If you are new to Facebook ads for e-commerce, you might find yourself hesitant to get started because of how expensive Facebook ads are.
So, we set out to make a framework that is budget-friendly and effective, while still being able to get you results like this:
And if you’re wondering what exactly ‘budget-friendly’ means, we’re talking about an initial investment as low as $30/day. If you follow our framework, you will not only learn how to test products but also evaluate your campaigns and scale profitable audiences.
So, let’s get to it!
Testing Phase 1 – Campaign Setup
The goal here is to find a good audience & ad creative, with an emphasis on the ad. We strongly recommend that you test a product that is valued at around $30. This is because the higher your product price, the higher your cost per purchase.
Once you’ve found your product and made an advertisement for it, it’s time to get the campaign going.
Campaign Settings
Your campaign will be using the conversions objective. Make sure you ARE NOT using ‘Campaign Budget Optimization. CBO’s are generally more expensive to optimize, making them ineffective for beginners with lower budgets. Instead, we’ll be using adset budgets.
Adset Setup
Choose the following settings for your adsets (same for all 10):
Event: Purchase
Budget: $3/day
Location: ePacket Countries*
Language: English (All)
Attribution Window: 7-day click, 1-day view
Detailed Targeting: Exclude ‘dropshipping’, include a relevant interest
Once you’ve done so, move on to the next screen, which is where you’re going to set up your advertisements.
Ad Setup
Right off the bat, you will want to test out two different ads. We strongly recommend that you try using several video ads, each of which approaches your product from a different marketing angle.
Once you have those, you will want one copy of each ad within each of the ten adsets.
Ultimately, your setup should look like this:
- (1) Campaign
- (10) Adsets
- (20) Ads
Testing Phase 1 – Campaign Evaluation
After setting things up, it is time to let your ads run. You will be evaluating your campaigns, adsets, and ads at different stages over the next three days.
After Day 1
After running the ads for a full 24 hours, it is time to make your first round of evaluations.
You will want to take note of the average CPC for each advertisement. More often than not, the ad with the lower CPC will perform better — and given that we have a limited budget, we need to be cutting off advertisements fast.
So, go ahead and turn off all of the copies of any ad that has a CPC above $1.00. If both ads had a CPC over $1.00, cut them all off and start over with two new pieces of creative. Otherwise, if both ads have a CPC under $1.00, go ahead and turn off the copies of the more expensive advertisement.
After Day 2
Inspect your campaigns at the adset level. Kill off any adsets that do not have an add to cart.
After Day 3
Kill off any adsets that have no purchase.
Next Steps
At this point, you should have at least two adsets with purchases to proceed to Testing Phase 2.
If you do not, go back to the first steps of Testing Phase 1 with two new pieces of creative. If you found one or more interests that yielded a purchase, you can re-use those interests in your next round of testing; otherwise, come up with new interests.
Testing Phase 2
Testing Phase 2 is all about verifying the consistency of results in the Testing Phase 1. We need to ensure that the purchases were not just ‘lucky’ purchases so that we can reliably make decisions about who to target going forward.
Testing Phase 2 – Campaign Setup
What you’ll want to do is select the interests that yielded purchases in Testing Phase 1, and find interests similar to those.
You can do so by plugging your existing interests into the ‘Detailed Targeting‘ section on your Facebook ads manager, and then clicking on ‘Suggestions’. Pick out several interests that have an audience size of at least 5m.
Once you have done so, go ahead and set up a campaign with the new interests, maintaining the same structure as the campaign in Testing Phase 1. Your campaign will once again have 10 adsets, and each adset will have two copies of your ‘winning’ ad from Testing Phase 1.
Go ahead and let the campaign run!
Testing Phase 2 – Campaign Evaluation
After Day 1
Just like for the Testing Phase 1 campaign, we will make our first evaluation after 24 hours. This time around, go ahead and kill off ads that have a CPC higher than $1.
After Day 2
Inspect your campaigns at the adset level. Kill off any adsets that do not have an add to cart.
After Day 3
Kill off any adsets that have no purchases.
If you found that your results did not drastically improve, start over from Testing Phase 1 with fresh creative and interests (keeping interests that yielded results, and replenishing with new interests as needed).
Otherwise, go ahead and move on to Testing Phase 3.
Testing Phase 3
The objective of this testing phase is to profitably collect more data and build strong lookalike audiences.
Testing Phase 3 – Campaign Setup
Duplicate the best-performing adsets from Testing Phase 2 into a new CBO campaign.
Set the Campaign daily budget to $90/day.
Set the minimum spend for each adset to (CBO daily budget/2/# of adsets).
So, say your daily budget is $90, and you had 7 winning adsets. You would set the minimum daily budget for each adset to ($90/2/7) or $6.50.
Go ahead and let things run!
Testing Phase 3 – Campaign Evaluation
If you’ve made it this far, great job — this is the last step of the testing phase!
The evaluation rules will differ slightly because of the increased budget and switch to the CBO campaign. You will be letting things run for two days before making this round of evaluations.
At this point, you will need to calculate your target CPP (target cost-per-purchase). To do so, utilize the following equation: Target CPP = Price * (1 – DPM) – COST
Variables:
DPM = Desired Profit Margin
Price = What you are selling your product for
Cost = What you are purchasing the product for from Aliexpress
If you’re wondering what the DPM value should be — ultimately, it’s up to you. We usually like to substitute something along the lines of 0.2 (or 20%).
In any case, let the campaign run for two full days before moving on.
After Day 2
Look at the CPP on a campaign level. If your CPP is $10 above your target CPP, turn off the entire campaign and go back to Testing Phase 2 with new creative.
If your campaign-level CPP is at or below your target CPP, go ahead and evaluate the individual adsets, turning off any that have spent at least 2X the target CPP, and have no purchases. Also turn off any adsets that have yielded sales, but are above the target CPP.
If your campaign CPP is below or at the target CPP, you can begin to scale up. To do so, simply double the daily budget of your CBO every two days, and continue to do so while the campaign remains profitable.
If you find that increasing the budget of your CBO causes turbulence, scale back a step (divide by two) and let the campaign run for a few days before attempting to scale up again.
Moving Forward
After spending $500 total on your ad account, you should move on to Scaling Phase 1, regardless of whether or not you made it to Testing Phase 3. The reason for this is because at this point in time, you should have sufficient data to create lookalike audiences. These audiences will tend to perform better than interest targeting, and so you may see that introducing them with your current creative could drastically improve results.
Scaling Phase
The objective of the scaling phase is to find profitable lookalike audiences. We will be focusing on the audiences that you have the most data for.
Scaling Phase – Campaign Setup
You will want to create the following:
- FB Page/Post Engagement
- Pageview
- Viewcontent
- Viewed 75% Of Video
Once you have created these, go ahead and run a campaign using our ‘normal’ CBO strategy, which you can find on our free case study video.
In short, your setup will consist of:
- (1) CBO – $100 daily budget
- (4) adsets consisting of FB Page/Post Engagement, Pageview, Viewcontent, Viewed 75% Of Video
- (8) ads total; two ads within each adset. You simply use your best-performing ad, and duplicate it once within each adset.
Scaling Phase – Campaign Evaluation
Your evaluation will be the same as with Testing Phase 3 — let it run for two days. You will be continuously increasing your budget until you find that your performance reaches an acceptable threshold.
Bonus Tips: Managing Cash Flow
Mistakes To Avoid
If you’re getting started, chances are you have not yet had to manage cash flow for a business. Keep in mind that there is a delay in receiving payments from Shopify, with no payments arriving over the weekend. So, while you may be profitable, the lack of payouts for days at a time could prevent you from paying your advertising bills, or fulfilling orders for the day!
The rule of thumb: Make sure that you can fulfill your orders every day. Don’t scale if you don’t have the cash to back up your spend!
Credit Cards
We strongly recommend getting a credit card for your business. If used properly, you will essentially float some amount of credit for the days where payouts are delayed, but not accrue any interest (so long as you pay off your entire card balance by the due date).
In addition, almost all cards offer a cash-back program ranging anywhere from 1.5% to 3%, or points that can be redeemed for flights and hotels. It might not sound like much, but can quickly add up if you run your Aliexpress purchases, Facebook ad spend, and other bills through your credit card. With a store that does seven figures, you might find an extra $10,000 – $15,000 worth of credit card points!
At this point in time, you should have an understanding of how to set up a low-budget campaign to test out new creatives, and how to progress through to the scaling phase. Keep in mind that not every product will work; if you find yourself repeatedly getting sent back to scaling phase 1 after a few attempts, don’t be stubborn; switch to a different product.
If you have any questions, feel free to drop a comment below or in our Facebook group.
