Most business owners would pick the one with the 12:1 return, and plenty of agency reports would put it at the top of the page. But when you work through the numbers later in this post, the 3:1 campaign brings in six times as much cash in its first month. The difference comes down to which Meta ads key performance indicators (KPIs) you track and how you count revenue.
Meta ads KPIs, or key performance indicators, are the numbers you judge a campaign by. For a local service business, they match the five funnel stages in Meta ads for local service businesses, from impressions to sales. Then add return on ad spend (ROAS), which tells you how the whole funnel is doing. Set a target for each one by working backward from your margin, and measure ROAS on cash you’ve actually collected.
Which Meta ads KPIs should you track?
Track one KPI for each stage of the funnel: CPM, cost per lead, lead-to-booking rate, show rate, and conversion rate, plus ROAS for the whole funnel. This table shows what each number tells you and where to look first when it slips. The formulas for each one are in the funnel section of the Meta ads guide.
| Stage | KPI | What it tells you | Check first when it slips |
|---|---|---|---|
| Impressions | CPM (cost per thousand impressions) | What it costs to reach people | Worn-out creative, seasonal competition |
| Leads | Cost per lead (CPL) | Whether the ad and offer get people to respond | The offer, then the form or page |
| Bookings | Lead-to-booking rate | Whether your team reaches leads in time | How fast your team replies |
| Shows | Show rate | Whether booked people actually come in | Days between booking and appointment, reminders |
| Conversions | Conversion rate | Whether the visit turns into a sale | Whether the price at the visit matches the ad |
| Whole funnel | ROAS | Revenue for every dollar of ad spend | Which revenue you’re counting |
If you quote jobs instead of booking appointments, swap the bookings and shows rows for quotes sent and quotes approved. Lead-to-booking rate and show rate depend more on your team than on the ad, and most of what moves them comes down to speed to lead for Meta ads leads.
What do the other numbers in Ads Manager mean?
Ads Manager, Meta’s tool for running campaigns, reports dozens of other numbers, but you only need a handful, mostly to explain why a stage moved.
Reach and frequency. Reach is the number of accounts that saw your ad at least once. Frequency is the average number of times each account saw the ad, or impressions divided by reach. When frequency and cost per lead climb together, the same people are seeing the same ad too often, and it’s time for new creative.
CPC and CTR. Cost per click (CPC) is spend divided by clicks, and click-through rate (CTR) is the share of impressions that turned into a click. A low CTR usually points to a problem with the ad, and a healthy CTR with few leads points to the page or form.
CAC. Customer acquisition cost (CAC) is ad spend divided by new paying customers, and it’s where your target cost per lead starts.
LTV. Lifetime value (LTV) is what an average customer pays you over the whole relationship. Use it to set the most you’ll spend to get a customer, but measure campaigns by the cash you’ve actually collected.
Track likes, comments, and saves on organic posts separately, as part of your social media analytics.
How do you set a target cost per lead?
Work backward from what a customer is worth after costs. Take a dental practice where each new patient is worth about $1,500, and 24 of its 200 leads became patients:
- Find your gross profit per customer. At a 40% gross margin, a $1,500 patient leaves $600 after costs.
- Decide how much of that you’ll spend to get a customer. Say half, or $300. That’s your target CAC.
- Apply your close rate, the share of leads who become customers. Twenty-four of 200 leads is 12%, so multiply $300 by 0.12.
- Use the result as your target cost per lead. Here, that’s $36.
The practice paid $30 a lead, so its ads are on track. Posted Social sets a target like this for every client. Its monitoring system, Triage, then checks every ad against that target each morning. If you want to run the same math with your own numbers, use the Paid Ads Calculator.
How do you calculate ROAS, and why can a 3:1 ratio beat 12:1?
ROAS is the revenue your ads bring in divided by what you spent on them. The answer changes with the period of time you measure. Take two Meta ad campaigns, one for one-time gutter cleaning and one for a monthly pest control plan. Each spends $10,000 and brings in 100 new customers:
| Campaign A: gutter cleaning | Campaign B: pest control plan | |
| Ad spend | $10,000 | $10,000 |
| New customers | 100 | 100 |
| Cost per customer (CAC) | $100 | $100 |
| What each customer pays | $300 per cleaning | $50 a month |
| How long a customer stays | Twice a year for 5 years (10 cleanings) | 2 years (24 monthly payments) |
| Collected in the first 30 days | $30,000 | $5,000 |
| ROAS, first 30 days | 3:1 | 0.5:1 |
| Collected in the first 90 days | $30,000 | $15,000 |
| Cash ROAS, first 90 days | 3:1 | 1.5:1 |
| Lifetime value per customer | $3,000 (10 × $300) | $1,200 (24 × $50) |
| Lifetime revenue, all 100 customers | $300,000 | $120,000 |
| ROAS on lifetime value | 30:1 | 12:1 |
The two reports were measuring different things. Campaign A’s report used the first 30 days, for 3:1. Campaign B’s used lifetime value, for 12:1. Measured over the same 30 days, Campaign A stays at 3:1 while Campaign B drops to 0.5:1. In other words, after a month Campaign B has collected only half of what it spent, and it takes much longer to cover its costs.
Cash ROAS is the money actually collected from new customers within 30 or 90 days, divided by ad spend, and it’s how Posted Social grades campaigns. Three months in, Campaign B has collected $15,000, which is a cash ROAS of 1.5:1. Lifetime value still sets a ceiling on what you can afford to pay for a customer, but you can’t pay next month’s ad bill with money a customer might send you in 2028.
What is a good ROAS for a local service business?
A good ROAS is any cash ROAS above your breakeven ROAS, which is 1 divided by your gross margin. That’s because ROAS is built on revenue, but your bills get paid out of what’s left after costs.
| Gross margin | Breakeven ROAS |
| 60% | 1.67:1 |
| 50% | 2:1 |
| 40% | 2.5:1 |
| 30% | 3.33:1 |
At a 30% margin, a 3:1 campaign loses money on every customer. Campaign A only makes money if gutter cleaning keeps more than 33 cents of every dollar after costs.
The second number to check is payback period, the number of days until cash from new customers covers what you spent to get them. Campaign A pays back in the first month, since each $300 customer cost $100 to get. Campaign B takes about 60 days, because it takes two $50 payments to cover a $100 CAC.
That gap matters when you raise the budget. Double Campaign A, and the cash comes back before the next ad bill. Double Campaign B, and the business has to cover about two months of spend before each new customer’s payments add up to what it cost to get them. At that point, you aren’t scaling the business so much as scaling a loan.
How often should you check each number?
Check cost per lead daily, the middle of the funnel weekly, and cash ROAS and payback period monthly.
| How often | What to check |
| Daily | Spend and cost per lead for each ad, against your target |
| Weekly | Lead-to-booking rate, show rate, frequency, and which ads to replace |
| Monthly | Conversion rate, CAC, 30-day and 90-day cash ROAS, and payback period |
If Meta only hears about form fills, it can’t report on bookings or sales. Sending those back through the Meta Pixel and Conversions API fixes that. No matter who runs your ads, Meta ads reporting should put every number in this table in one place.
Start with last month’s numbers
Pull last month’s ad spend and the cash you collected from the customers those ads brought in. Divide the cash by the spend, and that’s your cash ROAS. Then work out your breakeven, which is 1 divided by your gross margin, and compare the two. If you’re above breakeven, you have a campaign worth growing. If you’re below it, hold the budget where it is and use the KPI table to find the stage where you’re losing the most people.
These targets are one part of running Meta ads for local service businesses, alongside the offer, the creative, and the follow-up. If you’d rather have someone set those targets and check them every morning, that’s part of Posted Social’s paid ads management.
Common questions
Is a 3:1 ROAS good for Meta ads?
A 3:1 ROAS is good if your gross margin is above 33%, because breakeven ROAS is 1 divided by your margin. At a 50% margin, 3:1 is profitable. At 25%, it loses money on every sale.
What is cash ROAS?
Cash ROAS is the money collected from new customers within a set window, usually 30 or 90 days, divided by ad spend. It shows whether your ads are paying for themselves now, while standard ROAS can include revenue you haven’t received yet.
What’s a good cost per lead for Meta ads?
A good cost per lead keeps your cost per customer within what you can afford. Divide the most you’ll spend to get a customer by the number of leads it takes to close one. An industry average can’t tell you that, because it doesn’t know your margin or close rate.