In ecommerce, Facebook Ads is a powerful medium for scaling online shops and establishing a brand in a short time.
As an agency for performance marketing, specializing in social media, we know that Facebook Ads does not make sense for every online shop … At least not up to date.
Therefore, in this blog article I would like to go into when it makes sense as an online shop operator to view Facebook Ads as an additional source of traffic and sales.
In the past few years we have had many discussions with online shop operators. It already became clear in the initial discussion that Facebook Ads as an acquisition channel is not worthwhile for itself at the moment. You will now find out what the reasons are.
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Tips on Enough
Recommendation to start
Even if Facebook Ads is a great channel to find customers for your product, it can also quickly become expensive and unprofitable.
To avoid this, you should first be able to tick off the following points.
Online shop basics – the prerequisite for your success
Online shops are not always online shops. Yes, a shop can be set up quickly, but if you deal with your competition and other competitors, you will probably quickly notice how much energy and work some providers put into their shop. Online shopping is becoming more and more popular and so the presence on the Internet must also be well designed. Just loading a product into the shop is no longer enough to be successful in ecommerce. Therefore, research what is most important for your product and illuminate it from all points in order to serve the customer in the best possible way. Before you go online, also check whether all functions are working properly. Does the payment work, are there no incomprehensible / contradicting statements in your shop that might lead customers not to buy from you?
First orders
Facebook Ads only makes sense to use right from the start in very few scenarios. Facebook is a great way to scale online shops, especially when the first orders are already in the shop.
Why? Well, if you are already selling via your online shop, apart from Facebook ads, it is an indication that your presence / brand / product generates added value and that it is also accepted on the market. So you use it to test whether your online shop has substance. Another advantage is that you are already generating income that you can use to finance future growth. In the beginning, Facebook Ads is always an investment and a risk. After a few campaigns, you can then assess whether it is an acquisition channel that makes sense for your shop. This investment will of course be easier for you if you are already generating your first income.
Product Proof
You are always convinced of your own product, of course. Otherwise it wouldn’t be sold. But do your (potential) customers see it that way too? Think about a meaningful answer to the following points:
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why should a customer buy the product from you?
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Where can he still get it?
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What makes your product different from the competition?
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Price, material, team in the background, etc.
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unique marketing message
If you have a unique USP, selling will be a lot easier for you. So then on Facebook!
Conversion Rate
The conversion rate says what% of your total visitors on the website convert to customers. Usually a conversion rate of 1% – 2% is the average. In this example it means that you will acquire 1-2 customers per 100 website visitors as customers.
The higher the conversion rate, the more profitably you operate!
The conversion rate is especially important because you can roughly calculate how expensive your traffic is in relation to the sales revenue.
As soon as paid channels such as Facebook Ads are added to your acquisition format, you have to count advertising costs as part of your expenses and see whether it even pays off for you.
An example:
Let’s say you sell socks in your online shop. A bundle of socks costs € 20 on sale. You have a conversion rate of 1%.
The average CPC (= Cost per Click =) on Facebook is currently € 0.8
You would have to spend around € 80 to get 100 visitors to your online shop for one of them to buy. 80 € expenses for 20 € income are each of good and bad. So you see pretty quickly that you have to work on the online shop level for the medium Facebook Ads to make sense at all. 2 possibilities: Increase the conversion rate and / or increase the average sales value so that the shopping cart is not € 20 but maybe € 40. It also depends on which new customer strategy is pursuing.
Is it okay that you buy new customers via breakeven and become positive via the LTV (= Customer Lifetime Value)?
Shop optimization
Here I have already anticipated a little. The active online shop alone is no longer enough. This requires constant tinkering, analysis and testing in order to understand how you can increase your conversion rate and profitability.
To think about starting with Facebook Ads when the shop performance is not good at all is clearly a wrong decision. Facebook Ads can be used here to generate traffic, to understand how users interact on the shop, in order to be able to make optimizations.
Know your numbers
Do you know your numbers What is your AOV (= Average Order Value), what is your CR (= Conversion Rate), what is your margin per product, what ROAS does it need on Facebook Ads to be at least break even? What is the return rate? If you know your numbers, it is easy to plan and you also have a certain degree of security and sales can be planned. This is especially important for us as an agency. If we do not know which numbers we have to optimize for, we work past each other and results that we perceive as good are even absolute horror for you! If you are considering working with an agency, communication and close cooperation are mandatory. To keep the common goal in mind. In order to be able to guarantee this, we have weekly update meetings with our marketing customers to discuss the past week and to plan the future weeks.
Last tips
The post is not intended to badmouth Facebook Ads. As an agency, however, we have a lot of experience and would like to pass this on before you make financial decisions that you may regret.
It is important to understand that you understand the points above and know what to do. As I always like to say, Facebook Ads is not the solution to all problems either.
Do you want advice on your Facebook Ads campaigns, or are you considering working with a Facebook Ads agency?
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