see where people drop off. And then I can't stress this enough, I have seen businesses double in revenue just from making a few tweaks to your landing page. Like it's, it's crazy. And then if you, if you double your conversion rate, you effectively half your cost to acquire a customer. It's a really amazing thing. Then we've got our business and profit metrics. So this is also part of an operator's mindset and this is the stuff that actually determines if you can scale and if you have a profitable path to scale. So we've got profit margin, average order value, lifetime value, blended ROAs or ad spend, MER, you know, versus total revenue and then contribution margin. This is where a lot of people fall over because you might be scaling with a 2x ROAS, but if your margins are tiny or your shipping Costs are wild. The bottom line is you're not making money. And my advice is really to make sure you are running the numbers, knowing your break even on your return on ad spend your break even mer know how discounts affect AOV and track your blended roas, not just platform reported metrics. Because this is a trap many of us fall into and this is exactly what we teach you in founder operators. This is our high level membership for D2C founders that are doing at least a couple of hundred grand, $250,000 a year and are ready to scale. Nick Shack, who you probably know, who's a partner at Brezz, is America's bestselling cannabis drink and he's an absolute killer when it comes to meta ads. He's our operator in residence for founder operators and he's really the mastermind, really going to be helping all of you guys scale. So if you are interested in getting help scaling your ads, scaling your e commerce brand, you've got product market fit, you're doing at least 20 to 30 thousand dollars a month. We would welcome your application to founder operators. It's pretty exclusive, we are launching it very, very soon, but we're looking for 50 members and it's gonna be a super exclusive community of like minded operators and we've got some crazy software that can really help you track your spend and really your daily profit, your weekly profit, all sorts of things really help you know your numbers. If you're not getting the results you want from your marketing agency, if you are not getting the results you want from your ads and you're feeling like you're flying blind, then this is an incredible community to be a part of and I think you'll love it. So make sure you apply. We'd love to see your application if you're part of the founder fam. We are opening very, very soon and I'm super excited to partner with Nick and provide this level of service to our advanced members and our people that are, you know, looking to scale up in our community. So thanks for tuning in, guys. I hope you enjoyed this episode. Go out and get it. Let's scale up. Let's make 2026 our best year yet. All right, I'll speak to you soon.