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6 Steps to 6 Figures with Shopify - Test Products with Facebook Ads

Published on: December 7 2022 by Nick Peroni

6 Steps to 6 Figures with Shopify - Test Products with Facebook Ads

The above is a brief introduction to 6 Steps to 6 Figures with Shopify - Test Products with Facebook Ads.

Let's move on to the first section of 6 Steps to 6 Figures with Shopify - Test Products with Facebook Ads!

6 Steps to 6 Figures with Shopify - Test Products with Facebook Ads

all right everyone in this video step
four of six steps to six figures with
Shopify we are now gonna start looking
at testing products with Facebook Ads
and this is actually I have a fairly
straightforward process that is working
with CBO I've been teaching this to
people people have been getting a lot of
value from it and really understanding
how CBO works so I want to I want to
cover just like some different aspects
here from how I set my ads up in the
testing phase to the strategy and to
overall just like what makes this whole
process work okay so first of all I'm
going to tok about the campaigns that I
use these are the two type of campaigns
are using e-commerce the engagement
campaign which the purpose for the
engagement campaign when you have an ad
once you have an ad that you want to run
the purpose is because engagement equals
social proof and so it helps you get
like a jump start on your campaign and
also engagement campaigns overall bring
down the cost of the ad okay
and when I say bring down the cost of
the ad I mean on the conversion can't
pay because you're gonna use the same
post ID alright so you use the same post
ID from the conversion campaign and the
engagement campaign and the way you know
people always tok about how do I get
lower CPM lower cost on my ads the way
you get lower cost is by engagement so
when you run an engagement campaign next
to a conversion campaign you are going
to also naturally bring down the overall
cost of the conversion campaign okay now
I always target right for purchase on
conversion campaigns I mean meet
objective if you're trying to run leads
but for the most part it's just always
purchased all right that's not to say
you can't try different objectives if
you're not having luck with purchase but
I always just go straight for purchase I
don't really see it much of a need and
going after anything else
so campaign budget optimization
mandatory as of February 20 20 from the
reports that are out but it doesn't need
to affect the testing strategy okay so
you can control how many ad sets you
put in the CBO you can also set minimum
ad set spend levels to have control so
if you want to test with one ad set or
for example if you want to like when I
want to run an engagement campaign on an
ad just to get some engagement on it I'm
just running a simple engagement CBO
with one ad set $5.00 budget right I'm
not like launching a whole bunch of ad
sets and spending a whole bunch of money
on the engagement campaign I'm just
running that one and so I'm gonna draw
this out for you but that that's
basically the idea right is that you can
have as much control still within this
at the ad set level CBO just means that
you're setting your budget at the
campaign level and that Facebook is
going to do its best to automate your
budget based on however many ad sets you
have in the budget that you have towards
what's working and what's not working
and not towards what's not working okay
so here are my testing parameters right
and when I say testing parameters what I
mean what I mean is when you are coming
in to create an ad I can't paint right
over all you need to create a campaign
so when you're coming in here to create
a campaign and you're selecting your
objective these are the two objectives I
use engagement and conversion but I
never start with engagement right I'll
show you when I when the engagement
comes in I start by using conversions to
test okay right now this is why it's
optional you have to either switch it on
or off eventually this won't be there
everybody will have to just set your
budget at the campaign level right here
but you might as well start using it now
and getting used to it because it
actually still works really well and the
way that these campaigns run it can
actually create a very automated way to
run your ads when you're scaling so so I
like CBO okay and I also got to give
credit to Depeche Medallia he wrote the
CBO cookbook and I've learned a lot from
there right so I kind of I learned from
that book and then I just kind of picked
and choose what what I wanted to use and
made it work for me which is what you
should do as well Facebook Ads is
different for everybody so anyway let's
let's get started here so I would name
this campaign whatever it is or I test
convergence okay and then daily budget
usually I'm starting out at a fifty
dollar daily budget and my overall I'm
jumping ahead here for a second but my
overall testing strategy is to usually
test like five different ad sets $10 per
ad set you could set your budget to
whatever you want but for now let's just
say $50 and I'll come back and tok more
about that later in your ad set is where
you set your parameters of like how you
want to target your audience control
your budget and different things where
your conversion events going to be so I
would optimize for purchase right now if
it says red it's just because it's an
account that hasn't been used before
right like this one that I'm as using
it's just an example account okay so it
doesn't matter that it says red Facebook
still knows how to optimize for a
purchase even though you have no
purchase events yet and it will still go
out and look for people that are most
likely to purchase and then as soon as
it gets that first one right assuming
it's a good product
as soon as it gets that first one it'll
continue to use that data to then
optimize and and continue to optimize
based on the data its receiving okay
obviously this is pretty straightforward
here you can target locations you can
exclude people in certain locations if
you want to age demographic if you're
you know I generally only start at least
a twenty one but if you have like an age
demographic very specific to your
product or a gender very specific to
your product if I'm targeting worldwide
I always select English as a language in
here if you're just targeting the US
doesn't matter but when I if I am
targeting worldwide I which I would
narrow down to the English all language
I'd like to uncheck this because I it
went in the testing phase I don't find
it relevant right I just want to test
based on my own targeting that I give in
here we'll tok about audiences in a
second placements okay so again I'm just
toking about testing parameters stuff
that I set up the same way everything
time okay there are different opinions
on placements out there some people say
just test auto placements okay
facebook says it recommends to test auto
placements for me that doesn't make
alright number one audience network has
I've never found any value in the
audience network number two in the
testing phase I'm not testing people in
messenger messenger can be something in
there in the retargeting face like in
retargeting I do automatik placements
because then Facebook can just follow
people around the web wherever it wants
to and show them my ads wherever it
wants to but in the testing phase I'm
being specific about where I want to
show my ads showing somebody an ad in
the messenger like for the first
experience they have with your product
and your brand is to me it's a little
right so I removed messenger as well
Facebook and Instagram is this is an
situational condition right optional
okay so first of all for Facebook like I
said I removed the right column as well
I don't find much value in the right
column as a testing phase I just really
want to target in the feed feed for both
Facebook and Instagram
I removed stories to stories is
something I would test if I have a
winning product I would get stories made
later specifically because the story
format is fullscreen vertikal and
generally I'm testing in the feed format
which is the 1x1 square right so that's
you know stories are something that I
would generally test in a separate
campaign with a separate ad created
that's been designed specifically for
the story format now toking about the
rest of these things everything else is
fine okay this is how I said it the only
difference is do I use both Facebook and
Instagram usually I will test them
separately okay a lot of times so
Facebook and Instagram have different
audiences as well in my opinion
Instagram 80% of Instagram users are
ages 18 to 35 alright so not all
products are going to appeal to an
Instagram audience okay if I do have a
product that I
appeals to the Instagram audience I will
generally still test it separately
because if I know that there's a large
audience on Instagram then I want to
like I'm I just I'm gonna test it
separately than Facebook because I want
to know the data like obviously Facebook
will report that data within your
columns and you can you can see which
placement did better but for me it just
makes more sense to test them separately
with their own budget right just my
opinion okay it's not the only one and
I'm not saying it's the only the the
only right one but it is one that works
okay and that's why I like to do it that
way so looking at Instagram as well also
it kind of depends on if there's even an
audience there so for example if I type
in married as of relationship status
audience okay this is something I might
test for a jewelry product okay so then
I come down to Instagram if I remove
Instagram I see there's not much of a
difference in the audience right it went
from 57 million to 56 million people so
honestly there's not even really much of
a point in testing Instagram that died
the large part of the audience is on
Facebook okay but if I go in here and
let's say instead of married I type it
the interest marriage 21 million people
when it's just at the Facebook if I
option Instagram as well
I see 35 million people so there's a big
difference that right there's 14 million
people on Instagram that are categorized
for this audience so in that situation I
would test Instagram separately right to
see - because it's a big enough audience
on its own right where I removed
Facebook Instagram is still a big enough
audience on its own to test on its own
okay so that's that's the way I deal
with Facebook and Instagram when I'm
coming in here and looking at my
audiences and deciding what the test but
very rarely will I test them together
because I
more value and testing them separately
and I'm only really testing Instagram
separately if I notiked it has a large
enough audience size to make it worth it
okay so that's my overall parameters oh
and then down here as well right so I
would keep this optimized for
conversions I keep this on seven-day
click one day view the reason being this
is your conversion window right so it
just tells you it the amount of time it
typically takes for somebody to complete
the conversion based on after clicking
or viewing your ad so the reason I have
it set for seven days after clicking
and/or one day after viewing is
basically just like giving yourself the
biggest conversion window that's why I
like it in the testing phase because it
means that if even after seven days
after clicking the add if somebody goes
back in purchases then Facebook will
attribute that data to this ad set and
still add that in as a as as a
conversion event I use in its
optimization for for this ad set right
so that's why I like using it that way
okay so then if you if you look at if
you will get this okay so let's see here
well we'll wait well let's call spitting
right five ad sets $50 CBO so I
generally like to test five different
audiences three to five like three at
the minimum if there's not enough
audiences but five ideally if there if
there is enough audiences okay and so
each audience would just be a general
size interest like this so if I was
selling a product that had to deal with
married couples right this would be my
audience marriage 21 plus okay if it was
just men I would write 21 plus men right
and I would just select men or you know
you get the idea so that that's how I
structure my ad set okay and then that's
that's it basically right and your ad is
where I'm not going to go into this
because this is this is simple right we
already toked about how you create and
add this is just where you do it and
it's very simple answer
forward to do so there's no reason but
the ad set right now and toking about
how to set up the testing that's that's
what we're covering so so that that's
how I would do that okay
now moving into actually what the
testing strategy becomes okay because
we're going to be creating multiple ad
sets and then within that will have
different ads so we have these multiple
ad sets and the idea is split testing
ads and the reason behind this strategy
is because we want to identify two
things right there's two main variables
in your ad there's your ad I mean this
should say ad creative right there's
your ad creative and then there's your
audience alright these are your these
are your two main variables all other
things being the same you're testing
that's why the testing parameters are
the testing parameters they're generally
always the same for me they don't change
they don't affect they may affect the
overall goal but they don't affect the
performance the performance is based on
your ad creative and your audience and
more importantly which ones you're
looking for winning combinations right
so that's why you want to test multiple
ad creatives and multiple audiences
within each other to find winning
combinations that you can then scale
right the way that the CBO works in the
reason that a lot of people don't get it
right and depeche toks about this is
that the CBO works on having good
something good to automate right and so
you want to scale when you already know
what's working so you have to go through
this testing phase to identify what's
working by testing some different
audiences and ad creatives and then
moving that into a higher budget CBO
campaign which we'll tok about in the
scaling strategy so here's my split
testing idea okay now you could actually
take this to a much you could take this
to a much deeper level right I consider
this the minimum level for for getting
started and testing is having five
different ad sets - ad creatives per ad
set okay now I'm still only spending ten
dollars per
set alright and when I'm doing this I'm
setting a minimum did I tok about this
already I'm setting a minimum spent per
ad set okay so let me just make sure
that I cover this right because what I'm
going to do is what I'm going to do is
have each ad set right so the campaign
budget is set for $50 right so the CBO
is set at $50 right and I want that
distributed evenly across across five
different ones so ideally each one of
these ad sets is spending ten dollars
okay but it doesn't need to be ten
exactly I just want to make sure that I
have a way of setting a minimum spend in
the beginning so that Facebook so the
Facebook actually gives each asset a
chance right because the way the CBO
works is that it's going to usually
spend more towards one like Facebook is
going to identify an ad so that thinks
it's working best and want to push more
budget into that ad set based on its
it's thinking that this one is working
best so before Facebook jumps to
conclusions and maybe gets a false
I set a minimum ads bet ads ad set spend
to make sure that that money is being
distributed somewhat evenly okay so the
way that the way that we do this and
this is a formula I got from Depeche is
taking the total budget okay and then
you are dividing it by the number of ad
sets okay so you take the total budget
divided by the number of ad sets and
then you divide that whole thing by two
okay and so in this case we have 50 our
budget divided by five ad sets so that
equals ten divided by 2 would equal a $5
minimum right
it would be like this for any budget if
it was a $500 budget and five had sets
then it would be $100 per ad set divided
by two would be 50 okay so where you set
that in your ad set is down here at the
bottom all right
you set it down here at the bottom ads
ad spend limits to this ad set okay and
I set the minimum here at five dollars
all right that way I guarantee it
doesn't like it doesn't exactly
guarantee it'll spend exactly five but
it will at least make sure in the
beginning that Facebook is spending
money evenly before it tries to decide
where to start pushing more of the
traffic okay now this is pretty
straightforward the way that you test
your ad creative could be that maybe you
have a photo in a video maybe you have
two the same video with two different
thumbnails maybe you have the same photo
with two different ad copies and again
you could see you could break this out
even deeper like some media agencies
when they're working with a brand that
has like one specific product or selling
right and only one product they will
come up with like four ad creatives per
ad set in the beginning because that's
where you really want to gather your
data and test things you you really want
to you really want to be testing a lot
of things so you know what to move into
the scaling phase the problem with most
people when they try to get into the CBO
scaling like I already said is they
haven't put enough money in the testing
to know what's really going to work and
so they try to scale a combination that
may not really be a winning combination
and then it dies out quick or their
performance is all over the place right
and so this is a way the more ad
creatives you're testing within these
different ad sets you can identify the
winning combinations and it may not be
that it's the same for everyone maybe
this one performs best for this upset
this one performs best for this set set
maybe this ad set nothing works right
and so you just don't do anything with
this one at all maybe with this ad said
that you know what I'm saying so you're
looking for winning combinations in no
partikular order or meaning you just
want to find what is working because
then we're gonna tok about what you do
when you move to the scaling phase
basically you're gonna take that winning
combination so like if this ad set and
this ad creative works we're gonna take
that winning combination and move it
into its own CBO campaign so we can
start the scale it right and we're going
to create an engagement campaign once we
have that part that works
okay so we're split testing for the
outcome we're trying to identify the
best combinations so that we can then
create a new CBO campaign with those
winning combinations and we'll set that
new campaign for a bigger budget to
start actually pushing conversions okay
now in the testing phase here's the
metrics that I like to watch all right
CPM is your cost per impressions okay
your CPC is your cost per link click ATC
your cost Brad the cart of course your
cost for purchase in your return on
adspend so these all matter together but
in in different variations all right
CPM first of all is a secondary then
listen there's more stuff that you can
test I'm not trying to be super over
tiknical here I'm trying to give you
exactly what you need at a beginner
level to make money okay and the save
money really - in the testing phase
so the CPM is you know this is how you
get charged on Facebook right you're
charged by impressions and so the higher
your CPM the more difficult it is
advertised but generally the way to get
lower CPMs is just to have more ad
creatives like if you have a really good
ad creative for your audience and you'll
you'll see good seacams on it right
because people will be engaging with it
so I'm not going to tok too much about
this because CPM does matter it's better
I like to see CPMs under $30 as if I'm
targeting like top-tier countries like
the US if you're targeting worldwide or
over tier countries your CPM will proper
should be under $10 for sure maybe even
under $5 but your overall here this is
just kind of a secondary metric because
what matters most is your CPC these ones
right like these ones matter more you
could have I've seen
whereas CPMs that were higher like $45
say for a CPM and yet I was still
getting cost per purchase at my target
acquisition cost right so even though
tiknically I'm reaching less people for
my money I'm still profitable on my ad
spend so I can still just continue to
scale does that make sense
so for me obviously you want to lower
CPM but it's kind of a second everything
CPC so this is what you're really going
to look at first okay because when
you're looking at your when you're
looking at your CPC okay so when when
you are looking at your just get rid of
this okay
okay so when you have an ad set running
right the ideal line is obviously that
you want to get purchases okay but it
doesn't start out that way
and so two of the main events that I'm
looking for in the beginning is the CPC
which is the cost per click okay and
this is just a way of measuring how many
people are actually clicking because
engagement is great and if your CPM zero
and all that stuff is great but if
people aren't actually clicking on your
if people aren't actually clicking on
your ad then it's not showing any buying
interest right and so you you want to
make sure you have CPC what I generally
like to see okay this is again there's
so many variables in something like this
because it all depends on it all depends
on what you are advertising right for
example a high tiket product that maybe
is say you know let's just say $300 or
more and has a margin of say $100 or
more you can afford a lot higher CPC
right overall your CPC should be in
balance with your EPC okay so your cost
per click and your earnings per click
meaning that as long as this number is
lower than this number then I'm
profitable and I can continue buying
more clicks all right so it's something
that you have to kind of take with a
grain of salt a lot of you probably
aren't selling high tiket products but
if you are then you want to think about
this because you if you're selling high
tiket products this is why people on
Google for example can bid you know $10
per keyword for per click right because
maybe they have a product where they
have a really high profit margin so they
know that even if it's costing them $10
per click their earnings per click is
$20 right so you figure out your
earnings per click like this
you you will get total sales divided by
total visitors for a day or an or
whatever time period you want to put it
in total visitors all right so let's say
you are making let's say you do $2,000
in sales on 1,000 visitors that's bed
1,000 anyway that would mean that your
earnings per click is $2.00 okay so if
my CPC on average on my website when I'm
getting when I'm clicking on my ads if
I'm getting an average CPC of 75 cents
let's say that means for every visitor
that I get I'm spending 75 cents but I'm
making $2.00 right so then at that point
I know and as long as I can keep buying
visitors for 75 cents just keep pushing
them in to my my store to my product
page to my funnel and I'm gonna keep
being profitable right so or maybe I'm
because this obviously this doesn't
there's there's variables right this
doesn't include your cost per goods but
basically I'm just trying to explain the
overall concept of buying traffic and
CPC here okay
so now moving on nowhere I'm sorry
moving back into this the other thing
that matters is your lifetime value okay
we're not gonna get too deep into this
because this is a somewhat advanced
concept but you might know as you've
been running a store longer your
lifetime value of your customers like
maybe you get a customer and on the
first time they spend twenty dollars
with you but over the next three months
because of emails and upsells and
retargeting they end up spending $60
with you right then you know your
lifetime customer is worth more so you
can spend more based on what they're
worth over time this is how all big
brands like Amazon Nike and you know
different people know how much they can
acquire a customer for they can spend
more to acquire more okay in general
let's get down to the
practikal level right in general when
you're running products that are in the
range of like let's say $20 to $100
which is really the dropship
print-on-demand world by and large okay
that's that's what was terrible that's
what you're advertising right hundred
dollars $20 type product where I like to
see my CPC is anywhere from zero to say
two dollars okay
generally really good CPC is a dollar
and under all right that's really good
but I've also run products would say you
know a product didn't like the fifty
dollar range with decent margin where I
know that my marginal my product is safe
$30 and I'm profitable here at a $2.00
CPC because I'm getting you know I'm
getting a good conversion rate on my
store alright so keep all this stuff in
mind as you're testing products right in
the beginning basically you just want to
make sure you're getting clicks and for
the most part if you are running ads on
facebook with like products in this
range you should probably be looking for
clicks around the dollar range or under
as an indication that your ad is working
okay now another another caveat to this
is if you're running worldwide or if you
are running into third world countries
like India the Philippines Vietnam
Thailand you're gonna see much lower CPC
you're gonna see clicks probably under
10 cents because it's super easy to get
traffic not many people are advertising
there so traffic's a lot cheaper you
know so you'll see much cheaper CPC but
that's natural it doesn't mean you're
gonna get more sales necessarily because
traffic is just naturally cheaper right
but you should be looking at that in the
testing phase right in the first day or
two when you are running your ad right
so this is like day one right here okay
on my scale day one day two okay
in that first testing phase you should
be seeing clicks happening when you're
spending you know your first five
dollars you should be
at least a couple clicks if you get the
$5 spent and you have no clicks turn
that ad set off it's not working okay
now add the cart is the next phase that
you need to understand because when it
comes to your Add to Cart you know the
the thing that you need to be aware of
is once people are getting clicks right
the next stage is you want them to be
clicking that Add to Cart button showing
more buying intent getting them closer
to the overall goal of a purchase okay
so if you are starting to see a lot of
clicks over here but you're not seeing
any add the carts here then that becomes
problematik because it could be that it
could mean two days I mean it could mean
multiple things it could mean that your
price is too high on the product could
mean you have a really bad product page
I mean your product description is not
good enough could mean your something's
broken right but no matter what you need
to start looking at that your page here
if you're getting good clicks right the
ads only job is to get to click so if
you're getting good clicks on here but
then it's not working out here then you
have to think about what is that issue
generally I like to think of add the
cart in terms of half of half of my
margin or lower okay and what I mean by
that is let's take this example here if
I'm selling a $50 product and I know my
margin is on that after products sorry
after cost of goods and shipping right
so after cost of goods and shipping on
my $50 product I know I have $30 margin
for marketing and profit okay so in that
situation you always want to figure this
number out you always want to take your
price and then subtract your cost of
goods before you start advertising
because this kind of gives you your your
it gives you your margin and then from
there you need to think about your your
target acquisition costs okay and this
is why you it's hard to advertise
products with low margin unless you
understand your LTV or unless you have
good upsells in place right because the
other thing that matters here is your
AOV meaning your average order value so
if you have upsells
to bump things up and I'm not trying to
get too tiknical but I'm just trying to
highlight some of the things here that
you it all goes into testing your hats
right it's not as simple concept as some
people think so I need you to understand
all of this so once you take your price
minus your cost of goods sold you have a
margin left and that's your marketing
margin and your profit margin so in this
case if my price is $50 in my cogs are
$20 then I have a margin of $30 to
market and to leave me a profit so for
me I like to think of my ATC is as half
of my margin okay now that's that's a
very general way to say it like you have
to think about what your profit margin
needs to be in order for you to to make
money and make that as a scaleable
campaign that's different when you're
running a brand compared to one you're
just like the solo dropship or trying to
make some side hustle money to us or get
a business started you know at this
point your margin on a $30 margin could
really be anything up to $25 customer
cost per acquisition because even then
you're still making $5 that's not a
great profit margin but you're still
making money right you're still making
profit so there's no reason not to run
the ad but what I like that would be
like that would be like my top-line say
my top-line minute on acquiring a
customer maybe it's $25 if I have a
thirty dollar margin but my ATC I know
that there's always going to be a drop
off from Add to Cart to purchase right
so I need to account for that drop off
so ideally I'm thinking somewhere in the
range of half of whatever my customer
acquisition cost is that I should be
seeing at the carts so in this case by
the time I'm getting to let's say around
$12 an ad spend I want to see ad the
carts if I'm not seeing out the carts
then I'm there's a problem now if I'm
seeing very you know like if the clicks
for example are not great I got spent
$12 and say I've only had like six
clicks you know $2.00 per click it's
really not that great I might
terney had set off if I get it I'll
spend probably like two fifteen twenty
dollars and if I have no out the carts
turn it off but if I'm seeing a lot of
clicks here if I'd spent say twelve to
fifteen dollars and these are just like
general numbers you you know you gotta
apply it to what you're doing and what
your risk tolerance is but you have to
give your ad set time to spend right so
you're at least generally gonna have to
spend at least this much money to start
seeing some results and some data per ad
set but you know this is how I'm
figuring out where I should start the
beginning ad the cards because I'm
trying to figure out constantly am i
letting this ad continuing to run and
spend more money or should I be turning
it off okay so would and this is why you
test quality over quantity by the way
too because the more quality you tests
the more like you're likely to see good
clicks and good add-to-cart you know so
anyway when I'm here right if I spend
twelve to fifteen dollars and I'm seeing
great clicks like let's say I'm seeing
50% CPC right people are really clicking
and showing interest in this but I've
had no ad the carts then that's an
indication there's a problem somewhere
on my product page and that could be
multiple things it could like I said you
have to test and analyze and we toked
about a lot of things and I'm still
going to tok about more of it in the
next video of what you can look at in
your funnel that might be broken about
why you know your people are going to
the next stage but in a perfect world
with an optimized funnel this is these
are the numbers that I'm looking at
right and then finally costs per
purchase okay you have your margin your
your target acquisition cost is kind of
where you want to use as your frame for
when something should be getting a
all right so if you've been getting good
CPC and a good ATC right good out of the
carts and clicks and then you know
around the time you're getting the
twenty five thirty dollars spent you
want to see that first purchase come in
okay ideally even sooner than that right
but I'm just saying like as my
benchmarks because you need to kind of
have a benchmark of when to turn
something off or when they realize
something's not working and need to be
fixed and so these are our
at those benchmark kind of numbers to be
able to to do that okay and return on
so finally you want it to be at a
profitable return okay return on adspend
is not really again it's kind of a
secondary metric it's good to look at
okay because having an idea of like your
break-even return on adspend it's is
something good to know but basically
yeah I mean yeah so let's put it like
that you want to have an idea if you
break even return on adspend
which has to do with your margin and and
knowing like how much you're making per
sale right so if you know that you're
making if you know if you're making ten
US okay because it has to do with your
target acquisition cost and your your
only pull this up on a different thing
okay so a way to think about this let me
uh let me clean some of this up here
okay a way to think about this with a
breakeven row as is you need to know
your cogs cost cost of goods sold and
then your sale price okay which will
give you your margin okay so let's say
you're selling a $30 item okay and your
cogs on that item are $10 that's your
cost of goods plus shipping whatever it
costs you to fulfill it that means your
margin is 20 okay so your break-even row
as is going to equal your it's going to
equal your sale price divided by your
margin okay that's the formula
so in this case 30 divided by 20 which
would be I mean that's simple right so
it would be 30 divided by 20 which is
gonna equal 1.5 okay so what that lets
you know basically is when when you do
get a sale and you start looking at like
what is the return on adspend
your row as are you how to break-even
point or not and so it's good it's good
to understand this because then you can
kind of understand the context of your
row as a little bit when you're looking
at your ads in your your ads manager and
you start getting sale it's like am I
getting at a profitable spend or is this
is this not profitable for me and some
good guidelines on that are like if your
break-even range is 1.5 is is less than
1.5 then it's then it's great if your
row as if your row as range is too high
meaning to break-even for example if if
to break and this has to do a lot with
your sale price versus your cost of
goods just as much as your ad spent but
basically the higher this number is your
break-even row as it means the the
higher the harder it's going to be to be
profitable right so anything that's low
right anything that's a mobile number
like 1.5 or even under if it's a low
break-even grow as like you only need to
make one point five times your money
back to be to break-even then that's
great because that means if you're at at
two times zero as to three times or less
on front and traffic you are you're
making a profit which is which is a good
range for Facebook ads and and
especially on front-end traffic getting
higher than that can be very difficult
right so there and there's a lot of
concepts when it comes to row s so I
don't want to try to be too complicated
here you know toking about scaling and
and blended grow as and stuff with
retargeting but I just want I'm toking
about like really trying to make
front-end testing traffic work
were you okay and understanding these
different metrics and how you use them
and look at them but but mostly you know
mostly what really matters is once you
get that cost per purchase like just is
it coming in at a profitable you know
rate because ideally before you scale
you're gonna be testing something so say
say I'm testing and I start getting a
cost per purchase at $20 right I get my
first sale at $20 and I need to know
like is this is this profitable for me
very simple to figure out if you're just
selling one product you're you're
looking at again your cost of goods so
you're looking at your sale price like
in that example of something earlier
$50 sale price - a $20 cost of goods
fulfillment price equals a $30 margin
okay so I know that if I'm acquiring
customers at $20 that are profitable
right if I don't get a sale until $30
I'm not profitable all right and the you
if you're getting really good numbers
you might keep it running a little bit
longer because then if you get a sale if
you get your second sale at $35 spent
now you just drop down those $17 costs
per purchase right so again this this is
just like some general information on
testing understanding your metrics how
to look at it but like I said if you
want it in the beginning or the the
formula I'm looking at I'm looking at
CPC first right but in the first five to
ten dollars spent I'm trying to see at
least the CPC of like a dollar or
somewhere in that range
okay and then the next thing I'm looking
at is ATC okay by the time I've spent my
15 to 20 dollars I want to see some had
the carts okay at least one or two add
the cards hopefully more than that and I
like my range of what my cost per add to
cart is is usually about half of my my
target CPC right my target CPC cost per
purchase okay
and and of course finally when you get
to yours cost per purchase when you
finally make a sale is it coming in at a
profitable point and then what I'm doing
is for for every ad set right anyway for
every ad set that I run right there's
there's you know multiple ad sets in
that testing phase you're going to turn
off the ones that aren't working and
ideally right you have to add set or two
ads maybe that you're testing or maybe
you have multiple creatives in each one
but maybe one of them is working because
you'll look at these numbers at the ad
level right you're gonna look at it at
the ad level and compare both of them
and look at the CPC they're getting and
the ATC they're getting and eventually
the cost per purchase if they're getting
it and Facebook is going to naturally in
95% of the time gravitate towards one
one of them is gonna work better than
the other you you might see that early
on it might be this one's getting great
clicks and this one's not and so you
turn this one off right or it might be
that there is both start out getting
clicks but then this one is the only one
that gets a purchase right and so then
you turn this one off but eventually
what I'm doing is I'm gonna let this run
usually in the testing phase for like
four to five days and I want to see I
want to see at least three purchases in
the profitable profitable return write
profitable rolla's profitable cost per
purchase before I think about scaling
that before I think about scaling that
partikular ad set okay so that is um go
up here so that so when you're when
you're thinking about those five
different ad sets that you have and each
one of them write marketing to two
different ad creatives okay each one I'm
looking for
it's working I'm not no I'm not looking
for both of them to work I'm trying to
testify in the winning combination so
this one doesn't work then I know this
one's the winning combination that's
what I'll be taking in the scaling phase
later and I'm looking at for each one
maybe this ad set doesn't work at all
with either of the creatives but then
maybe this one works with this so this
is wrong so then that makes this my
winning combination right here and maybe
this one works with this as well so now
this is my winning ad creation and maybe
this one doesn't work so now if these
have all been getting like at least
three purchases consistently over a four
to five day period then that is a
significant it's profitable then that
say that's the indicator for me then I
can now take that into the scaling part
one phase right this is not there's
multiple steps to scaling this is just
scaling one where basically I'm
isolating that winning combination into
its own CBO campaign okay so that is the
testing all right and I know that I
jumped around a little bit from
different things here and there but
there's really a lot that goes into
understanding your numbers and
understanding this out on level that you
can be successful with it okay so I hope
that that was super valuable watch it
again if you need to or certain parts if
you need to and in the next video I'm
actually so instead of like you might
think the next video might jump
immediately to scaling one the next
video is actually about optimizing your
store because one of the things that
you'll see and I'll tok about this in
the next video is that situation where
maybe you're getting good clicks but
you're not getting good ATC or you're
not getting a good conversion rate of
sales on your store and that is a funnel
problem right not an ADD problem the ads
only job is to get the clips so in the
testing phase those are the metrics you
need to understand and we've walked
through all the way up to that point but
before we can really tok about scaling
we need to tok about optimizing your
store to make sure it's set up in a way
that the traffic is converting otherwise
the money that you can
spending could just be wasted anyway all
right so that's what we're going to tok
about next in the next video

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