22 april 2020 0 comments

Case Study: How We Scaled From $43K/mo at Breakeven to Over $200K/month x2 ROAS

This is for a mid-market skincare brand based in the US, for middle-aged to older women.

As you can see the date range I screenshotted[1] was for a month until early March, where COVID was affecting things but not too much.

We did drop spend by around 40% to maintain the same ROAS for the rest of March, as conversion did go down, but now we’re back to $50K/week in sales.

I won’t pretend I’m the only one succeeding here in non-essentials.

However, what I’ll share in this post are core fundamentals, and always apply no matter the situation.

This brand was just breaking even at 1.24 ROAS a month before, so we were able to improve not only ROAS but also scale overall profitability and cash flow.

I’ll outline what we did to help scale the account whilst maintaining a profitable ROAS and consistent results.

Focusing on creative and creative testing

This was by far the most impactful change we made. At this point, we’ve tested over 100 creatives and only 22 prospecting audiences to put that into perspective.

We took the best performing creatives from the account and made iterations on them, as well as developing our own.

For example, we’ve tested:

  • different angles in the ad creative (e.g. testing anti-aging vs cruelty-free, vs chemical-free, vs acne preventing, etc.)
  • UGC images
  • models using the product
  • ages of the models (e.g. young women vs older women)
  • product images
  • product images & benefit text
  • videos combining all the above
  • weird skin images (like the ones you’d see on native ads)

For example, we’d test different angles, images of models and product shots. We’d then find what angle, model and product shot works best.

And then further creatives would combine elements from existing top-performing creative. Then that would be tested and iterated upon etc.

Creative is always one of the biggest levers we can pull in eCommerce ad buying.

When you have a mass-market offer, like in weight loss, beauty or health, having a solid creative testing process and making the creative and offer resonate more with your audience is far more important than what individual interest or LAL to target.

Product Bundling to increase AOV

We consulted with this brand to encourage them to bundle their products together. For example, offering a travel-sized bottle alongside the standard bottle.

We also bundled other complementary products together to create a set. We saw approximately a 20% uplift in AOV and ROAS.

Providing complementary products that enhance what the customer is looking for is a great way to improve the customer experience, as well as average order value, ROAS, and profit.

Do keep in mind that if your margins and AOV fluctuate, then this has to be accounted for in your collection/account-wide ROAS target.

Removing Conversion Killing Bottlenecks

There were several issues hurting the post-click experience and sales from the existing site. Examples included:

1. Poor site speed & stability:

The initial website was slow, drop off rate was high, the site crashed at times, and slowed down even more when increasing spend and traffic. We advised removing many redundant and bandwidth draining plugins within the site.

My in-house dev is now working on transitioning the site to a headless build so that all the pages will load quickly and as we scale up the spend, it won’t slow down and hurt conversion.


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2. Poor Usability:

In one instance, when a user quickly views a product on the collection page, they couldn’t exit it on mobile and buy. It was very hard for a user on mobile to actually pick the product they want, add to cart and buy. The font size was small at times, despite the target audience being middle to elderly women.

We went through the site and checkout flow and desktop to note down usability issues and consulted with the brand to eliminate them. Some are still present, unfortunately, but our new site migration to a headless build will fix this and unlock more scale from our paid media efforts.

Setting Clear ROAS Targets

A 2 account-wide ROAS may not look great, but the margins are almost 80% after COGS, shipping & fulfillment.

With a subscription program and returning customers, we actually can scale at a low ROAS and still do well. We also see an uplift in sales on Amazon — thus we can justify scaling on a seemingly poor ROAS.

Previously, the ROAS target was set at 1.6 per ad. So instead, we set separate targets, one for prospecting and the other for remarketing.

This is because of Facebook’s last touch 100% credit attribution model — sales will be skewed towards retargeting (and not taking into account the spend needed to drive them into a retargeting audience).

We set targets to hit a 1.6 account-wide, where we could scale at 1.4 ROAS on prospecting as long as we maintained a remarketing ROAS of over 2.

This allowed us to get more scale-out of the account as we can scale at a lower ROAS on prospecting and get more customers.

Optimizing Retargeting

Previously this brand was allocating only 8% spend to retargeting. Since we needed to aim for a higher ROAS on remarketing, we worked on optimizing that. The previous retargeting campaign was just all the site visitors lumped together.

Instead, we built out segmented retargeting to retarget warm audiences (ad/post engagers, site visitors, video views with product page visitors excluded) and hot audiences (product page visitors, cart abandoners, etc.)

We could then tailor the message accordingly to the stage in the funnel to allow us to see which objections were present and the best way to overcome them.

For example:

  • reminder + value prop type ads,
  • review ads
  • offering travel bottles for free alongside the standard size bottle

Automated Rules

That way ad spend is not being wasted when not logged into the ad account.

I’ve made a detailed post about rules in this group already so feel free to search my name to find it.

Back

Conclusion

There’s still plenty to optimize here, in fact for the first couple months in 2020 we’re shifting to improving conversion, as that’s currently the biggest bottleneck.

There’s only so much you can optimize within an ad account and the biggest results within media buying come from optimizing outside of the account.

As you can tell, this post is quite plain, straight forward and talks about basic fundamentals. No special super tactic or bidding hack.

But the truth is, focusing on fundamentals like improving creative, conversion and AOV are what really help you scale.

Take a look at the fitness industry, so many people are trying to be healthy by buying the latest supplement or pre-workout when the solution is simple but boring: eat clean, sleep well and exercise more.

Yet both obesity rates and the supplements market are forever growing.

Fundamentals > Tactics

Author: Cem Verghese (Sell Through Digital)


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