The #1 Mistake E-Commerce Stores Make When Scaling Their Facebook Ad Campaigns
There’s an expensive mistake that nearly every e-commerce store owner makes when they find a winning Facebook campaign:
Rushing to scale.
After testing a campaign for three days, they check out the stats and discover that it’s producing a decent Return On Ad Spend (ROAS).
Because they get $2.00 back for every $1.00 they put in, they decide to ramp up the spend. Within three weeks they’re spending $350 every day.
Looking over their stats at the end of the month, they feel quite pleased. According to Facebook, they got $1.50 back for every $1.00 they put in. It’s lower than they started with, but it’s a positive ROAS. That means it’s still good, right?
Is Your Campaign Dead On Arrival? Here’s What To Look For…
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half”
John Wanamaker (1838-1922), Department Store Magnate
It might be nearly one hundred years since his death, but Wanamaker’s problem remains as relevant as ever for store owners.
You spend on advertising, but you don’t know which dollars are really bringing you a return.
And to make it interesting, we’ll put you in the same position as the typical e-commerce store owner – you’ve scaled to $350 per day in spend, and it’s the end of the month.
Time to check out your advertising stats.
- Spend: $10,500.00
- Gross sales attributed to advertising: $15,750.00
Calculating your Return On Ad Spend, this looks good at first blush. You’re getting $1.50 back for every $1.00 you put in.
But let’s dig a little deeper:
- Spend: $10,500.00
- Gross sales attributed to advertising: $15,750.00
- Cost Of Goods Sold: $12,600.00
- Gross Profit: $3,150.00
Things are looking a little worse now. For every $1.00 you put into Facebook Ads for Growler’s Toy Outlet… you’re losing $0.70, getting just $0.30 back.
Think about it…
You generate $15,750 in sales, and you pay $12,600 for “cost of goods sold”, leaving you with $3,150 to pay for advertising.
Deduct your advertising cost of $10,500, and you’re in the red by $7,350… and you STILL haven’t paid taxes, operating expenses, debt repayments, and inventory replenishment costs.
When all the dust has settled, and you look at your financial statements in-depth, it will become clear that Growler’s Toy Outlet has lost a lot of money on this ad campaign.
Why do we do this to ourselves?
There’s a simple answer…
The False Profit: Why We Waste Good Money On Scaling Bad Campaigns
If you’ve read anything about direct response advertising, you’ll be familiar with two terms:
- Customer Lifetime Value (CLTV or LTV)
- Customer Acquisition Cost (CAC)
And as the old wisdom goes, as long as your LTV is greater than your CAC, you should beg, borrow, and steal as much money as you can to fund that campaign.
While correct in principle, this oversimplification is dangerous for a lot of e-commerce store owners for 3 reasons:
- Few people understand what really goes into their customer acquisition cost, and grossly under calculate it
- Most e-commerce store owners aren’t using a sophisticated enough level of tracking to really know their numbers down to the exact cent
- Most e-commerce store owners don’t have a rhythm of tracking their key numbers, building cash flow models, and allocating appropriate risk capital
If you’re a victim of any of these 3 reasons, don’t feel bad.
Certain marketers and snake oil salesmen have made a lot of money by conveniently glossing over these realities while telling you how easy Facebook Ads are.
The truth is that a lot of people are in the same position as you. And the explanation is simple – they simply aren’t aware of issues like these.
And as a result, the margin of safety in their campaigns disappears completely.
But luckily, it doesn’t have to be that way.
Instead, if you can zero in and surgically remove the cancerous tumors that threaten to destroy your campaigns and kill your profits before you scale, you can capture a beautiful profit on every Facebook driven sale.
IMPORTANT – Before we move on – if you have no interest in learning about this, but still want great results, you have my permission to skip to the end of the article.
That’s where you’ll find out how you can profitably scale your Facebook campaigns for a much bigger return without having to waste time figuring it all out yourself… or even hiring new staff.
The Hidden Tumors That Are Destroying Your Facebook Campaigns… And Killing Your E-Commerce Profits (Address These BEFORE You Scale)
Now that we know some of the fundamental issues with creating profitable Facebook campaigns, let’s get back to Growler’s Toy Outlet – and the threats to your business’ profits.
Specifically, let’s talk about tumors.
In your Facebook Campaigns, a tumor is like a cancer cell. It eats away at your profits, silently and secretly eroding your return.
And it gets worse. Because Facebook Campaigns are made up of so many variables, you need to be a total pro with the right setup to even begin figuring out where the profit-eating tumor is located.
Consider the 5 basic elements of every Facebook Campaign:
- Targeting – who sees your ad, on what devices, in what countries?
- Inventory Placement – where are your ads located?
- Schedule – what days of the week, and what time of day or night, are your ads running?
- Structure – are your campaigns, ad sets, and ads set up so that you can kill the losers and run the winners?
- Creative – what text, imagery, and design are you using?
If you have one control for each element, it’s fairly simple. Only 1 combination to consider.
But what if you add in just one variation for each element? You’re now at more than 25 possible combinations to track.
Want to add a second variation to each element? Now things are getting really complicated.
Which is just what campaign tumors want.
Because while the list above is just an outline of the basic elements, it’s also a list of where you can find the tumors that threaten your profits:
- Targeting – are your audiences hiding cash-killing interests, demographics, or locations that you aren’t identifying?
- Inventory Placement – are your inventory placements wasting money?
- Schedule – are you throwing money away at 4pm on a Friday? Should you keep running your ads at 3am on a Tuesday?
- Structure – Are your ads easy to navigate and isolate variables, or are you dealing with a total mess?
- Creative – what text, imagery, and design are you using?
This is where it can get very painful.
Without the right tools, tracking, and setup, you risk losing a lot of money every month – even though your ad reporting says you’re “profitable”.
So how can you begin discovering much net profit you make from every dollar you spend, per permutation?
It all starts with getting the right numbers in front of you.
(By the way – if you don’t want to do this yourself, I recommend you contact Growth Ninjas. They’re the only Facebook Advertisers I recommend, and for one reason: they work purely on performance. That means that if you don’t make money, they don’t make a cent. Apply to work with them here.)
Diagnosing – And Surgically Removing – Your Profit Eroding Tumors
So far you know two things:
- A tumor is a variable in your campaign that isn’t performing
- If left unaddressed, it will erode the profits made by your more successful ads, leaving you with a loss at the end of the month
Now it’s time to talk about getting rid of your tumors, which starts with numbers.
You see, running a Facebook campaign is a little like flying an F-16 in bad weather.
You’ve got lots of dials and numbers in front of you, but unless you can understand what each one is telling you, you’re going to crash and burn – FAST.
That’s why you need to understand not just what numbers you need to look at, but what they’re telling you, too.
That’s how you find – and can begin surgically removing – your profit eroding tumors.
At a base level, tumors are found by considering the following:
- Impressions – how much are you spending per thousand impressions (CPM)? Is it expensive, or just right?
- Click Through Rate – what percentage of people who see your ad are clicking through? What does that say about your targeting? What does that say about your creative? What does that say about your audience:message match? Is it too low? Too high?
- Cost Per Action – based on your campaign goal, how much does it cost you to get an individual to achieve that goal? What is it compared to your Cost Per Click (CPC) – are you getting a very cheap CPC, but an expensive Cost Per Action (CPA)? And what does the difference between your CPC and CPA tell you about your targeting? Your creative? Your audience:message match?
- Schedule – How do these numbers vary on a daily, or hourly, basis? Do certain combinations consistently perform better than others at different times of day, and to different audiences? What does this mean? How can you leverage it?
As you go through these questions, you’ll begin noticing little things.
Here’s two simple examples:
An audience issue, or a creative issue?
Let’s say you’re running a campaign to advertise chew toys at Growler’s Toy Outlet.
Over the last 7 days, you’ve seen a very low CTR with a very expensive CPC, but also had a very cheap CPA.
Looking at the stats, you start asking yourself – is my issue in my audience, or is it in my creative?
Because you’ve got such clean numbers, you can begin isolating and testing each variable:
- Create a small budget campaign with a different audience, but using the same creative
- Create a second small budget campaign with the same audience, but using different creative
A week goes by, and through the testing, you discover:
- When you change just the audience, the CTR sky rockets, the CPC drops, and the CPA barely moves
- When you change just the creative, the CTR sky rockets, the CPC drops… but the CPA goes through the roof!
This tells you that the profit eating tumor was in your audience.
By adjusting your targeting to find more people who love what you’ve got, and stopping your underperforming campaign, you put your advertising budget into a campaign with a MUCH higher yield (and produce more profits in the process!)
A creative issue, or a landing page issue?
Now, let’s pretend that your chew toy campaign has a different issue.
Over the last 7 days, your CTR has been phenomenal with a very cheap CPC, but the CPA has been unbelievably expensive.
Again, looking at the stats, you start form hypotheses:
- Am I targeting people who won’t buy, but just want to click?
- Is my ad too click-baity, and not matching my landing page?
- Is my landing page incongruent with my ad?
And then you move on to your experiments, isolating and testing each variable:
- Combination One: New audience with different demographic, same ad, same landing page
- Combination Two: Same audience, new ad with eye-catching image, same landing page
- Combination Three: Same audience, same ad, new landing page with bigger buttons and clearer text so that it matches the ad
A week goes by, and through the testing you learn:
- Combination One: CTR drops, CPC goes up, CPA remains expensive. Not an audience issue.
- Combination Two: CTR goes up, CPC goes down, CPA increases. Not an ad creative issue.
- Combination Three: CTR and CPC don’t change, CPA drops dramatically.
This tells you that the tumor was hiding in your landing page, gobbling up profit every time you had a new visitor.
By adjusting it with bigger buttons and clearer text so that it matches the ad, you were able to reduce the CPA and start turning a MUCH bigger profit.
Now, if you’re feeling overwhelmed, I’ve got good news…
You, Too, Can Have Highly Profitable Facebook Campaigns For Your E-Commerce Store… WITHOUT Doing All This Work
Now chances are that if you’re reading this, you’re not a Facebook Ads Expert – and you probably don’t want to become one.
You just wanted to learn how you can stop losing money on those Facebook ads you’re running to your e-commerce store.
And you know that while you’re already spending a lot of money, there just isn’t the time in the day for you to handle this level of complexity to make sure you’re profiting. There’s just too many other things demanding your attention.
If this sounds like you, I’ve got good news:
How To Turn Your Existing Facebook Campaigns Into Daily Profit Producers Without Lifting A Finger Yourself
If you’re already spending substantially on Facebook, but just can’t get it to produce a decent return, read on.
I want to introduce you to a company that is generating substantial returns for their clients by scaling and optimizing campaigns.
This company is called Growth Ninja. They’re a Facebook Advertising Management Company.
But unlike other Facebook Advertising Management companies, they don’t charge you a percent of spend.
Instead, Growth Ninja works on a “pay-on-performance” basis.
This means that you ONLY pay them for the results they generate. Nothing else. No overhead, no retainer, no recurring fees. You simply give them a small percentage of the new money they put into your business’ bank account.
An Advertising Partner For Life?
Since opening their doors two years ago, their clients have only paused their Growth Ninja campaigns for two reasons:
- They’ve been running out of inventory too quickly, and need to re-stock their products
- They need time to nurture and close the rush of new customers they’ve secured
So why do their clients stick around for so long?
Because Growth Ninja only works with customers that they like, that they can help, and that they can build a long term relationship with through high ROI campaign management. If that’s something you’re interested in, fill out this short application form.
How One Business Generated $955,000 In Annual Revenue From A Little Over $10,000 Per Month In Ad Spend By Working With Growth Ninja
One client Growth Ninja works with is a well known fitness company (we can’t reveal their name, though).
When this company first reached out to Growth Ninja, they were losing money on their Facebook ads, and struggling to generate a few thousand dollars per year.
They’d tried running the campaigns in house, attempted all the “hacks”, and were even generating sales. But they just couldn’t turn a profit.
Seeing the opportunity to help, Growth Ninja agreed to work with them. And twelve months later it was a very different story.
In the short period they’d been working together, Growth Ninja’s client had gone from losing money every month to:
- Generating $955,000 in annual gross revenue from their Facebook Advertising from a monthly advertising spend of a little over $10,000.
- Building their customer base by tens of thousands of customers
- Securing a 5.2x return on their ad spend (leaving a LOT of profit margin for the company)
Is this the kind of change you’d like to return you’d like to see from your Facebook Ads – getting $5.20 back from every $1 you spend?
Why You Should Work With Growth Ninja For Your E-Commerce Business’ Facebook Ads
If you’ve been running your Facebook ads, failing to see the return you know that others are getting, then it’s time to consider what’s best for your business.
Could your business be generating more revenue and more profits if an expert took over your campaigns?
And would your business benefit from growing in a risk-free way, where your expert was only paid when they delivered results?
If so, Growth Ninja is the company you should work with (the application form is here).
If you’re a good match, Growth Ninja will take over your Facebook Advertising campaigns and:
- Bring in more revenue and greater profit per sale from each advertising campaign by using their proprietary, in-house optimization and scaling process
- Eliminate the excessive costs that are destroying your advertising profit margins
- Free up your time so that you can focus on what you’re best at, by taking over all the day-to-day number crunching, tweaking, and fiddling you’ve been doing.