E-commerce Facebook Ads and 4PI Analysis
Author: Elena Chardaklieva (Media buyer at Markademics)
When it comes to measuring the success of our Facebook ads, relying solely on traditional metrics may not give us the full picture. Let’s explore the limitations of these metrics and delve into the concept of 4PI Analysis, a modern approach that offers a more comprehensive view of ad performance.
Traditional metrics like CTR, ROAS, and Conversion Rate have long been the gold standard for evaluating ad performance. However, they often fall short in capturing the true impact of our campaigns. For example, while a high CTR may indicate attention, it doesn’t necessarily translate to meaningful engagement or sales. Similarly, ROAS may show profitability on the surface, but it may overlook critical factors like customer lifetime value and brand loyalty. And while Conversion Rate is celebrated as the grand finale metric, it may not guarantee long-term success.
Enter 4PI Analysis – a more holistic approach popularized by a recent guest of our podcast, Charles Tichenor IV. The name “4PI” derives from the four key areas it focuses on: Spend, Cost per Acquisition, Cost per Thousand Impressions, and Frequency.
These metrics provide a comprehensive understanding of ad performance, telling us how much Facebook prefers to spend on an ad, how efficient the ad is, where it sits in the funnel, and how well it performs in that position.
Let’s break down the key components of 4PI Analysis:
Spend: This metric evaluates our investment in ads, helping us understand how much we’re allocating to different campaigns and audiences.
CPM (Cost per Thousand Impressions): It measures the cost of reaching one thousand impressions and is an important indicator of cost efficiency.
Frequency: Measures how often our ads are shown to users. A high frequency paired with rising CPM may signal potential ad fatigue.
CPA: Measures the efficiency and overall effectiveness of our ads, considering factors like engagement (such as social proof) and conversion rate.
So, how can we leverage 4PI Analysis to master our Facebook ads?
Let’s consider some examples:
Suppose we notice a campaign with a high frequency and increasing CPM. This may indicate potential ad fatigue, where users are becoming less responsive to the ad. In this case, we could experiment with different ad creatives or target a broader audience to maintain engagement and freshness.
Imagine we have two ad sets with similar CPMs, but one has a much higher frequency. While the high-frequency ad set may seem more efficient at first glance, 4PI Analysis may reveal that it’s actually driving lower engagement and conversion rates due to ad fatigue. By reallocating budget to the lower-frequency ad set, we can achieve better overall results.
Let’s say traditional metrics show a high CTR for a particular ad campaign. While this may seem promising, 4PI Analysis may reveal that the ad’s frequency is also high, leading to potential ad fatigue and decreased efficiency. In this scenario, we might decide to diversify our ad creatives and adjust our targeting to address these issues, ultimately improving overall ad performance.
In conclusion, while traditional metrics have their place, the 4PI Analysis offers a more nuanced and modern approach to evaluating Facebook ad performance. By embracing 4PI Analysis, we can unlock new insights, optimize our ad strategy, and ultimately achieve better results. It’s time to move beyond traditional metrics and harness the power of 4PI Analysis for Facebook ad success.
At Markademics we analyze our clients’ ad accounts by reviewing all their key metrics.
Contact us and we can review your ad account live on a call with you.
