Ecomm Variables Impacting Facebook Ad Performance
Every online business has it’s own components which will more or less influence it’s Facebook advertising performance. Although all of them are variables on the business side, many of them must remain stagnant due to their importance in the business model. However, it is important to understand their relation to ad metrics. Let’s take a deeper look at some of them:
Market
Each market (Country, Region, City) has it’s own online behavior and therefore, it’s own average CPM. While targeting developing markets yields a lower CPM, it will usually result in lower CTRs or conversion rates, but is not always the case. Tip: It’s always a good idea to test multiple markets in different ad sets and learn from their metrics. The 2015 Q4 average CPM for the Americas was $8.01, $4.61 in EMEA and $3.46 in APAC.
Pricing
Affordable products usually produce a shorter path to purchase due to the emotional and impulsive process, while expensive products require multiple touch-points (ad impressions) between the lead and the brand before converting them into a client. However, a higher product price will typically result in a higher margin. Tip: Up-selling strategies with DPA (direct product ads) will help you raise the AOV (average order value) and leverage your biz margins.
Business Margins
The higher your business margin, the more you can bid in the auctions to win ad delivery. If your margins are very constrained, the space to test, learn anditerate is very limited. Always include margins in your ROI formula to see the big picture and the real ROI. Tip: Some advertisers assign the real value of the product (Price — Cost of product) instead of the price in the product feed so they can get the actual ROI driven by DPA directly in Facebook’s ad reporting tool.
Product Life Cycle
The product life cycle is the progression of an item through the four stages of its time on the market. The four life cycle stages are: Introduction, Growth, Maturity and Decline. The acquisition cost level is directly correlated with this cycle. The earlier the business is in the cycle, the more expensive the price will be to get a new client due to the aggressive demand generation process you’ll need to pursue. Tip: Ensure your relevance score is as high as possible so you can lower your CPM.
Purchase Frequency
The number of times a customer makes a purchase in a given period of time will be directly correlated with the product category. If the purchase frequency for your brand is lower than category rates, your customer is likely spending their money on your competitors. Categories that have high levels of purchase frequency also lend themselves to high levels of attrition among customers. Tip:If your company is based on a subscription model (no purchase frequency), retargeting clients will help lower churn.
Product Catalog Size
We all agree that the best-performing Facebook ads are Dynamic Products Ads. DPA is a cross-device retargeting solution that helps e-marketers promote their entire product catalog. It’s a robust ad type that combines dynamic offerings with optimized targeting. However, it requires a widerproduct catalog offering for better performance. If you are promoting a uni-product company, this tool is not for you.
You can learn more about the Facebook advertising full funnel approach for Ecommerce Marketers in this FREE E-BOOK!
