How We Brought Facebook Acquisition Costs Down by $190

Facebook ads can be tricky – and cost a ton. Here’s how one campaign manager took Facebook acquisition costs down $190 per conversion.

Facebook Ads for Subscription Boxes

The channels and marketing opportunities available when deciding to market your subscription products are endless. From using influencers and guest posts through to paid advertising and content marketing, it’s never been easier to promote your brand to the world.

Ironically, however, the most powerful marketing platform also happens to be the most misunderstood and under-leveraged.  

Facebook ads.

Look, I’m not here to tell you that Facebook ads are going to miraculously make your baby pretty – if your product isn’t something your market wants, no amount of retargeting or boosting will help – but I will say, with a confidence rooted in experience, that Facebook ads are hands down the most effective way to sell your product FAST!

I get that you may be a bit skeptical– chances are you’ve already given Facebook ads a shot and lost a lot of money in the process.  Take comfort in knowing that you’re not alone and that the frustration of ineffective Facebook ads is one shared by many.

Case and point, I recently took on a new client selling food subscription boxes and they came to me with a big problem – it was costing them, on average, $230 to convert one customer (for a $100 product)!

Ouch.  

Sure, the lifetime value of their customer was triple that, but the high costs of their ads meant they were left with virtually no margins to play with.

I set out to understand the nuances of subscription based business models and Facebook ads (as this was not a model I had ever worked with) by reaching out to successful businesses & entrepreneurs in the space and, while there are some unique quirks to selling a subscription product, the approach is the same as any ecommerce business.

And here’s what it boils down to: People on Facebook don’t want to be sold to.

Think about it: they’re there to check out pics of their nieces and nephews. Of their friends holidaying in Costa del Playa. To read funny memes and watch entertaining videos. In a holistic sense, they’re not necessarily in the mind-frame to purchase (unlike Pinterest, where people are there to browse ‘objects of desire’).

And so, when you go and show them an ad of your product – and they’ve never heard of you before – you’re guaranteeing yourself a one-way ticket to nowhere.

Instead, here is how you need to approach Facebook ads:

  1.     Use them to aggressively build your email list (Lead Ads & Competitions)
  2.     Use them to sell to your email list or website visitors (retargeting)
  3.     Use them to sell to a cold audience using a loss leader or incentive (so discounts or freebies)

This blog post is going to focus on the latter.

Facebook Ads for Subscription Boxes: How it Worked

When I took over the account, the client was already running a $20 Off offer to their email list and website hits, these were converting pretty well, but only generating 1-2 sales per week. Their cold audience ads, on the other hand, were inflating costs and causing them to lose a lot of money.

The solution?  Simple. We took the ‘$20 off’ tripwire to the cold audience.

Here’s how we set up the campaign in Ads Manager:

Step 1: Creating a Facebook Ad Campaign

First, choose your incentive.

We tested out different offerings and how these were framed. Sometimes audiences respond better to a monetary amount versus a percentage, or even a freebie.

Make it your mission to find out and always watch those retention rates closely to make sure it’s not undercutting your profits in the long term.

Step 2: Choose Your Type of Campaign

Suggested: Clicks to Website (as opposed to Conversions)

We tested out conversion campaigns but found that, surprisingly, most people convert about 7-13 days after clicking on the initial ads; therefore the campaign was better set up as Clicks to Site and optimized for impressions.  

It’s important to point out here that the client does have an email capture form on their site, so some of the hits from Facebook were being placed into an automated email nurture sequence.

Note: Make sure you have a Standard Event set up on your site so that you can track the number of purchases made from your various ads.  Also, remember that Facebook’s default attribution window for conversions is 28 days – meaning if someone clicks on your ad and then makes a purchase 2 weeks later, Facebook will count this as a conversion.

Step 3: Understand Your Targeting

Here’s who we targeted with the ad.

  • Cold Audience built using Interests, Age, & Location segmentation
  • Lookalike Audience (of their existing ‘best’ customers) – click here for more info on Lookalikes

Facebook Audience

The image above is a screengrab of one of the targeting sets we created.  The ideal customer is a busy professional so we targeted based on publications and media they consume (such as morning Radio stations) and product they use.  

You can target your competitors’ fans (if they have a large enough page) and also target based on behaviors.  For example, if you are going after small business owners, you could tell Facebook to show your ads to people that are Admins of Facebook Pages:

Additional Audience

If you want additional targeting options, click ‘Browse’. This is where you choose to target ‘Facebook Page Admins’, as well as other unique audience types that might be part of your target demographic.

Step 4: Determine Your Daily Spend

We started off small – with $50/day.  Because they were limited to one city with a relatively small audience size of 600,000 (shipping restrictions) we weren’t able to scale too much beyond $70/day.

However, regardless of your audience size, when you first start off, you’ll  also want to stay within the $50-$60 mark and then scale up slowly.  To do this, just add $10 to your campaign every day and increase the audience size as well.  Fail to do this and your well-performing campaign will go bust. 

Step 5: Review Your Progress

When we first tested out this ad, it was still converting at the $100 mark. This was already a MASSIVE improvement on the previous $230 average cost per conversion, but we knew we could do so much better (remember, the product is only $100. You should be able to achieve 100% ROI at bare minimum from Facebook ads at this price point).

Based on previous experience with Facebook ads we knew that a surefire way to instantly drive down this cost was to build social proof into the ads (likes and shares).  This is an extremely powerful psychological hook as people inadvertently want what people have (go figure!).  If potential customers see your ad has 300 likes on it, they are more likely to perceive your product as being desirable, thereby increasing the likelihood of purchase.

Here’s the problem though – unless you’re tanking $40,000 into your ads, it’s very hard to generate likes and comments on ads. This is because you are optimizing your campaign for clicks or conversions so it makes no sense that someone would click your ad and then return to Facebook to give it a like.

There’s a workaround though, here’s how:

First, you’ll want to determine which one of your ads worked best for you.  

Next, you’ll want to create a ‘grey’ post using PowerEditor (instructions below) – this basically means a Facebook post that will never be shown on your timeline.

Stick with me…

Here’s how to create a grey post in PowerEditor:

Access PowerEditor and click on Page Posts.  Select ‘Create Page Post’ and start building your ad (the default is a Link post, just leave it on this).

Grey Post

Once you finish your post, select Create Post.  You’ll see the post now appears at the top of the list.  You can also see it next to the image icon the Page Post ID, which you may need to refer to later on.

Unpublished Page

Next, you’re going to want to create a ‘Page Post Engagement Campaign’.  You can target the same cold audience and then just select the post in the ad level.

If you can’t see the post, just paste in the post’s ID.

Use Existing Post

Give this a bit of juice with $50/day budget and once you get a couple hundred likes, you can stop this campaign.

Next, head back into the Clicks to Website campaign you originally created, and in the ad level you’ll want to select ‘Use Existing Post’.  Again, choose the post or paste in the ID.  This is basically now telling Facebook to use the same post that will have all those likes and comments on it.

Example Post 

This simple tweak alone allowed us to drive down cost per conversion from $97 to the $40 mark.   It was so effective that even the grey post was converting into cheap sales!

Post CoCA

Some important considerations if you’re going to replicate the above:

  • Make sure you retarget people that visited your website from your first ad (so they clicked through to a promotional landing page)  – you also want to show the offer to your email list.
  • Make sure to exclude people that have already purchased from you (using Standard Events) – especially if your offer is only for first time buyers.
  • Be patient!  You need to allow up to 30 days for your ads (both cold and retargeting ads) to kick in.  As mentioned, on average we saw conversions take place 7-13 days after the initial click!
  • You can use a feature called Dayparting in Facebook ads that allows you to select the times and days you want your ads to run on.  We found that we weren’t getting any conversions on the weekends so applied dayparting to the campaigns to only work weekdays from 12-10pm
  • Bear in mind the possible cost per conversion and your daily budget.  For example, if it costs $60 for each new customer and you only assign $5/day to your campaign, it’s going to take you nearly two weeks to achieve one conversion!

Some other funnels you can explore using Facebook ads:   

  • Acquisition Strategy:  Use a Video at the top of your funnel (you can get video views for $0.02 so this is cheap as chips) and then retarget anyone that viewed your video with your product offering or special offer.   
  • Email List Growth:  Use Facebook ads to promote a competition (a freebie of your product works well), run this for 1-2 weeks (no more, so that you can track conversions within Facebook’s 28 days attribution window) and retarget the entire list of people who didn’t win with your special offer.
  • Retention Strategy:  Boost your Facebook page posts and target anyone that has paused a subscription. You do this by uploading your email list of paused customers into Facebook and creating what is called a Custom Audience.

The opportunities and options are endless really, but if there’s one thing I hope you take away from this post today is that you MUST persevere with your Facebook ads.  Test lots and lots of different funnels, targeting options, and ad formats and get to the bottom of what will work for your audience and product offering.

Now it’s your turn – give Facebook ads a crack and let me know how you get on!

This guide was contributed by Cat Howell, a digital strategist at Eight Loop Social. Find her on twitter @SocialUpLap

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About Jesse Richardson

Jesse Richardson is an author, educator and co-founder of several successful subscription businesses. He focuses on building engaging communities and has been described as "insanely customer centric." Find him in the Subscription School group or at his blog.

1 Response

  1. Pierre

    Great article – we’ve been struggling with Facebook ads for a while, seeing big boosts to our traffic without much in the way of conversions. So will be actioning your plan to see if we can get some new customers for our UK subscription box.

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