How to Structure Facebook Ads to Scale Profitably

Transcript

Meta ads has never been more expensive. The cost of advertising is skyrocketing. CPMs are on the rise. Cost per clicks are higher than ever. And worst of all, brands are overspending on existing customers that they've already acquired and failing to scale new customers profitably. This puts [music] brands in a neverending cycle where they never gro... Read More

Key Insights

• Three campaign types carry the whole structure: prospecting for new customers, retargeting for people who visited the site or engaged on Instagram and Facebook, and retention for existing customers who buy again and again.
• Retention is the highest margin lane because it gets existing customers to come back repeatedly, but it must not absorb the budget. Overspending on already acquired customers while failing to scale new ones traps brands in a cycle where they never grow.
• The conversion event should always be purchase, with no exceptions. Telling Facebook you want add to cart or any other event means the algorithm optimizes for that instead of the purchases the business actually needs.
• New ad sets get spend through ad set spending limits: set the average daily minimum equal to 1x your CPA average, so a $50 average cost per acquisition means a $50 minimum. Remove the limit after seven days.
• Creatives are grouped into dated broad ad sets called packs, organized by concept or theme. This account is on pack 82 with 88 ad sets launched, stacking new rounds of creative over time rather than editing old ones.
• Prospecting ad sets stay broad but exclude custom audiences of site visitors and purchasers. This creates clear swim lanes so spend is attributable to acquiring genuinely new customers rather than overlapping with retargeting.
• Retargeting uses three audiences laddered by relevance: Instagram and Facebook engagers at 14 days, website visitors at 30 days, and add to cart at 90 days. Engagers are kept tight because clicking or liking happens so often.
• Prospecting should dominate reach and spend. In the example account, prospecting reached 6.8 million people and took $167,000 of the $195,000 spent over 30 days, producing 118,000 link clicks to the website.

Questions & Answers

Q: How should I structure a Facebook ads account to scale profitably?

Use three separate campaigns, described as swim lanes. Prospecting acquires new customers who have never heard of the brand. Retargeting engages people who visited the website, engaged on Instagram or Facebook, or added to cart without purchasing, pushing them to convert quickly. Retention targets existing customers to bring them back repeatedly and is called the cash cow. Each has a unique purpose, and keeping them separated makes it clear where cash is actually being spent.

Q: What conversion event should Facebook ad sets optimize for?

Always the purchase event, with no exceptions. The reasoning is direct: if you want Facebook to get purchases, tell it what you want. Do not select add to cart or any other event. Alongside this, the location for conversion is set to website, the performance goal is either maximize number of conversions or maximize value of conversions, and the data set must be set up correctly. Value rules are not used in this setup, though there are some use cases where they apply.

Q: How do I make sure new ads get enough spend to be tested?

Use ad set spending limits. In the budget section of a newly launched ad set, click to set a minimum or maximum spend limit for that ad set, choose dollar value, and set the average daily minimum equal to 1x your CPA average. If your average cost per acquisition is $50, enter $50. After seven days, unselect the ad set spending limit no matter what, because by that point the ad set has enough data to show whether it is a winner or a loser.

Q: How should creatives be grouped into ad sets?

Every time new creatives arrive, launch them as a new broad ad set, dating both the ad set and the creative. Two, five, or nine creatives can go in a single ad set. With around 30 new creatives, split them so creatives are grouped by category or theme, treated as concepts. The grouping is mainly for organization, so if you have two concepts and are unsure, putting them in the same ad set is fine. Over time these stack into packs, and this example account is up to 82 active packs.

Q: What retargeting audiences and time windows should I use?

Three primary audiences laddered down by relevance. Instagram and Facebook engagers are set to 14 days, because clicking or liking happens so often that the window needs to be tight. Website visitors are set to 30 days. Add to cart is set to 90 days. For creative, use your top ads or even all your ads, since any ad working in prospecting is very likely to work in retargeting. Building custom retargeting ads is optional and not a requirement.

Q: What campaign level settings are used across these campaigns?

Campaign budget is always selected, so budget is set and adjusted at the campaign level, known as CBO. The campaign bid strategy is set to highest volume or value for the most part. Under more settings, no budget schedule is used. In audience segment reporting, engaged customers are defined as anyone who added to cart or visited the website in the last 180 days, and existing customers are all-time purchasers plus the website purchase list at 180 days.

Q: How much of the budget should go to prospecting versus retargeting and retention?

The majority goes to prospecting. In the example account, prospecting reached 6.8 million people, far more than retargeting and retention combined, and took $167,000 of $195,000 in total spend over the last 30 days. That ratio is described as what drives the business forward. The reach translated into 118,000 link clicks to the website for that business, which is why the site experience matters so much afterward.

Q: Why do brands fail to scale on Meta ads?

Costs are rising, with CPMs on the rise and cost per clicks higher than ever, making advertising more expensive than before. On top of that, brands overspend on existing customers they have already acquired while failing to profitably acquire new ones. That combination puts brands in a never ending cycle where they never grow. The fix presented is a full funnel setup across both Facebook ads and Shopify that drives cheap quality traffic which actually lands on the site and converts.

Summary & Key Takeaways

• The account is divided into three swim lanes with distinct jobs. Prospecting acquires people who have never heard of the brand. Retargeting engages site visitors, social engagers, and people who added to cart without buying. Retention targets existing customers repeatedly and is described as the cash cow of the account.

• Campaign settings stay consistent: campaign budget optimization so the budget is adjusted at the campaign level, highest volume or value bid strategy, no budget schedule, and audience segment reporting where engaged customers are add-to-cart plus site visitors over 180 days and existing customers are all-time purchasers plus a 180-day purchase list.

• New creative is launched as a new broad ad set, dated by launch and grouped by concept or theme. This account is up to pack 82 with 88 ad sets launched. New ad sets get an average daily minimum spend limit equal to 1x the CPA average, removed after seven days once there is enough data to judge the ads.