How to stop wasting money on Facebook ads for new customers

Transcript

Most e-commerce businesses are overspending on Facebook ads, throwing money right out the window. And in this video, I'm going to show you exactly how you could identify how much money you're wasting, how much money you actually should be spending to acquire as many new customers as possible that ultimately can grow your business for net new acquis... Read More

Key Insights

• The key to reducing waste is prioritizing net new acquisition over existing or engaged audiences.
• The ROAS can appear strong on the surface but drops when incremental attribution is considered, especially for new audiences.
• Frequency must be tailored by campaign type; prospecting, retargeting, and retention require different ranges.
• Swim lanes provide guidance for exclusions and budget allocation across campaign types.
• A dedicated scale campaign helps push best new audience ads to maximize growth.
• Exclusion logic is critical to prevent cross-targeting that inflates performance metrics.
• The frequency calculator adjusts targets based on look back window to maintain efficient reach.
• The M3 guide and free resources are offered to implement these strategies in practice.
• More videos from this channel:
  • How to scale Facebook ads after the Andromeda update
  • How to scale Facebook ads beyond broad targeting traps
  • How to use the three-act ad structure for higher ROAS
• More from this channel: Sam Piliero

Questions & Answers

Q: What is the main problem with the example ad account in the video

The main problem is that the account spends roughly a third on new customers, a third on existing customers, and a third on engaged audiences, which means two thirds of the budget are not dedicated to net new acquisition. This misallocation reduces incremental ROAS for new audiences once attribution is accounted for, and it obscures true growth potential. The speaker emphasizes shifting focus toward new customer acquisition and implementing swim lanes to ensure 90 percent of new budget remains net new across campaigns.

Q: How does incremental attribution affect ROAS for different audiences

Incremental attribution reveals that the reported ROAS can drop significantly when counting only incremental conversions that would not have happened without the ads. In the example, overall ROAS drops from 14x to 6.2x, existing customers drop from 18x to 7x, new audiences drop from 7.9x to 3.4x, and engaged from 15x to 8x. This highlights the importance of focusing on genuinely incremental gains from new audiences.

Q: What are swim lanes in Facebook ads according to the video

Swim lanes are a simple framework that guides exclusions and budget allocation by audience type. A prospecting lane targets 100 percent net new customers with exclusions for retargeting and retention. A retargeting lane targets site visitors, add-to-carts, and engagers, excluding retention. A retention lane targets existing customers and excludes non purchasers. A scale lane elevates top performing new audiences for growth.

Q: What frequency ranges are suggested for 30-day windows by the presenter

For a 30-day window, the recommended frequencies are 2 to 7 for prospecting, 10 to 15 for retargeting, and 10 to 15 for existing campaigns. The ranges are designed to optimize reach and impact for each campaign type while avoiding oversaturation. This structured approach helps maintain efficient pacing across audiences over a full month.

Q: Why is new audience spend crucial in growing e-commerce brands

New audience spend is crucial because it drives net new customer acquisition, which is essential for scalable growth. When a business allocates too much to existing or engaged audiences, it misses the opportunity to expand its customer base. The video demonstrates that larger scale spend on new audiences can yield significant customer growth even if ROAS per new audience appears lower, because the overall customer base expands.

Q: What is the 14x ROAS example and how is it misleading without attribution

The 14x ROAS example comes from an initial looking at spend and purchases before applying incremental attribution. This can be misleading because attribution reveals that the true incremental value attributable to ads is lower, particularly for non-new audiences. When adjusted, the ROAS falls to 6.2x for all campaigns and even lower for new audiences, showing the importance of incremental metrics.

Q: What additional resources does the video promote

The video promotes several free resources: a frequency calculator that helps set optimal ranges based on look back window, a 21-page written guide on how to set up and optimize ads, and an ad creative library. It also links to a case study about scaling a brand and increasing ROAS, plus social links for further engagement with the creator.

Q: How should a growing e-commerce brand structure its campaigns according to the video

A growing brand should structure campaigns into swim lanes: a prospecting lane focused on net new customers with exclusions for retargeting and retention, a retargeting lane targeting site visitors and engagers with exclusions for retention, and a retention lane focused on existing customers. In addition, a scale campaign should amplify the top performing new audience ads. This structure prioritizes new customer growth while controlling waste.

Summary & Key Takeaways

• The video analyzes an advertiser’s 30 day data, showing a total spend of 11,400 and 753 purchases, with a 14x ROAS before attribution adjustments. It highlights that a third of spend was on existing customers, a third on new, and a third on engaged audiences, revealing misallocation.

• The speaker introduces frequency as impressions divided by reach and emphasizes that different swim lanes require different frequency targets to optimize net new acquisition. He provides a calculator to tailor frequencies per look back window and campaign type.

• The content argues that proper swim lanes and a focus on net new acquisition can dramatically improve ROAS for new customers, and promotes free resources including a frequency calculator and a 21-page guide to set up and optimize ads.