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Podcast: Is there a RIGHT TIME to scale Facebook Ads: Questions Answered

Dave Granfield:

Hey guys, it’s been a little while. Honestly, Jay and I’ve been under the pump over the last couple of weeks, and while we’ve had a few guests that have come into the podcast and we’ve had a good chat with JD and Josh Remington, we have neglected the purpose of why we started this podcast a little bit, but it’s been for the greater good a BidPixel and building the agency. So, you all know Jay. Jay, hello.

Jay:

Hey, how you going? Good to be back again.

Dave Granfield:

Yeah, it’s good to spend some time with you in this format, mate. One thing that we’ve been doing over the last couple of months is asking people to ask us the tough questions, and it’s about time we started going in-depth and answering some of these tough questions. So, what we’re going to do today, guys is there’s a few of these questions where I can speak into the marketing strategy side of things, the overall why you’d want to do it, but then I’m going to hand it off to Jay because he can really talk about how to implement it in Facebook or the platform like Google. So, let’s just get started. 

Amber Hanham has asked the question, when do you know the right time to scale Facebook ads, and is there a right time?

Jay:

Great question. Yeah, there’s a right time. 

There are so many factors that come into it, and I think there are so many factors that come into it if you want to scale in a way that’s healthy to your business. 

And that’s one thing I guess we always want to focus on with our clients. It’s one thing, for instance, is ramping up your ad spend. If your account’s not in the health position to do that, there’s no point. 

There’s also, on the other hand, we can ramp out the ad accounts in a healthy position, but the backend systems of your business in a healthy position to doing and you don’t have your dispatch and fulfilment set up.

Jay:

So, in terms of the right time to scale, I would say look at it holistically. 

First off, is your business set up to scale? 

Do you have the systems and processes in place to handle increased purchases, increased inventory, increased staffing, the needs that come along with a higher revenue business? Do you then have the dispatch areas of the business? Are you fulfilling in-house? Are you dropshipping? Are you printing on-demand in-house? Are you using an external company to print for you? 

All of those things, are they in place and are they ready to go? Do you have the cash flow? If you’re expecting an influx of 100,000 sales where you’ve only been getting a thousand sales, do you have the cashflow to bankroll getting those products made for you or sent to you ready to go? Yeah, that’s probably the first thing I would look at.

Dave Granfield:

So, that’s all the business process side of things. We’ve got plenty of customers that get stuck in maybe the pre-order cycle or plenty of customers that get stuck in the labour side of things. They just don’t have the labour of scale. I really want to hear from you though on the return on ad spend metrics and what happens to an ad account, so a Facebook or Instagram ad account, what happens to that typically when you try and scale?

Jay:

Yeah, perfect. On the ad account, there are a few key things that we look at. One of them is the consistency of on the ad account, and that’s positive consistency. 

So, the ad account constantly has a healthy return. There’s regularity in terms of how many purchases a day, a month, a week that the account’s getting. And also, consistency around the cost per purchase. And that’s also well above what the minimum returns need to be.

Dave Granfield:

Can I speak onto that for a second? We’ll put a link into the description of the podcast and the vlog, but one of the things that we do very religiously with customers, make sure that you understand what your break-even return on ad spend is. And I’ve been finding more and more people just don’t get a sound understanding of this. 

What is the return on ad spend? For every $1 you spend on advertising, it’s how many dollars you make in return. So, most businesses, e-commerce wise, maybe two and a half times return on ad spend is a litmus test of a break-even return on ad spend. 

So, for every $1 they spend, they need to make $2.50 just to recoup their costs on the product, wages, advertising, those sorts of things.

Dave Granfield:

That gets more complex when you start charging. Many agencies charge management fees and there are multiple complexities there. 

But one of the things that would generally happen, and I’m sure Jay, you’ll speak into this a bit more, is if you don’t understand your return on ad spend break-even point, it’s very hard to judge a good time to scale. 

And if you start scaling, you find that you go back and, literally, you’re pumping more money into the business just to break even or not go in anywhere. And it becomes pretty obvious pretty quickly that there’s no money left in the bank. 

One of the big strategies of scaling an ad account is introducing more people to a brand. So, a top of funnel awareness strategy. Now, what generally happens to a return on ad spend metric when you start scaling awareness to get more people involved in the business?

Jay:

Yeah, getting more traffic is a huge thing. 

Literally, you can push in the top of funnel and brand awareness style objectives where you’re getting in front of a lot more people, and then really starting to strategize the progression from when somebody hears about you for the first time, right through to becoming a customer, and then back again to repurchase in the future. 

So, yeah, that’s where we started to blow out each section of that funnel, which is probably more the marketing term, expanding certain sections of the funnel, diving deeper into the certain sections of the funnel. We can expand on the middle of funnel audiences or really segment down the top of funnel audiences and niche down to specific demographics and specific audiences in all that. And then, test and measure as we go.

Dave Granfield:

There have been some really naive fundamentals in Facebook advertising for a long time where you see all these people that say they get an amazing return on ad spend, but a really high inflated return on ad spend is generally, and I’m generalizing here, you’ll look deep diving into it, and it’s usually a retargeting style strategy that’s going to get a better return on ad spend.

Dave Granfield:

And unfortunately, if you don’t have more traffic coming to the website or new people getting introduced to the brand, you can only scale a retargeting or remarketing strategy so far before you exhaust your audience. 

So, a true test of when is the right time to scale is can you put hundreds, thousands, millions of people into the top of your advertising strategy funnel and successfully convert them into a purchase at some stage, middle or bottom? And if you aren’t ready to do that, and if you can’t do that successfully, then it’s not the right time to scale.

Jay:

Absolutely. A real-world scenario I guess is scaling a remarketing campaign. 

And like you said, a remarketing campaign might, for instance, have a 10 times return, and it’s really great. They’re people that have been on the website that added to cart, they’ve had a very clear interest. You then measure the frequency of ads that have been delivered to those people. 

If, for instance, you look at, say, Shopify and look at how many people have added to cart in the last 30 days. And say it’s 300 people, you can spend $10 getting in front of those people or you can spend $1,000 getting in front of those people.

Jay:

The number of people doesn’t change if you are purely focusing on remarketing. 

You’re still getting in front of those same 300 people. You can up the ad spend. As a result, the frequency will go up, but your CPMs will go through the roof. And really there’s the same amount of people in that audience that are going to purchase anyway, which is why we want to focus on getting our brand out there and the brand awareness and filling the top of the funnel.

[50K Campaign]

Dave Granfield:

As a blanket rule, Jay and the team genuinely try and run, if we’re scaling an ad account aggressively and we need to introduce people to a brand and everything converts as it should. 

The education of motivational stage of things happened, they’re making them problem aware or situationally aware, a top of funnel works and progresses down. Generally, what we find is up to 70% of an advertising budget could be placed at the top of the funnel.

So, introducing people to the problem or to your brand and then educating them and then trying to get them to purchase.

Dave Granfield:

I think last time, we talked about this, Jay, you had about 70% allocation of funds to a top of funnel strategy but 15 to 20% of education and motivation. Now, the big thing that we find is you introduce someone to your brand or you introduce someone to a problem that they have and, although you can fix that problem, you’ve now made them aware of that problem and there’s the potential that they go shopping on your competitors websites to solve that problem. 

So, the middle of the funnel has a fairly large place to educate and motivate them that they should be purchasing or consuming from you.

Dave Granfield:

So, 70% top of funnel, 20, 25% middle of the funnel, five to 10% bottom of the funnel. And then, I’m going to segue this fantastically into the next question, which I’m skipping a heap of questions that we talked about before we went live. 

And the next question is from Adelia, which is an ethical fashion brand that we’ve known of for a little while now. Their question is what is the best way to split test and recognize a winning ad audience? That’s actually not the question that I was supposed to go to. Sorry.

Dave Granfield:

The question that I was going to go to was Jonas Hag, which was how do you tackle an advertising strategy, which has the purpose of securing current clients for a small business, rather than trying to find top of funnel and awareness, how do you secure people who have already purchased from you before or are already in your nurturing sequence for the pure purpose of retaining them and making sure they don’t go somewhere else? So, my segue was absolutely terrible. I’m sorry. Oh, and you’re frozen on me, Jay.

Jay:

I’m back now.

Dave Granfield:

You’re back. 70% top of the funnel, all the way down to, if I did my math right, technically I should have left 5% free. And that really is a win-back campaign or a nurturing campaign of getting people to come back and purchase a second, third, fourth, fifth time. 

So, Jonas’ question, how do you tackle an advertising campaign for a win back purpose? How do you do that and what do we do with our customers?

Jay:

Yeah, I guess I’ll put a little caveat in there is when we’re talking percentages, the biggest factor of that is what’s the consideration process? How long is the consideration process for our clients, customers? 

If it’s a quick $5 product that doesn’t really take much thought of in terms of purchase, sure, we can really go hard at the top of the funnel. There are not many objections to overcome.

Jay:

So, that consideration process is considerably smaller. If the client sells aluminium pergolas and swimming pool fences and that sort of stuff, then it consideration’s obviously a lot longer because we’re talking about a 15, 20, $30,000 purchase. So, there’s a much longer period. 

Therefore, we really utilize that middle of funnel strategy to overcome objections, we put them through nurture sequences, we grow out the strategy that way. So, those numbers would be slightly different in that case.

Dave Granfield:

I completely segued to the next question without giving you the chance to finish the first.

Jay:

That’s fine.

Dave Granfield:

All right, can we move on from Jonas?

Jay:

Yeah, definitely.

Dave Granfield:

How do we structure win-back campaigns for our customers? It’s probably the easiest way to answer this question.

Jay:

Yeah, win back, I would say, again, depends on the product. We’re not a cookie-cutter agency. 

We really want to have individual strategies, but some things you look at are the value of the client. So, are they a recurring client? In Shopify, we can see what the returning customer [inaudible 00:16:56]. You can pull down how many times someone’s purchased from your store, put them into a VIP list. People that have purchased more than five times or more than 10 times or 20 times, or people that have purchased more than $500 or $1,000 worth of products.

Jay:

And then, people that have purchased over a time frame, in the last 60 to 90 days, or 90 to 180 days, and using your custom lists even further. If it’s an annual purchase, getting that back in front of people that purchased off you last November for Christmas gifts, getting them back again this year, building out a campaign specifically for those people in October this year, ready to reengage them again and reactivate them for this upcoming 2020 Christmas season.

Dave Granfield:

I guess products have to buy different buying cycles as well. Some products are going to be a single purchase. If you’re purchasing something for a baby, a wrap, that sort of thing, it’s a single purchase. You might be able to get a gift buyer to come back and buy it for another person or for themselves. 

But if it’s a mother buying something for a newborn, until they have another child, you don’t have another opportunity to sell newborn products. Someone like Dr Pickles body wash that I’ve got up here on the shelf or PodBiotics Coffee, they’re a consumable product, and I think you need a smart strategy and you need to start learning what the buying cycle is.

Dave Granfield:

If you sell a 10 pack of coffee to someone, how many days is a 10 pack last and when should you be targeting them again? 

And your Facebook ads strategy can be built fairly robust and smart about retargeting ads based on the time from purchase and conversion, and start taking them through a journey or upselling and cross-selling them into another product. Dr Pickles, you could sell them from a three in one body wash to a tattoo care balm to sunscreen to something else that they’ve got. 

PodBiotic Coffee, you could sell them on a probiotic coffee, an organic coffee, a turmeric coffee or whatever coffee you wanted to coffee them. But coffee drinkers are going to come back and purchase again.

Dave Granfield:

So, creating audiences based on your pixel fires and your conversion tracking is a really smart way of doing it through Facebook, or you can tie in a platform like Clavio in Shopify or [inaudible 00:19:09] commerce or Big commerce. Clavio is a really smart and intuitive email marketing platform that has a bit of machine learning that can work out the optimum time for someone to come back to purchase. And you can hit them with emails at the time, or a Clavio audience can be shared to a Facebook audience and ad campaign.

Dave Granfield:

You can start getting really smart about your advertising in that way. I guess the old saying is there are three ways to make money in business. 

You get new customers, you get them to purchase more while they’re at the checkout or while they’re purchasing, and you get them to come back and purchase again. And that whole setting aside budget in your Facebook advertising campaign for a win back or repeat purchase customer is a really good way of making more money. You’ve paid to acquire them once, it’s going to be cheaper to acquire than the second, third, fourth, fifth time.

Jay:

Absolutely. So, virtually when you’re getting someone a second time, you remove them from the need for a top of funnel audience and you remove them from the middle of funnel audience because they’re already aware of your brand, they’re already product aware, they’re problem aware, and they’ve overcome all those problems once before. They’re purely remarketing so it’s cheaper to get them to purchase again than what it is to get somebody to purchase the first time.

Dave Granfield:

100%, and if you’ve ever bought something from Kogan or any of those large big-box retailers, you’ll see the ad sequence that you go through afterwards, which is almost targeting you with similar products or like-minded products or accessories. 

When I bought the GoPro for BidPixel the other month, we then got targeted with all the accessories for the GoPro and different things for that camera. And there are really clever ways that you can do it if you do it well. And if you don’t know how to do it, reach out to your agency or someone like Jay and just get some good advice on how you can make money while the sun shines I guess. Decent analogy, right?

Jay:

Absolutely.

Dave Granfield:

Cool. Mate, there were five questions. We just answered three of them and we’ve done 22 minutes of talking. So, let’s just wrap this one up, man.

Jay:

Yeah, sounds good.

Dave Granfield:

Amber and Jonas, thank you very much for your questions, guys. If you have a tough question, ask it in the comments below. Our team crawls all the comments, gives us a list of them. We’ve got probably about 150 questions that we need to answer, so we need to actually get cracking on this. I’m going to do some of them as a solo version. I’m going to get some of the team in. I don’t want to take your time all the time. But Craig, Scott, Karen, Pauline, Steven, I’m just reading now, Sarah from [inaudible 00:21:33]. I’m going to answer your question, Sarah because I want to work with you. There are heaps of questions here. Paper made solutions, Adelia, I need to get back to you now because I started asking your question and realized it was not the right one.

Dave Granfield:

Jackie, Magda, Michael, we’ve got tons of questions. So, guys, ask your tough questions in the comments below. Jay and I or one of the team will help try and get through and answer these questions. And just by asking a question, you can go on the draw to win $50,000 cash, the contents of a locked safe, or Jay and the team will grace your presence for a couple of months and help you with some strategy to get some of these tough questions actually implemented onto your own advertising accounts.

Jay:

Sounds great.

Dave Granfield:

Yeah, [inaudible 00:22:13] home today, mate? I can hear [crosstalk 00:22:14].

Jay:

I do, yeah.

Dave Granfield:

Family days, fun. All right mate, great to see you today, bless you. Thank you for your time today. I’ll let you get back to doing what you do well, and that’s making money for our customers.

Jay:

No worries. Thanks for your time. Cheers. Bye.

Dave Granfield:

See you.

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