Let’s face it; no one wants to waste money on Facebook marketing strategies that yield more stress than results.
And if you’re an eCommerce business trying to navigate the ever-evolving landscape of Facebook ad campaigns and their constant increase in pricing, you already know maddening it can be to watch your little advertising budget dwindle with little to no ROI to show for it.
Failing to keep up with Facebook advertising trends, and allocating your advertising budget accordingly, has recently become the kiss of death for long-standing retailers and start-ups alike. Just in the last three years alone, mega brands like Sears Hometown Stores, Revlon, Party City, and Forma Brands have all filed for bankruptcy due to the recurring problem; they ran out of cash.
Not only has this recent trend of significant bankruptcies raised concerns for shoppers, but the case studies lingering impacts of the pandemic on the economy have caused Consumer Confidence Index (CCI) to fall drastically since 2020.
That means that your target audience is warier than ever to put their money in your hands, making it even more crucial for you to maximize your return on investment (ROI) across all your marketing efforts and social media platforms, even if you’re selling on reputable platforms like Shopify and Amazon.These trends, coupled with reduced access to capital, have placed eCommerce businesses in a serious bind.
Today, we’re breaking down our signature process for creating Facebook marketing strategies that hit your targets, increase your cash flow, and shield your business from volatile market trends, where we’ll teach you to:
Contents
Understand Business Targets
In this section, we’ll cover key concepts that eCommerce business owners need to understand to maximize their ROAS, including:
- How To set ROAS targets
- What It Means To “Win”
- Where Opportunities Are Hiding
- How To Know If Data Is Lying
- One-Day Clicks Vs. Seven-Day Clicks & Why You Should Track Their Trends
- How To Limit Cost Caps
Allocate Budget For eCommerce Marketing
Here, we’ll walk you through the strategic steps you can take based on the information gained in part 1, including:- How To Identify Trends In ROAS
- How To Decide What To Keep, Kill, Or Scale
- Short-Term Vs. Long-Term Scale Ideas
- How To Keep A Backlog Of What Worked Vs. What Didn’t
The first step to an effective budget allocation strategy is defining a clear objective. For us, that means taking the time to look at your targets for each Facebook ad campaign, so we can determine whether or not your current strategy is yielding a worthwhile result.
Ultimately, our job is to help you win. To do that, we’ll work with you to determine precisely what winning looks like for your business goals from a return on ad spend (ROAS) perspective. And since winning may look very different from one eCommerce business to another, our tools are here to offer a customizable approach to budget allocation that puts the unique needs of your business needs first.
4 Steps To Understanding Business Targets Questions To Ask Before You Allocate Your Ad Spend
Of course, all that might sound easier said than done, especially when trying to make sense of an endless set of data points and complex algorithms. Thankfully, that’s where we come in. Our marketing services aren’t just here to help you make sense of your metrics; our goal is to help our eCommerce clients understand exactly where their advertising costs are going so that they can beat the algorithm and turn each piece of ad copy into a consistent cash stream.
But we’ll need to start with a few quick questions to do this.
What are my targets?
No matter what your eCommerce niche may be, you likely have varying goals for each product in your inventory. And the more specific you can be in your ROAS goals, the better chance you have put more money back in your pocket. That’s why we take the time to understand the optimal ROAS multi-SKU targets, allowing us to analyze the performance of every item in your Facebook ad manager account.
To do this, we use a unique multi-SKU spreadsheet where you can input the Order Quantity, Order rev, Refunds, COGs, LTV, and profitability target. Next, the sheet will automatically calculate the products that have the highest Margin and also are bestsellers, along with their KPIs. Those are the products you should be promoting in your ad account and making product-specific funnels around.
You can learn more about our multi-SKU system here.
What does winning mean for my business ?
Let’s say that after merchandising your account, we determine that the target for your brand is 2.5 ROAS. With this information, you can start seeing where your ad dollars are currently going and whether or not your target is being hit.
Hitting The Target ROAS + Less Wasted Spending = Major eCommerce Win.
Where are the dollars being spent?
In this tool, you can see an example of what this data might look like from an analytical perspective. Here, you can start to compare the ROAS from platforms like Facebook, Google Ads, Tik Tok,Snapchat or even LinkedIn and other revenue sources like email marketing. This makes it easy to determine which avenues are or are not hitting your targets.
Where are the opportunities hiding?
By taking a platform-by-platform approach, you can start to make strategic decisions about where to shift your advertising dollars. That’s the good news.
But with any processing involving data, there is always a margin of error (The Data might be lying to you). That means it’s crucial to weigh the possibility of inaccurate numbers whenever you prepare to make a decision about allocating your budget.
Could the data be lying to me?
While most like to think that numbers don’t lie, the reality is that data can be inaccurate, especially in the eCommerce space. And with so much riding on your marketing strategy, being confident in the accuracy of your data is absolutely non-negotiable.
So, unless you’re using a pixel (or a tracking cookie for user behavior) on all of your ad campaigns, you’ll need to take a hard look at your data.
How To Verify Google Ads Data
First, let’s look at Google ads specifically. In your Google ads account, you can view the ROAS for each campaign individually and for what keywords the ad is firing off.
In other words, we want you to make sure that these campaigns aren’t firing off based on unreliable assumptions, which can hurt your business in the long run.
By verifying this data, you can feel confident that the decisions you make about your Google ad strategy are based on a rock-solid statistical foundation.
How To Verify Facebook Ads Data
Now, Facebook ads are slightly different. With a Facebook ads account, you can also check each ad campaign individually to see how the ROAS is performing, but you’ll want to analyze a few specific categories to determine where an error in your data might be hiding.
These categories include:-
1. Campaign Assets
This might seem obvious, but even something as simple as a misspelled campaign name can lead to inaccuracies in your data.
That’s why it’s important to check that all SEO (search engine optimization) keywords, headlines, brand names, and other crucial assets are exactly as you intended them to be.
2. Accurate Targeting
Whether you’re retargeting, drawing in new customers, or reaching a lookalike audience, you want to be sure that your efforts are reaching the right audiences.
You can do this by looking at your traffic sources, letting you know that the right people are clicking on your ad. Otherwise, you can be hitting the wrong demographic of Facebook users for your products.
3. Decision Making
Every decision you make in your ad strategy can have a measurable impact on your numbers. So, we advise our eCommerce partners to back up their decision-making with tangible evidence instead of acting based solely on assumptions, allowing them and their account manager to make the best Facebook ad decisions.
One Day Clicks Vs. 7 Day Clicks
As we’ve mentioned, the main goal of budget allocation is to move money out of campaigns that seem to be missing your target ROAS and into campaigns that are performing more strongly.
For instance, if you notice that you have a Google ad campaign that is consistently performing under 2.5 (which is your target ROAS), but you have a cold campaign that is hitting 2.6, moving more ad spend into the cold campaign will ultimately put more cash in your pocket.
The main thing that differentiates our approach from other digital marketing agencies is that we focus the bulk of our analysis on your One Day Click (1DC) metrics rather than your overall 7 Day Clicks (7DC).
Ads manager
Here’s how we do it:
Based on our example target of 2.5 ROAS, we already know that the 1DC equivalent of this would be 1.87. So, when we look at your 1DC for any particular Facebook ad campaign, we can quickly decide whether or not that ROAS is yielding the results we want. And the more of your budget that we pump into better-performing 1DC campaigns, the higher your average ROAS will become for the 7DC.
But why look at these numbers as opposed to strictly the 7DC?
Well, it all comes down to finding the most accurate data. In a 1DC result, you can see predominately the impact from your Facebook ad with a limited amount of outside influences that could inflate your numbers. Which, as you know, can lead to an off-base decision.
In contrast, a 7DC campaign is more likely to showcase misleading information due to the extended time period and the broader scope of information. By using your 1DC to determine your budget allocation, we can give you the most accurate data about your ROAS, leading to bigger wins for your eCommerce business.
Not only in-platform, you can also reallocate budget across platforms. If your Cold google campaigns are working at 2.6x and facebook is at 2.3x, then you can even take ad spend away from facebook and put it into google for a better marginal outcome of every dollar of your marketing budget.
“The end goal here is not to show an inflated ROAS number, and make everyone think they are winning, instead the goal is make the client actually win by putting more cash in their pocket.”
Limiting Cost Caps
If you aren’t already leveraging the power of cost caps in your Facebook advertising strategy, it’s definitely time for you to start. This bid acquisition tool allows you to set a maximum Cost Per Acquisition (CPA) on a specific product. In other words, it prevents you from going above your desired CPAs on all of the ads you’re running, keeping you focused on conversions that are actually yielding profits for your business.
Wrapping Up Part 1:
So, by this point in the process, you should be able to…
- Merchandise your account using our multi-SKU spreadsheet
- Generate a target ROAS for every individual campaign
- Clearly define what a “win” means for your business
- Understand how to evaluate “lying” data
- Compare 1DC & 7DC trends
With this information in mind, you can finally start strategically allocating your ad spend budget and adding incremental value to your business which each campaign.
Budget allocation may be our bread and butter, but as a full-service Facebook ad agency, we’re not just here to help you manage your ad spend effectively. Instead, we work with you to ensure long-term growth in your business through strategic social media marketing tactics that drive conversion rates and keep more of your target audience engaged with your eCommerce brand.
One of the main ways we do this is by playing a game of keep, kill, or scale. This means that we take the insights gained during the budget allocation process and use them to determine the fate of each ad campaign, giving you data-driven results you can bank on.
Here’s how it works:
Step 1: Determine Target ROAS
First, we need to figure out the optimal ROAS for each individual ad campaign so that we can have a baseline to judge its current performance.
We calculate this by merchandising your account using our multi-SKU sheet, which gives you clear insight into the ROAS of every single product in your eCommerce store. This allows us to fine-tune our budget allocation approach based on your social media advertising goals.
Step 2: Identify Potential Trends
Once we know our target ROAS, we can start to look at previous days in your Facebook ad account to determine if any trends exist.
This can mean that the ad’s ROAS is either increasing, decreasing, or holding steady over the course of several days. We do this using a 3:5:7 model, which enables us to track the trends of each ad campaign in real time.
So, let’s say you have a specific product with a target ROAS of 2.18. In your Facebook ad account, we can extract the information from your 1DC and 7DC to compare how the ROAS increased or decreased over a period of time.
From there, we log this date into our 3:5:7 spreadsheet, which will show a trend for your ad campaign over 3 days, 5 days, and 7 days.
In other words, understanding the trend of your ROAS is the final essential puzzle piece you should consider before deciding the fate of your campaign.
Step 3: Decide to Keep, Kill, or Scale
Finally, we’ll make a recommendation for the best course of action you can take on this ad based on our analysis. In most cases, these ads will fall into 1 or 3 scenarios:
Scenario 1 :
Let’s say we look at the ROAS for this ad campaign on both 1DC and 7DC, and we notice that we haven’t quite hit our target. But, if we look at our overall trend, the ad seems to be gaining momentum with a steady increase in ROAS over several days.
In this case, we would suggest keeping the ad going while possibly tightening up on our CPA to make sure we’re not losing any potential profits.
Scenario 2 :
Now, what if we have an ad campaign that is failing to meet the target ROAS and simultaneously showing a decreasing trend?
When this happens, we always recommend “killing” or pausing the ad campaign. This allows us or your social media manager to evaluate the ad creative and decide if we need to refresh the campaign or brainstorm a new copywriting, an influencer endorsement, or brainstorm a fresh concept entirely.
Scenario 3 :
The third and final scenario is when an ad campaign hits the target ROAS and shows an increasing trend at the same time. And obviously, this is the best scenario for any marketing strategy!
In this case, we suggest to scale the ad. That could mean moving advertising funds away from less effective ad campaigns and into this one so that you can get the best return on your ad dollars. You can either do this by funneling more money into that particular ad campaign or by stacking the ad, driving up your overall ROAS.
What Ads To Scale & How To Do Effectively
Beyond reallocating your advertising budget, scaling each individual ad campaign can have both short-term and long-term impacts when done effectively.
So, even when the ad in its original form has run its course, you can utilize the lessons learned from its results to inform how you approach your Facebook marketing strategy moving forward.
Imagine that your ad campaign is like a pipe. At some point, it’s going to run out of space to continue funneling results to your eCommerce business.
However, if you use it to create a system of new pipes in its place, you can increase your profitability tenfold.
Short-Term Scaling Ideas:
As we’ve mentioned, moving your advertising dollars around to benefit your highest-performing ad campaigns is just one place to start. From there, you can start to analyze the individual elements that seemed to work well for your ad campaign.
In this case, you can imagine your ad campaign like a pipe to your cash flow. Instead of funneling more power into the pipe, causing it to max out, you can begin to open new pipelines that generate similar successful results leading right back to your pockets.
Paid social campaigns, like PPCs, can provide you with loads of data to help you build even more funnels in the future.
The most effective way to do this is by using our “Circle of Influence” levers, which represent the cost-caped expenses that lead to incremental revenue for your business, including landing pages, headlines, and ad copy. For more insight into this process, you can check out our helpful guide here.
Long-Term Scaling Ideas:
Making short-term pivots in your advertising strategy is an ideal way to increase your profit margins, but long-term winning comes from taking the lessons learned in our budget allocation process and using them to create a comprehensive catalog of what worked vs. what didn’t work.
This not only helps you paint a clear picture of your business growth over the long haul, but it also helps you understand the preferences of your target audience in real time.
What Worked:
When we look at overall ROAS and its upward trend over the course of each ad campaign, you can start to get an idea of what assets really worked in your favor. But instead of looking at just the short-term payoff, you can start to see long-term trends for your advertising strategy.
For example, if your conversion rates steadily increased without it maxing out your CPA limit or driving up your CPC, you can break down the elements of that particular ad campaign to see what was driving those results. This can be even more insightful if you use a backlog of what things did or didn’t work in your business, so you can reference these insights in the future.
Few elements you can track and breakdown by are –
- AOV – Average order value
- CPC – Cost Per Click
- CR% – Conversion Rate
- CTR – Click Through Rate
What Didn’t Work:
Of course, it’s not just the successful ad campaigns that can give us valuable insight. Keeping track of the campaigns that were killed or paused after budget reallocation can help you understand why certain tactics might not have played well for potential customers.
So, if you had a campaign that started off strong but saw a sudden decrease in ROAS over several days, you can review it in hindsight to determine what factors might have contributed to its poor performance.
Some examples of this might be:
- Relaunching the campaign and updating one of the creative variables, like the graphic design, for instance, and running an A/B test to see if that corrects the decreasing ROAS.
- Noticing you have an ad campaign with a strong ROAS but poor conversion rates and updating the web design of the landing page it leads to, which drives better results for your ad.
- Retargeting these ads to customers who have already purchased from you using the custom audiences feature, noting if the ROAS still continues to decrease.
Ultimately, long-term scaling is about building habits that enable you to consistently analyze and log your data, allowing you to build a backlog of information you can use when creating future ad campaigns.
How To Kickstart Your Facebook Advertising Strategy
It’s one thing to understand the ins and outs of managing your social media marketing strategy, but it’s a completely different story to put all the data to work in your favour. Our team specializes in helping eCommerce businesses win their short and long-term growth goals with a data-driven approach that yields higher conversion and puts more cash in your pocket.
Bottom line? We’re not just here to be another Facebook ad agency that takes your advertising dollars while doing the bare minimum in return. We’re your growth partners in the digital age, and we’re committed to helping you win every step of the way.
If you’re curious to see how our budget allocation tactics can grow your profits, we’d love to chat with you during a free consultation today.
