How to estimate whether your eCommerce shop can get profit through Facebook Ads?

Hi, Danil from?vend.agency?here!

Whoever you are: some local business, mid eCommerce shop, or even a big conglomerate, you always look for new cash flow channels, whether it would be new distribution points, partners, or digital marketing.

The statistic shows that more and more eCommerce shops are going into social media. And forecasts say that trend will only increase.

But when businesses are going to work with Facebook Ads, they have to assess their potential on that platform. In this article, I want to show you different points of view that will allow you to evaluate your possibilities of working with Facebook Ads. And, of course, to dispel some myths ??

But what about tests?

Anyone who reads my blog knows that for any statement, I prefer tests. And that article doesn’t contradict this rule. However, the problem is that all the courses teach media buyers how to set up campaigns and nothing about things outside the Ads Manager. And often you don’t even need to jump around your campaign, but shift the focus beyond it.

So, for buyers, this article will help to look outside of the Ads Manager and for Founders to understand when there’s nothing to catch (or what to improve).

Market Trend

I'll start with the most important things that affect our campaigns more, and then move on to the things that affect less.

And without proper market trend, Paid Social won’t perform a miracle.?

Market trend it's about demand level, extra factors that may affect your business (such as a pandemic), seasonality, and competitors activity.

If you try to sell skates in summer, you'll obviously fail. Also, if your competitor has achieved some innovations that give them advantages over your product, you'll also face some problems.

So, if you're looking for some magic in Facebook Ads because your business is struggling with some kind of external factors, you have to understand that it's possible to get results here. However, there is no magic.

Product and Brand

Let’s be honest. If your product/brand requires improvement or people simply don’t like it, Facebook won’t fix it. As I said, it’s just an instrument, but you should have good material to use it.

First, your product must solve some kind of client’s problem. Or make client’s “job” done (about JTBD?here).

It doesn’t have to be some material benefit. You can just make your client feel happy.

But to create feelings between the product and the customer, you have to work on brand positioning.

Net Margin

Here is a statement: “You can’t sell low-margin products on Facebook”. That’s it. Especially if you have low AOV.

Imagine that your product cost is $20. And your net margin is 5$. Let’s calculate.

For example, your CPM now is $3.5. So it means that we buy 1000 impressions for $3.5. The average Click Through Rate (CTR) is about 2.3%. So out of 1000 people who have seen your ad, only 23 will click on your website.

The average eCommerce website Conversion Rate (CR%) is about 1%. So you need at least 100 website visitors to get 1 purchase. With this formula, your CPA is about $15.

In this case, you earn nothing and have to increase your AOV and decrease CPA if possible.

Competitive Advantages

I’ve talked about this in the previous paragraph in the market trend context. And that isn't a mistake. However, your competitor's advantages and the way how you improve your product are also about your brand. So if you have any features, it's crucial to position and connect them with your brand correctly. And that’s what really affects your advertising.

Simply, if you have something that you can call unique on the market, this feature will make your advertising easier.

Brand Awareness

People always think that Paid Social will help them make their brand recognizable. And it’s possible if you have enough resources. However, if your goal is to get your first sales, it’s not a good strategy.

But how does Brand Awareness affect your performance?

I often see the situation when new brands come to us and say something like: ”Our brand is unique, and we have the Idea, so we want to sell our products more expensive than the market.”

Wait, wait, wait…

Does anyone know you? What makes you think you can really do that? Oh, the Idea…

And unfortunately, it doesn’t work. So either you have some material benefits or you’re just well known.

It doesn’t mean that if you’re a new brand shouldn’t try any advertising. Of course not. But it's better if you take that factor into account.?

Sufficient Assortment

For some types of eCommerce, for example, apparel, it’s not enough to have a few product positions. The customer requires a wide selection. Otherwise, your potential client will go to your competitor, which has many different products and categories

Also, it’s essential to have your goods in stock.

Marketing Activities?

If we are talking about eCommerce, you must provide timely marketing activities to expand your assortment and encourage clients to buy your product. Don’t forget about new collections, thematic activities, etc.

The same applies to the other types of businesses.

The Power of Offer

Offer is the third main thing that can help you sell your product. We need to understand that the offer is those types of marketing assets that you should invest in

In general, offers could have content, context, and form. For example, you can create a different content offer for one product (for example, sales) at different times (summer or Christmas sales) and with various forms (discounts, promo code, lead-magnet, tripwire).

The broad offer set will help you create many marketing activities and reach all audience segments.

However, besides the varieties I’ve written above, it’s really important to go into detail and figure out if your offer is ready for Social Media Advertising

Value of the offer

If you ask your customer to do some actions to get the value (a popular type of offer), be sure your offer is worth it. I often see the situation when online shops or start-ups ask to fill out a form and leave customers’ private data for some useless offer.

FOMO

Most people know what FOMO is. It’s fear of missing out. Basically, it’s a trick you use to create good offers that cause this feeling and push customers to purchase. However, it’s important to keep the balance using FOMO. Don’t ruin a good offer by oversaturating it with FOMO.

Clarity for Customers Experience.

It’s easy to explain what does 10% discount mean. But sometimes we have a more complicated offer. For example, you give a discount only when customers buy 4 different products. Or you have a complex loyalty program. Anyway, try to make your offer clear.

The clarity of each offer has to explain to your customer only two things

• What value customer will get from your offer
• What they have to do to get that value

By explaining these points, you can be sure that your offer is understandable. Or you can provide customer experience research =)

Offer Justification

No one will believe you do something good (like a discount) for no reason. It sounds strange, but sometimes a discount without justification can ruin your offer. Just because customers don’t understand the reason for the low price and start looking for a trick. So you’d better find a good one ??

Landing Page

One of the main things is what will happen with your client after clicking on the ads. So here you must ensure that your landing page loads fast. It has a straightforward design and is easy for your customer to navigate.

You can try using different landing pages changing the design, discounts and product bundles. This will give you a greater chance of success.

Don’t forget that your website is your salesman. So, you have to work out all objections and show your social proofs (like reviews and testimonials).

Conclusion

The main thing I wanted to make with this article is that Facebook is just an instrument. And there are many factors outside of the Facebook Ads we need to consider.

So if you’re a media buyer and you have this knowledge, good for you!

If you’re a business and you want to work with media buyers with this marketing understanding, we can help you!