After auditing millions in DTC eCommerce FB ad spend, I’ve found common similarities that were hurting ROAS and preventing scale
1. Too much focus on the “tactics”, little focus on the basics
In so many accounts I’ve seen, the brand owner or internal buyer are split-testing the most random things with little thought behind it. Different optimizations (like testing VC vs ATC vs PUR) or testing different cost caps and bid caps. Then when I look into the ad level, the creative is awful. The value proposition isn’t communicated clearly, the image or video is bland. And no wonder it’s not converting.
The basics are having a good product and offer, compelling creative and messaging, a fast site with good CRO and an easy checkout process with an AOV high enough to leave margin to scale. It’s seemingly obvious but common sense is not common practice. The tactics are testing different bids or software or other random hacks. There’s only so much you can optimize within an ad account. It feels good to do all these little tests to keep busy because it’s harder for example to go and source better creative.
Don’t invent tasks to do to avoid the important!
2. No rules set on the account
I’ve already made a post about this, but in case you haven’t seen it, then do ensure you’re using rules on your account. The number of brand owners I talk to who know what rules are, but just don’t bother using them is crazy. There is no need to manually turn ads on and off. Learn how to use them to protect your time, bandwidth and maximize ROAS.
3. Aiming for ROAS, not scale
Again, when I ask to explain their margins, they are usually around 60-75%. But a lot don’t know what their breakeven ROAS is. So they set a higher than needed ROAS target and underspend to hit that. When you break down the LTV, repeat purchase rate, the average time to repeat purchase and other factors in the business you realize that customer acquisition is more important and profitable than aiming for a high ROAS and front-end profit.
The amount of “15X, 20X, 92012932X ROAS” screenshots I see is crazy. If they are legit (which I doubt), surely aiming for a high ROAS is theoretically less profitable. Because how big is the opportunity cost from not scaling and underspending in that time frame compared with scaling and getting more customers?
4. Incorrect exclusions
On your prospecting campaigns, you must exclude your site visitors AND purchases. This is to ensure your prospecting ROAS is accurate, and they aren’t delivering “cold traffic” ads to your remarketing audience. Without this, you’ll have inaccurate data and experience prospecting campaigns sometimes unusually tanking after a few days. On retargeting, ensure that exclusions are set apart from each other. So that 1 ad set’s included audience is excluded from the other. I’ve seen a lot of brands simultaneously run individual VC retargeting and ATC retargeting ad sets, yet the VC RT ad set doesn’t exclude the ATC audience. Get the exclusions right so your data is accurate.
5. Retarget only up to a timeframe that makes sense
One account I saw, had a very low AOV (below $25) and 93% of purchases happened on day 1. And there was sufficient traffic to split into time frames. For some reason, the retargeting was set to retarget up to 180 days. If most people buy on a 1 day, does it make sense to retarget up to 180 days? So if you are driving enough traffic to split out your retargeting timeframes, ensure you segment and your rules will kill the longer time frame ad sets if they perform under target remarketing ROAS.
6. Forgetting to retarget collection page visitors
In some cases, VC and ATC retargeting are set up correctly, but then there are no retargeting ads for those who visited the collection page but didn’t click through onto a product page. Often there are the most visited pages yet the most looked over. Ensure your collection page visitors are retargeted. I’ve found collection ads work great for these as the visitor is interested in the collection, but hasn’t got round to checking out the individual products yet.
7. Creatives being left to run indefinitely
In multiple accounts I’ve seen – the main ads with the most amount of spend have great lifetime ROAS, but the last 3, 7 or 14-day ROAS is below target – yet it’s still being run. You can quickly check to diagnose creative fatigue by seeing if there’s a decrease in ROAS as frequency and first-time impression ratio increase. Make sure you’re continually testing new creatives to cycle them in once your winners start fatiguing.
8. Underspending on retargeting and no campaigns targeting existing campaigns
Everyone loves to focus on new acquisition. We all like to dump our spend and focus on there. But a lot of the times I see retargeting bringing in great ROAS, yet the budget is kept small. Especially if you’re driving traffic on other channels, keep pumping up the budget as long as your target remarketing ROAS is met. And what about your existing customers? It takes a few minutes to set up a simple campaign and target them, but it’s easy sales that will always be there.
9. ROAS target is set per ad, not account-wide and not by prospecting + remarketing
Example. Let’s say your kill ROAS is 1.6. Most people will just set their kill target 1.6, and if any ad is below 1.6, they’ll pause. Here’s the correct way.
1. Set a target ROAS you want to hit account-wide. E.g I want to hit a 2 ROAS account-wide on a 28 day click 1-day view attribution
2. Calculate your % spend distribution between prospecting + remarketing. Let’s assume it’s at 70% prospecting, 30% remarketing
3. Use a weighted average calculation to calculate your ROAS targets for prospecting + remarketing. For example, if you’re usually getting just over a 3 ROAS on remarketing, you can cut off at 1.6 ROAS on prospecting to hit a 2 account-wide. If you’re getting 4 ROAS on retargeting, you can aim for a 1.2 ROAS on prospecting to hit the target of 2 ROAS overall. You want to aim for a higher ROAS target on retargeting, due to the fact that you will have already spent money on prospecting ads from Facebook/Google.
Facebook assigns credit to sales on a last touch basis so the FB ad that is last clicked/viewed within the attribution window (which will usually be your remarketing ad) will get the revenue attributed to it. Also, conversions from abandon cart emails will positively skew your retargeting ROAS. So there’s that too. Look at the ratio of view/click-through conversions on your retargeting ads to get an idea of the real value that FB is driving for you. If you use discounts on your retargeting, you’ll need to factor the decrease in AOV too into your ROAS target as well.
10) Little focus on CRO
The number of brand owners I’ve spoken to, who think they have an ads problem – really have an offer and site issue. The site is slow, the value proposition is weak. Only product on white images are displayed. No reviews. The site is hard to navigate on mobile. No clear explanation of how the product works and why it’s different.
One tool I like to use to quickly benchmark performance is the audit app in the chrome developer tools. Simply right-click on your site > Inspect > Audit > Run audit and it gives a great quantitative breakdown on where to improve. Here’s an example below:
Hope this helps! If you’ve been guilty of these and would like our to help fix these, we can go over your ad account and show you the exact bottlenecks in your account to improve your ROAS and scale. Contact us by filling the form down bellow.