STOX Energy is a direct-to-consumer compression sock brand based in Amsterdam. They sell compression socks for runners, tennis players, hikers and for medical use. Despite already having a strong product and offer, they struggled to scale their Facebook and Instagram ads while keeping their return on ad spend (ROAS) above target.
Facebook and Instagram ads were their main source of acquiring new customers and performance declined to 1 ROAS in the month before we took over.
STEP 1.
Analyse
The first step to diagnosing their poor ROAS was to take a look at their ad account and Google Analytics. During the analysis phase, we uncovered the following bottlenecks that were causing a low ROAS and preventing the account from scaling:
Too much focus on split-testing things that didn’t matter.
For example, there were a lot of different manual bidding tests being run, and tests to figure out which different optimisation events (like optimising for purchases, add-to-carts or landing page views) brought in the best results.
Hardly any focus on creative.
The creative is the most important part of the ad. Yet for the last 6 months, only 4 creatives were being run to acquire new customers for running socks.
Nothing was done to combat creative fatigue.
ROAS sharply decreasing after 3-4 days of launching prospecting ads.
Overspend on unprofitable ads.
Some ads were even spending for two weeks at 0.13 ROAS. Ad spend was wasted on ads below target ROAS.
Too many campaigns.
There was no clear account structure or strategy, and the budget was spread too thin across the campaigns.
Retargeting was incorrectly set up.
They were previously using the same creative and angle in each retargeting ad. This meant that their website visitors were being served the same message in an attempt to win them back, despite that different customers will have different objections as to why they didn’t buy.
No campaigns cross-selling existing customers.
The easiest customer to sell to is the one who has bought before!
Overall, a lot of the mistakes they were previously making were because there was too much focus on the tactics only, and little focus on the fundamentals.
STEP 2.
Strategise
Now that we have uncovered the initial bottlenecks – how did we fix them and turn the performance around?
Here are the following changes we made in the account that helped scale STOX whilst keeping the results profitable and consistent:
Firstly, we kept all ad sets optimised for purchase only. We’ve found from our accounts that the purchase event optimisation on conversion campaigns yields the best results.
Then, we focused extensively on creative and creative testing. We started with 6 new creatives and used previous controls. We shut off the poorly-performing ones and duplicated the ones that were performing well in our creative testing into our main scaling campaigns.
From here, we then cycled them around when they started to fatigue. We found that lifestyle and product videos work the best with short benefit points on each clip – so we continued to create more of these.
To keep our prospecting campaigns consistent, we put exclusions on the prospecting level. We used fewer ad sets and campaigns and more budget per ad set. By excluding site visitors from our prospecting campaigns, we’re able to have our prospecting ads deliver to actual cold audiences and not skew the results. We typically will exclude website visitors and our lifetime customer list. That way we know we are only serving ads to audiences who have not bought from us recently and are unaware of the brand.
Finally, we set clear KPIs and targets with the client for each collection and stage of the customer journey.
We used our product KPI calculator to work out margins. These are based on:
COGS per unit
Shipping cost per country
MSRP
Payment processing fees
Reduced rate VAT
Our agency fees
Then, we used our blended ROAS calculator to work out ROAS targets for prospecting and remarketing.
For example, we worked out that after all costs, we needed above 1.68 ROAS on running socks in the Netherlands in order to be profitable.
As long as we maintained a 3 ROAS on retargeting, we could scale at 1.6 ROAS on prospecting (measured from a 28-day click 1-day view window) to maintain the target account-wide ROAS of 2. You can see how we calculated this here:
STEP 3.
Optimise & Scale
We were recently able to scale the account up to €50K/mo in spend at just under 3 ROAS.
One of the ways we optimised the account and improved ROAS was through the use of rules. Their in-house marketer was unaware of automated rules and had previously overspent on ads below target ROAS; we were able to cut this out completely and thus reduce waste on unprofitable ads, improving the account ROAS.
Automated rules allow you to optimise ads 24/7 and focus on what moves the needle in scaling Facebook ads: improving creative, offer, CRO and AOV.
Another method that helped improve performance was to translate the copy into English, Dutch, and German using Dynamic Language Optimisation. That way we could ensure our creative and ad copy was in the native language of each of the countries to which we scaled.
The way we scaled the account was mainly through horizontal scaling. Since the countries we mainly sell in are small Western European countries, we focused on refining the creative and messaging for each collection and then moved to optimise the campaigns for other collections.
For example, once we had optimised and scaled the running socks campaigns to above target ROAS, we focused on optimising the tennis socks collection, and then hockey socks, etc…
This allowed us to scale the daily budget, whilst also helping to expand STOX’s product line so that they were no longer dependent on their bestsellers to stay afloat.
Conclusion
Overall our 3 step eCommerce scaling process helped turn around STOX's main traffic source of new customers from losing money. And, at a weak cash flow position, we doubled the account ROAS, increased spend, restored healthy cash flow and increased STOX's overall revenue and bottom line.
The time and bandwidth freed up from their internal team have allowed them to channel that focus into working on the backend, improving customer LTV, sourcing new creatives and working on creating new products and offers.
Want to achieve similar results for your brand? We can walk through part of the analysis step with you through a free account audit. Through a video conference call, we can go over your account and identify the bottlenecks stopping your brand from scaling to your target ROAS and revenue.
“With a high volume of creative testing and a performance approach to media buying, Venture Beyond helped grow STOX Energy from €1.1m/yr to €4.5m/yr over 1.5 years of working together. They outperformed all previous agencies and it was very pleasant to work with a proactive team who’d drive the account forward, I recommend them to all my e-commerce colleagues in Netherlands.”
Caspar Disselhoff
Founder, STOX