“This can’t be right! There’s no way that it’s THAT high…” I thought to myself while rubbing the sleep out of my eyes. The ROAS score (short for return on ad spend for those not in the know) on my screen was reading 18.72. That meant that for every yen I was investing, my client was making a return of 18.72 yen. Sure, it was only one ad out of about a hundred that I was running for a client at this PR agency in Japan but a return like that is unheard of. Quite literally, that’s a 1,872% return on investment, at top of funnel nonetheless! After I refreshed the page several times to ensure that the 18.72 ROAS number wasn’t a figment of my imagination, it dawned on me that I was onto something.
If you’re not in the trenches of Facebook advertising day-to-day, it’s easy to miss many of the frequent changes that happen on the platform. For example, in years gone by, best practices held that one ought to make a highly tailored piece of advertising creative and then target it at those for whom it was reverse engineered. While this play can still work in some instances, marketers are now seeing more and more return from what is being called the “Power Five.” I’ll get into the weeds of what these are in the following paragraphs but essentially the algorithm has now evolved to the point where it is far better at marketing than any human could ever dream to be.
What? Give the Zuckerbot MORE control?!?! Are you crazy? Well, no actually. By giving Facebook far more data to play with, the algorithm is able to go through reams of profiles and find the types of people who are most likely to convert. Through a process of iterative testing, Facebook is now able to pinpoint exactly the type of person who is most likely to perform the action you optimize for when choosing a campaign objective. Of course, you should put some parameters on your targeting if you’re selling a product or service that only caters to a specific demographic. That said, the more that you can open things up and give control over to the algorithm, the better results you’re likely to get.
Facebook’s Power Five
With that now said, let’s cover each of the Power Five in turn…
Auto Advanced Matching: Of the Power Five, this one is the easiest to implement. All you need to do is toggle this option on in your Facebook pixel settings and you are good to go. Once it’s on, your pixel will be able to better ascribe where your conversions are coming from, thereby allowing the algorithm to make better decisions on your behalf down the line.
Automatic Placements: I am not going to lie. For the longest time, I thought that this was the Zuckerbot’s way of tricking marketers out of their ad spend. As it turns out, I could not have been more wrong. While there are of course corner cases where it makes sense to limit things to only a single placement like feeds or stories, the Power Five play is now to just let Facebook figure out what converts the best. Note that this has the added benefit of picking up sales in places like Facebook’s audience network that you might have otherwise missed out on due to overly focusing on the feed.
Dynamic Ads: As my country manager friend at Dynamic Yield would say, modern marketers need to up their game when it comes to personalization, on-site, in-app, and on ad networks. In the days of yore, Facebook advertisers would need to manually refresh and test their creatives. Now, thanks to the advancements in the algorithm and integrations, markets can simply show the right product to the right person. By leveraging interest that users expressed on your site, app, or elsewhere on the internet, Facebook can match creatives with audiences.
Campaign Budget Optimization: Of all of the Power Five, this one is my favorite by far. Slowly becoming mandatory for all ads, campaign budget optimization (or CBO for short) moves the ad spend from the ad set level to the campaign level. In doing so, it allows Facebook to better invest where the budget is allocated across the top performing ad sets in a campaign. I’ll detail how to use this later but for now, know that CBO campaigns get far cheaper results than one would otherwise get trying to manually tweak your spend at the ad set level.
Simplified Account Structure: This last one goes hand-in-hand with the aforementioned CBO feature. By consolidating your campaigns and turning on CBO, the algorithm is able to figure out which ad sets and which ads perform the best. Previously, many people would divvy their placements up across a number of campaigns but this is now inefficient when compared to a more streamlined approach.
I’ll risk stating the obvious and point out that the Power Five are far more potent when used in combination than alone. Since learning about this quintet, I’ve not only been able to procure extremely cheap traffic for my blog but I’ve also been able to greatly reduce the cost per result for my clients.
How to Maximize ROAS
With the Power Five now thoroughly introduced, let’s get on to some of the plays that I’ve been using that incorporate this new way of doing things. From here on out, I’ll detail the go-to process that I’ve been using to drive high ROAS scores for my e-commerce clients. Of course, there’s many ways to skin the proverbial cat but this has worked in the past for brands with large catalogs of products.
First of all, you’re going to need to have a Facebook pixel installed on your e-commerce site before you begin marketing. Without this, you’ll be unable to capture customer data and will essentially be groping about in the dark. What’s more, failing to properly set up the Facebook pixel means that you will also be unable to retarget potential customers who have viewed your content. Seeing as there are already a plethora of guides on how to implement this important step, I’m going to simply defer you to a Google query for this part of the process.
Once you’ve got the Facebook pixel on your site, the next hurdle is coming up with a set of content that spark conversions. Given that the creative is quite literally the variable of success, this is one of the most important factors when it comes to driving ROAS. You can have a great and highly in demand product but if the ad is not up to snuff, you’re not going to get any significant amount of conversions. Note that whenever possible, I recommend that you go with video as it allows for you to capture additional data such as view percentage (the reason why this is important will become apparent later).
With the Facebook pixel installed on your e-commerce site and a good set of creatives at the ready, you’ll be set to start running conversion ads to cold traffic. Your first objective will be identifying profitable audience segments and discerning which creatives work. While you likely have a sense of who your target consumer is, this initial process involves a lot of trial and error. Oftentimes, I’ve found that the most profitable audience segments are not the ones that I thought would be the best. Unfortunately, the only way to figure this out is through aggressive A/B testing. As mentioned above though, Facebook is moving more and more to broad targeting, so try to open things up as much as possible.
Assuming that you don’t have a ton of data already logged on your pixel, your first objective will be to collect some conversion data. With this in hand, you can move onto the more lucrative phase of things where you are actually trying to drum up sales. Though it’s largely product dependent, I typically start with something similar to the following. For the purpose of making things as easy to follow as possible, let’s use the example of iPhone cases to illustrate the process.
To launch the store, I would begin with something like the following…
Campaign: A CBO campaign with the conversions object at the minimum ad spend possible. This number in Japan is 110 yen a day per ad set. Note that you need to select the type of conversion on the ad set level and here you’ll want to opt for “Purchases.” Though you can use other alternatives like “Add to Cart” or “Initiate Checkout” to parse cheaper data, they do not correlate as well with actual sales. Remember, Facebook knows who is most like to be a purchaser!
Ad Set: Here, I would make a very broad, nationwide audience that would target only females. Additionally, if I had access to customer data via a CRM or something, I would also make a lookalike audience based on actual purchasers. In addition to this, I would test a few interest based audiences that may be interested in buying our iPhone cases. Ultimately, I want to get around ten to twenty audiences to test here that are distinct enough that I can parse the results.
Ad: Finally, at the ad level, I would add a bunch of different creatives that display a wide variety of phone cases. By throwing everything at the wall and seeing what sticks, I am able to see which products work for direct response and which don’t. By the way, if you have things set up on your e-commerce site to enable Dynamic Ads, you can skip this step by embracing the Power Five play. Just let the Zuckerbot figure out what sells for you!
Basically, this creates a massive CBO campaign where many of the variables are all left up to the Facebook algorithm. By structuring it this way, you create the prerequisite environment for the system to go and figure out which of the various audiences respond to the many products in the catalog. Though this sounds confusing, the above graphic should help in making sense….
When it comes to ecommerce ads, I suggest that you begin by first committing to a month of data collection. Here, the goal is not to make as many sales as possible but instead sow the seeds of better marketing. During this phase, you want to get as much data as possible while also simultaneously looking to vet audience segments and creative variations. After about a month of this, you’ll have identified what works and have sufficient data to launch lookalike audiences. Ideally, you want 500 purchases as well as a healthy amount of the other conversion objectives too.
Once you have a few weeks of data collected, you should have built up your pixel enough to move on to the next phase. Here, you’ll want to navigate over to your audiences and make a 1% lookalike of all people who have purchased your product. In the example of the phone cases, this would allow me to pinpoint similar people to those who had already bought something on my site. The great thing about lookalikes is that they become virtuous cycles in that each additional purchase gives the Facebook machine more information about who your customers are.
While you’re making that 1% purchased lookalike audience, I also suggest you create a custom audience for the “add to cart” and “purchase” objectives. Then, you’ll want to create a saved audience that uses the “add to cart” custom audience as its base but excludes the “purchase” audience. This will allow you to retarget anyone who has not completed the checkout process. Finally, it might also make sense to make another custom audience for all e-commerce site visitors as this warm traffic will be easier to market to than people who don’t know your brand.
Ad Creative that Converts
By the way, assuming that you can come up with top tier content, video is the gold standard when it comes to conversion ads. First and foremost, video has the potential to convey a lot more than just a still image. What’s more, video also gives you another metric to play with in view percentage. With a video creative, you can both retarget those who have watched a significant portion of the clip and also make additional lookalikes based on this data set. Given you can knock out two birds with one stone, the only valid excuse for not using video is an inability to create engaging content.
Anyway, with these new audiences at hand, you’ll be set to really start driving your ROAS score up. Going back to my iPhone case example, I’d set up the following campaign…
Campaign: Purchase objective CBO campaign with an ad spend of whatever I could afford to lose per day.
Ad Set: Here, I’d go with two or three ad sets. The first one would use the 1% purchase lookalike audience whereas the second would be the ultra-broad audience used above. For the last ones, you could also add in a video views lookalike and maybe even an engagement lookalike too.
Ads: For the ads, I’d either make use of the Dynamic Ads function from the Power Five OR I would take the winning creatives vetted during the data collection phase. My testing has shown that Dynamic Ads perform much better during retargeting campaigns than at top of funnel though.
In addition to the above campaign, I’d also create a second campaign for remarketing to warm traffic. Here, I’d include both the has added to cart but hasn’t bought audience as well as the audience for the pixel traffic. To incentivize these warm leads, I would then offer a discount code in the ad copy to get them to consider purchasing. That way, I’d have a higher likelihood of getting them to buy on the retarget.
Of course, you can get waaaaaay more advanced than the very simple ad structure I’ve outlined above. That said, this should be more than enough for anyone who is not already experienced in e-commerce to start running Facebook ads. Just follow the blueprint and you’ll start seeing conversions soon enough. If you don’t, it means something is wrong and you need to troubleshoot. This process can get a bit tricky but basically what you need to do is go through each stage of your funnel and look for sticking points. For example, if you get affordable traffic but few add to carts, the issue is not with your ads or marketing but instead with your site or product.
Did the above masterclass on digital marketing sound like a foreign language to you? Fret not. I’m here to help. Just reach out to me at firstname.lastname@example.org and I can help walk you through things. Alternatively, if you’d rather a professional just handle this on your behalf, we have an expert team of marketers and content creators here at Kyodo PR that can sort you out.
About the Author
Donny Kimball is a digital strategist and growth hacker at Kyodo PR who specializes in tourism promotion. A PhD. candidate at Sophia University who grew up in Japan, he blogs about social media strategy and how customer behavior is changing.