I started ROAS Media 3 years ago and bootstrapped the business from day 1. Over the years we’ve managed to generate over US$100M in ad revenue for our clients, predominantly working with eCom disruptors from around the world.
We’ve worked with celebrity brands, Shark Tank/Dragon’s Den funded brands and Fortune 500 brands alike but one of the most interesting observations over this time is that the vast majority of the brands that are seeing the most success are run by young founders 19-30y/o.
Why is it that so many of these young founders are seeing such great success, particularly on Facebook/Instagram?
One of the biggest reasons is because Facebook/Instagram ads are so underpriced right now and these platforms have naturally been a huge focus of young founders who grew up with them.
Facebook and Instagram ads are like the early days of Google Ads when keywords were ridiculously cheap and then there’s the added benefit that many people in the market still doubt the performance of FB/IG because they had tried it in the early years when FB launched their ad products and many brands were burnt trying to drive sales while focusing on likes/comments.
Facebook/Instagram has come a long way since those days but the market is taking its time to realize the true potential now and this means lower competition and costs.
Speed of execution is key
The other reason that these younger-founder-led brands are doing so well, to put it simply is that they get social. They move quickly and they focus on metrics that matter. If a particular ad creative is performing well, within a few days they’re producing content to drum up another 10 variations of this ad creative to test and keep scaling. It’s a different world when you compare this to the yearly content plans of large brands and the 1-3 month turnarounds for pivots in creative strategy and messaging.
Why you need to focus on the metrics that matter
I worked at Facebook for a few years before starting ROAS Media and one of the first things you’re taught during month one of your training is that Facebook groups audiences by the types of actions that they typically perform. If you select campaign objectives for Traffic, then Facebook is going to push your ads to people that like to click a lot but not necessarily buy a lot.
Would you rather pay more per click to attract people who are actually purchasing vs clicking? Yes, right, however, it’s something that many of the larger brands today are late adopters too when it comes to thinking about their online activity in this way and this is further adding to the lower cost/competition you would expect across these platforms.
Understanding the margin vs volume play:
The challenge many brands face is that it’s a lot easier to achieve a higher return on ad spend at lower spends in the sub $20k per month mark than it is to achieve this at $250k-$1M spend per month. If you’re trying to scale to this level, you need to understand that it requires a huge focus on scaling your top-of-funnel activity. This means reaching out to people that have never come across your brand before and these are naturally more expensive audiences that will dilute your overall return on ad spend (roas).
To understand what returns you can expect at higher tiers of spend, you need to know your new customer acquisition costs, you need to understand the increased costs involved with scaling and truly understand the relationship between your CPMs/CTRs/AOV/CVR and how these all come together to achieve your calculated return on ad spend.
Do you know your numbers?
- What is the benchmark CTR for your niche?
- What average order value (AOV) should you be targeting, given the average cost per purchase in your niche?
- What’s your lifetime value of a customer?
- How does ROAS change at different tiers of spend?
- Which are the best markets to target for your niche?
- How quickly can you scale ad budgets without hurting your performance?
- What are the best email campaign strategies to leverage your digital advertising activity?
- How extensive should your abandoned cart email sequence be for the best results?
- What are the best retargeting windows to use at different tiers of traffic to your site that you’re generating as you scale and how should this change over time?
- What’s the best ad format to use to drive sales (video, video, video. 70% of the sales we’re driving from clients with the highest returns are coming from video ads)
For more articles on Facebook Advertising, read the following articles:
Race to Success with Facebook Ads
