How We Achieved a ROAS of 13 on Facebook

Return of Advertising Spend (ROAS) is a very important metric of success when it comes to any form of advertising. It is calculated by dividing the total revenue generated by your ads with the amount you spent on advertising.

Simply put, the campaign that I developed for an e-commerce brand generated a ROAS of 13, meaning for every $1 they spend on advertising, the return they receive is $13. So, if they spend $10, the return is $130 and so on.

I'm particularly proud of this work because my client told me that before they worked with me, they did their own Facebook advertising and were losing money on it.

So, what's the magical formula to generate this amazing ROAS?
 

Photo or it did not happen. It absolutely happened and our Facebook campaigns are still KILLING it.

There is no magical formula, but, it's also not based on luck - here are a few steps that we took to reach our #unicorn of a ROAS:

1. Targeting the right audience: 

I can't stress the importance of targeting enough. THIS is the most important step when it comes to Facebook advertising. If you have a list of 500 - 1,000 customers who have purchased from your e-commerce store, my recommendation is to upload that list on Facebook and create a lookalike audience. Facebook will them work its algorithm magic to search for audiences that have similar behavior to your customers.

 

We uploaded a list of 100 customers and Facebook generated a total audience size of 620K. Additionally, we ran a test ad set with an audience that our Google Analytics identified as our customers. The verdict? Facebook's ad set translated better.

2. Catchy creative + great landing page:

This is secondary to targeting the right audience. Once you have your targeting nailed, you need to have a catchy creative with PROFESSIONAL images (or at least, professional looking ones) because they do make a difference. Always ask yourself this question - If you saw your own ad, would you click it? Be honest.

Now, after putting together a wonderfully catchy creative, the next step is to have an optimized landing page. Optimized? What is that?

An optimized landing page is one that has the customer in mind. From the moment they enter the landing page from the channel they discovered it from, the brand story should be consistent.  The advertising creative is the lead. Once you catch a potential customer's attention, it is up to the landing page to make a sale - to give them the fuller story of what they saw on the ad.

Basically, your landing page is your 30-second pitch to your potential customer. It should immediately communicate the what, how and why: What is your product, what value does it have to me and why should I purchase it?

It shouldn't take a customer more than 1 minute to fully understand what it is you are selling. Otherwise, they will leave confused.


3. Optimization and Retargeting:

The first time a customer visits your page, it's likely that they will not make a purchase. This is especially true for new brands that have yet to build awareness and presence. A potential customer will likely go back and forth your website at least 2 more times before they decide to purchase your item. This is why optimization and retargeting are important.

Let's start with optimization. When you launch a campaign, my recommendation is to let it run for 3 days without changing anything (I know, this is especially tough when you're a control freak like myself!) Then, once you have enough data, you can find meaningful statistics on Facebook about your potential customers - the most common device they use when they purchase, the age range of those who have purchased, the day of the week, etc., – information that you can utilize to lower down your cost per aquisition.

For instance, in my campaign, here are my age range statistics:
 

So, it looks like a majority of those who purchase from my client are in the age range of 25-34. My recommendation would be to test an ad set with only targeting to 25-34. By serving my ads only to that age range, the likeliness of increasing revenue is high because then, I won't be wasting clicks on other age ranges that are not likely to convert.

Moving on to retargeting. As mentioned earlier, customers need to interact with your website more than once before they make a decision. Put yourself in their shoes. If you discover a new brand that you're interested in, would you immediately purchase? You'll probably go back and forth before parting with your money.

So, it's important to remind your potential customers about your great new product that they took an initial interest in. How? Dynamic Retargeting. 

Have you ever gone to Amazon, added a few items to your cart and leave without purchasing? Then, the next thing you see is a random Facebook ad that has all the items you added to your cart! It is scary when you think about how much these platforms know about you and your purchase behavior but the reason why this advertising option exists is that it works.... Tremendously.

The good news is that you too can implement the same strategy as Amazon and it won't cost you an arm and a leg. In fact, retargeting ads are 50% cheaper than general Facebook ads because as the marketing principle goes, "it is much cheaper to re-engage a previous customer than to acquire a new one."

I know, I know, it is probably easier said than done, but trust me, once you get the hang of it, you'll be an expert in no time. If you have any questions, please feel free to email me here.