CASE STUDY: Scaling Facebook Advertising 5X In Less Than 1 Month (Profitably)

By January 18, 2017case-study

Want to spend more money with Facebook advertising?

What if you found out you were a lot more profitable than you thought?

What if you could take your current ad spend and 5x it in less than a month (and generate a higher return for every dollar you invest)?

Here is how I helped a client scale from $60 a day to 300 day profitably.

If you don’t know your numbers, you can’t grow. Are you tracking the right numbers? Click here to know the exact 15 metrics we looked at daily to scale from $60/day to over $300/day in less than 1 month, profitably.

This is a breakdown of the last 30 days of working with a consulting client.

The product: a supplement company based out of the United States. They have a unique blend of superfoods that can be taken as a supplement every day. The supplement is sold a la carte or on a subscription basis.

The Facebook Ads: spend $60/day on average.

The advertising challenges

  • 100% budget-based Facebook advertising. The issue with having a fixed budget is that it doesn’t allow you to scale. Most people thinking like this: spend $1, get $2? Spend more! Spent $1 and get $0.50? Spend less. The reason there was a budget on advertising because there were tracking issues…
  • Can’t determine profitability. If you don’t know how profitable a campaign is, it is different to double ad spend. There was a gap between how much money was being spent every day vs. how much being generated the same day and how much was being generated as lifetime revenue.
  • Optimizing for the wrong metric. Since targeting was off, client ended up optimizing for lowering cost per clicks instead of cost per acquisition (CPA). We see clients optimizing for many different numbers, but the main number for this client was CPA and a series of benchmarked metrics leading to a profitable CPA.

The intangible challenge: there was an underlying challenge that had nothing to do with the ads manager, power editor, etc. The gap was: how does the founder of the company manage the media buyer and vice versa. This is a challenge I see frequently and when there’s a disconnect, it creates a lot of frustration. The main reason is because there’s a difference in expectation.

Here are is the common scenario: most media buyers are looking at the indicators of profitability and working on maximizing those indicators to increase the return on advertising spend. Most entrepreneurs understand indicators, but prioritize money in, money out (obviously). When media buyers aren’t able to show/communicate continuous improvement in growth and profitability, that becomes very frustrating as an entrepreneur. I have been on both sides of that equation and can empathize with both parties.

For this client, the relationship was healthy and there was open line of communication. They just didn’t have a list of questions and indicators to discuss the profitability of a campaign or troubleshoot performance.

We first defined what the challenges and pinpointed and how to overcome those challenges. Here are the challenges and what we did about them:

Advertising Challenge: can’t determine profitability (tracking issues)

If you don’t know your numbers, you can’t grow. Usually, advertisers are able to determine money in and money out, but in this case, we weren’t able to determine how profitable the campaign was.

Solution: implement tracking throughout the funnel

In order to track the funnel, it needs to be clear what the funnel is. So here’s the whole funnel:

  • Step 1) FB ad
  • Step 2) Sales page
  • Step 3) Offer page
  • Step 4) Add to cart
  • Step 5) Initiate checkout
  • Step 6) Order confirmation

So we installed Facebook pixels throughout the marketing funnel with the correct standard events. 

Advertising Challenge: Optimizing for the wrong metric

Since there wasn’t tracking in place, it was nearly impossible to optimize for cost per acquisition (CPA). So now that the tracking was working, we started getting data! BOOOM. Now, with this data, we have to determine how to make decisions.

Solution: Create and implement a decision making framework internally

Imagine knowing exactly when to turn off campaigns and when to scale because you having a better understanding of your true breakeven CPA. In the case of this client, their breakeven CPA on the initial transaction was $60. The lifetime breakeven CPA was $198.

Here is the solution:

Breakeven on the initial transaction: $60
Breakeven on the lifetime transaction: $198
Therefore, we set 3 benchmarks:

  • If CPA/ad set is less than $60 = scale = add more budget
  • If CPA/ad set is between $60-$198 = monitor = watch that ad set
  • If CPA/ad set is greater than $198 = turn off

Usually, when you add advertising budget to a campaign, it decreases in profitability momentarily (until you kill losers). So as the media buyer started testing new audiences. As he did, he needed a way to define losers and then turn off the losers.

So we started making decisions internally (based on the risk tolerance of the client) regarding how much they were (weren’t) willing to lose on month 1, if CPA did become more expensive.

The incredible part?

We found out that they were profitable.

And their CPA was below the $60 breakeven CPA.

But now, say they want to scale, how do they do that? The media buyer on the team started adding budget and started adding $30-40 daily ad spend at a time. As he started adding budget, we found a lookalike audience that started converting, as well as older audiences we can see clearly if they were converting or not.

For the first time, the client was getting sales relatively consistently from cold Facebook ads. Previously, it was just remarketing sales. So now that sales were coming through from cold ads, the retargeting ads became even more profitable.

Advertising Challenge: 100% budget-based Facebook advertising

Defining a budget in order to get started with Facebook advertising. Scaling advertising and revenue is impossible if the media buyer doesn’t have liberty to make decisions and permission to scale when things are working. If something is working, now is the time to push it!

Solution: Establish a base budget with the freedom to scale

The minimum budget that was dedicated to Facebook advertising was $2000. That is a healthy base budget to start testing and experimenting with Facebook advertising for the average business. The client was getting sales, collecting data and established a way to make decisions. Now, time to make decisions to scale!

Intangible Challenge: Founder managing the media buyer (+ vice versa)

After halfway through the first call, something clicked. Once we went through the funnel process and financial modelling of the funnel, the founder of the company understood the funnel from a Facebook advertising perspective and so did the media buyer. It was getting clearer on what to track, importance of setting benchmarks and how to communicate to each other.

Solution: Empower the right people, and watch them impress you (and themselves).

Something powerful happens when you give people more responsibility, they become more competent, hungry and work that much harder to accomplish the goals they co-created. For example, in our agency, when the account manager has been trusted completely, he has grown leaps and bounds in noticeably short periods of time. Same thing has happened with the lead media buyer on our team, virtual assistants and more.

This is the same thing that happened here.

This is something I was super excited about because you could see him take more control of the conversation and provide deep data from the performance of the campaign on and off of Facebook. The media buyer in the client’s organization became more confident because we set boundaries.

We had an important conversation: “here are all the things the media is responsible for and what he will report to you.” As soon as it became clear what he was reporting and what the benchmarks for his reporting were, everyone knew what they were responsible for.

When clients hire me for consulting, here’s what I’m responsible for:

  1. Ensure the correct tracking is established throughout their funnel
  2. Collecting the right data to make the right decisions
  3. Setup financial modelling to benchmark funnel performance numbers
  4. Pinpoint weaknesses in at the Facebook ads, funnel and follow up level
  5. Create a plan to optimize campaigns and generate a higher return on your Advertising

For this case, together, we did an incredible job troubleshooting and executing to generate a noticeably profitable ROI.

Bottom line – After:

  • Have 5 daily ratios to review
  • Know daily performance numbers
  • A lot more clarity of profitability
  • Scaled to $300+/day profitably
  • Clear reporting and communication
  • Spend: $300+/day
  • ROI: 5.89:1

Here is what we learned:

Remarketing Is Still By Far The Best Return On Investment

Majority of their sales were coming from retargeting in the beginning; an incredibly high ratio of 9 retargeting sales for every 1 cold ad sale. Now that cold ads are converting from click to sale, the retargeting has become even more profitable.

Metrics: $1,183.68 spent = $4,246.95 revenue = 358% Return on Ad Spend

Lookalike Started Performing

The media buyer tested a variety of lookalike audiences. One of the custom audiences created from engagement with the ad is performing really well ($33.54 CPA). The size of that audience is 14 million people:

Metrics: $1,836.14 spent = $3,277.65 revenue = 176% Return on Ad Spend

Funnel benchmarks are crystal clear

The funnel is as follows for this client:

  • Step 1) FB ad
  • Step 2) Sales page
  • Step 3) Offer page
  • Step 4) Add to cart
  • Step 5) Initiate checkout
  • Step 6) Order confirmation

Here are the main ratios they are looking at in order to optimize the performance per audience, per ad objective and per ad:

  • Product page/sales page ratio: 19.09%
  • Add to cart/product page ratio: 16.23%
  • Initiate checkout/add to cart ratio: 60.40%
  • Add to cart/complete purchase: 38.15%
  • Click to sale ratios: 0.74%

Now what

In order to wrap up the call, here are the 3 major pillars the client will be working on:

1) Video ad testing. They just completed and launched a new video ad. Video ads are very powerful when it comes to conversion as well as engagement and retargeting based on the video ad. Excited for them to test this out!

2) Conversion rate optimization. Even though the campaign is profitable, there is a lot of room for growth on the conversion rate optimize of the marketing funnel. The overall funnel converts at 0.74%; that’s really low for a one product business. They are going all into conversion rate optimization to maximize ad spend.

3) Lead generation. To date, the only place they are collecting leads is the home page with a small optin field for updates; they are capable of so much more! They will revisit lead generation later this year and start building their list.

All of this happened over 2 calls + a little bit of back and forth on Whatsapp.
I can’t wait to see these guys take off!

Let’s Work Together

If you like what you are hearing, here is how we can work together:

Done-with-you: Consulting
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