This client got 3x ROAS on cold traffic & 10x ROAS on retargeting traffic for their new tech gadget shop.
By new, I mean within the first month they were already highly profitable. Shortly after setting up their Facebook page & advertising account, first online orders started to drop in. Admittedly, their products weren’t first on the market and their website wasn’t super extravagant and fancy. What was the trick?
No trick, but tactics and testing. And in this piece of content, I will share with you just how we’ve done it, and still doing it. Because the magic isn’t only getting a high enough ROAS, it’s the “keeping it high (or higher)” part that counts. We will go through exact steps of how we approached this challenge, and how you can too!
After reading this article, you’ll feel more comfortable tackling Facebook and Instagram ads - not only as “another banner placement” but as a strategic way to scale your advertising and profit majorly. Or, maybe you will even feel comfortable working with us to help you on this trail :)
First, we need to see where we stand and what’s your advertising history etc. For example, if you already had the FB Pixel properly installed even if you hadn’t been running any ads, or if you at least already have a functional FB Page that’s active, or if you had previously done any FB Advertising yourself.
If not, it means we’ll need to start fresh. That being said, it doesn’t necessarily mean this is a bad thing, just like it doesn’t mean having an ad history will suddenly give you perfect results.
Let’s have a look at this company’s example. Based on their initial ad distribution budget, we first decided on how to smartly distribute this budget across different campaigns - mainly prospecting & retargeting in the beginning since the nature of their products as well as their price point don’t dictate a very long sales funnel. So, no reactivation right now, we’ll be focusing on prospecting and trying to be break-even, while gaining real money on retargeting campaigns.
We invested more money in Prospecting campaigns just because we desperately need to grow this audience first to even have buyers to play with and remarket to later on as this company was only starting out. Also, in Prospecting we tested ad creatives on a broad audience, then moved to performance part with top performing ads.
So, we did a lot of testing (more on this later on) to get those winning ads in Prospecting, then we tested new creatives again for remarketing.
1 week in, we were pleasantly surprised already. Note how at this point, we aren’t even running ANY retargeting because it’s the first week of this shop being open and there isn’t even enough data on FB Pixel to create a Custom audience.
We were at almost 20x total value in orders over what we’ve invested in them a.k.a. almost 20 ROAS on COLD traffic.
After the first month, we were happy because we still kept a decent ROAS (about 8) since after initial good streak, we didn’t want to get our hopes up too high. At about 890€ invested we were at 6800€ of total value in purchases. At this point we were testing about 45 different ad creatives.
The first important step in profiting from an e-commerce company is knowing where you stand profitable, what you can afford in terms of advertising or other costs, how much you can invest before starting to make money - all of these are implied by your product margins.
So, before you start working with an agency, think about your product margin, plus any additional costs of logistics and transport, added taxes, packaging etc. in order to set the right metrics & indicators of profitability.
For this client, we wanted to explicitly see what ROAS we need to target for each of their products - since the product are very different, have different price range and they also mean different margins for our client. To do this, we needed to set up their sales funnel in Facebook Ad Manager and track what metrics and numbers we need to follow on each step of the funnel to form better decisions.
We divided ad campaigns to Prospecting, which we further divided into Testing and Performance, we tested an Engagement campaign - also for prospecting, and a Conversion retargeting campaign for bottom of the funnel. Keep in minds that most of their products were not premium priced and their sales funnel was pretty short, which is why we didn’t add up multiple stages in between.
One of the most important things you need dialed in for Facebook ads success is a process for creating and testing new ad creatives.
Inside our agency, the process looks like this:
Content planning -> Ad creation/production -> Ad creative testing -> Documenting tests & moving the best performers to performance campaigns
For 1 test you typically spend about 3x the CPA (aka if your cost per purchase is 10$, you’d spend 30$ total) or until you can see what creatives are winners - sometimes that’s sooner, sometimes you have to leave it to run a few extra days.
If testing with smaller budgets, you usually have to rely on early indicators. You won’t have enough purchases, to clearly say which creative is ready for performance campaign, so you rely on CPATC/CPIC.
We tested our ad creatives on a broad audience to see how successful they were at the first glance, and then only used the top performers in our Performance campaigns, targeted at different types of goal audiences, with a higher campaign budget to invest. Depending on product type and ad creative, we chose the most relevant target public to get even better results than in Testing campaigns.
We had it all - correctly set up target audiences, top performing ad creatives, sales funnel and metrics to decide our profitability on - now we just needed to scale the sales process for each product so that ROAS wouldn’t fall, or better yet, it would keep growing!
We only took our top performing ads from the first testing market that our client wanted to do business in, to serve them as first batch of ads in the next market etc. We created Lookalike audiences from the past Purchase, Content views, Video views and Add to cart events to serve ads to a more relevant cold audience in the beginning. Once we had the best combination of ad creatives and targeting nailed down, we started scaling the daily budget slowly. Slowly, meaning only about 20% at once and went on after we’ve tracked what the result is and if the ROAS grows at a better rate than our increased budget. Only then would we scale on with the next 20% - we wanted to do anything to prevent our client from losing their invested ad budget due to Facebook making their own decisions too fast and with not enough data collected.
We went from the average account ROAS at around 3 in the first month, to 3.2 and 3.7 in the next 2 months.
To wrap things up, let’s go through the most important steps on your way to social media advertising success, shall we?
First, make sure you have your Facebook Pixel set up properly and that you’re correctly tracking all the events that are interesting for your business in order to track your results, to decide on what works and what doesn’t, and to later calculate your profitability indicators.
Your margin is the base - without it, you can’t form the target ROAS for each of your products and it will make it impossible for you to make good decisions about ad targeting and ad creatives.
To make sure you’re not spending too much of your ad budget on ad creatives or audiences that aren’t working well, you need to know how to make decisions based on early indicators. For this, you’ll need to run your ads on a testing period and then export the right metrics that will tell you where you’re being successful.
Test your ad creatives based on the placement, audience and sales funnel stage - switch your ads on and off, depending on their early indicators.
Scale your ads by location, size of your audience and most importantly daily budget invested, in order to grow your ROAS.
Have we sparked any ideas on how these tactics could work for your own brand? In case you’re interested in custom solutions for your own company, don’t hesitate and choose profitability today! Contact us at firstname.lastname@example.org