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Facebook Ads 2021: Sell Out Inventory with $6 Cost Per Purchase

Published on: November 20 2023 by Chase Chappell

Facebook Ads 2021: Sell Out Inventory with $6 Cost Per Purchase

Table of Contents

  1. Introduction
  2. The Candle Daddy's Supply Issue
  3. Ad Budget and Audience Shifting
  4. Understanding Ad Fatigue
  5. The Importance of Backup Ad Creatives
  6. Decisions on Product Promotion
  7. Rising Cost per Purchase
  8. The Impact of Scaling Back on Results
  9. Tapping into Untapped Potential
  10. Transitioning from Amazon to Ads
  11. Coincidental Drop in Amazon Orders
  12. Strategies to Prevent Inventory Shortage
  13. Launching New Ads and Targeting Strategy
  14. Incorporating Retargeting Ads
  15. Monitoring Progress and Future Plans

The Candle Daddy's Supply Issue and Shifting Ads

Have you heard of The Candle Daddy? Well, he's been facing quite a challenge lately. His candle supplier is running out of stock due to a national shortage - possibly caused by people stockpiling candles during the COVID-19 pandemic. This shortage has left The Candle Daddy nervous, especially considering the high demand he's experiencing on Amazon. However, before he can fully scale his business, he needs to find new suppliers to meet the increasing demand. There's also an interesting development with his ad campaigns that has caused a shift in audience targeting.

The Candle Daddy's Supply Issues

The Candle Daddy has been experiencing a surge in sales on Amazon, and he's eager to scale his business. However, his current supplier is unable to keep up with the demand due to the nationwide shortage of candles. Despite this setback, The Candle Daddy is actively searching for new suppliers to ensure he can continue meeting customer orders. It's a precarious situation, as he needs to balance scaling his business with having enough inventory to fulfill customer demands.

Ad Budget and Audience Shifting

In the first few weeks of running ads, The Candle Daddy had allocated his entire ad budget towards promoting his five-pack candles through look-alike audiences. These five-pack candles were flying off the shelves and were continuously in stock. However, there was a sudden shift in the audience targeting, causing his ad budget to start focusing on the candle audience instead. This shift created a dilemma for The Candle Daddy because while he had enough stock of wax melts, he lacked a sufficient quantity of jar candles. As a result, he had to scale back his advertising efforts until he could obtain more jar candles.

Understanding why this sudden shift occurred requires delving into the concept of ad fatigue and the way ad platforms optimize their campaigns.

Understanding Ad Fatigue

Ad fatigue is a phenomenon that occurs when an audience becomes tired or disinterested in seeing the same ads repeatedly. As a result, the performance of those ads begins to decline. However, the algorithms used by ad platforms, such as Amazon, have become remarkably sophisticated in understanding audience preferences. When an ad campaign reaches a state of ad fatigue, the system automatically adjusts and starts showing different creative to the audience. In the case of The Candle Daddy, this algorithmic adjustment resulted in a hard shift from promoting the five-pack candles to targeting the candle audience.

The sudden disappearance of the old creatives and the influx of new ones meant that The Candle Daddy's ads experienced a surge in purchases practically overnight. This is a normal occurrence in the world of advertising, and it's why having backup ad creatives is crucial. However, in this specific situation, it created a challenge for The Candle Daddy due to his limited stock of jar candles.

Decisions on Product Promotion

Given the limited inventory of jar candles, The Candle Daddy and his team need to make a strategic decision on how to proceed with their ad campaigns. The options are twofold: either promote the wax melts exclusively and allocate all ad spend towards them, even if it means a slightly higher purchase cost, or introduce a different product that is also a bestseller and has ample stock. The latter option is particularly appealing since The Candle Daddy has Christmas-themed candles coming soon, which are known to be highly popular.

Scaling up their advertising efforts to reach the desired goal of $100k per month is, without a doubt, a gamble. However, The Candle Daddy has witnessed encouraging results so far, and he's willing to take the risk based on the data he has collected. It's an exciting time for The Candle Daddy, but careful inventory management and strategic product promotion will be critical for his continued success.

Rising Cost per Purchase

The cost per purchase is an important metric for The Candle Daddy to monitor. However, he noticed that after reducing his daily ad spend from $350 to $250, the cost per purchase seemed to increase. This observation led him to wonder whether reducing ad spend affects the overall performance of the campaigns.

When ad spend is reduced, it means that less data is being fed into the system. This reduction in data can disrupt the momentum of the ad campaigns and cause some friction in the delivery and optimization process. For accounts like The Candle Daddy's, which have consistently produced successful results, scaling back ad spend can actually hinder performance. This is because the system relies on a continuous stream of data to operate smoothly and deliver the desired outcomes. Therefore, it is generally advisable to maintain or increase ad spend to maximize results.

Tapping into Untapped Potential

One thing The Candle Daddy should keep in mind is that he has yet to tap into the full potential of his business. With only a limited number of products currently being promoted, there is a vast untapped market waiting to be explored. Expanding his product range and running more comprehensive advertising campaigns could generate exponential growth for The Candle Daddy. By dedicating a larger budget to advertising, he could easily reach a daily spend of $1,000 to $2,000, opening up new opportunities for his business.

Transitioning from Amazon to Ads

The Candle Daddy has expressed his desire to shift his focus from Amazon to advertising. He currently spends approximately $100,000 per month on Amazon and eBay charges, and he sees an opportunity to redirect that budget towards his ad campaigns. Making this transition successfully would require a smooth operational shift and careful financial management. To avoid running out of inventory on Amazon, The Candle Daddy needs to sell a substantial amount of products, ensuring he has enough inventory to meet customer demands.

Coincidental Drop in Amazon Orders

The Candle Daddy mentioned an interesting observation - his Amazon orders per day have gradually decreased over the past month, coinciding with the period when he started running ads. While it may be tempting to draw a connection between running ads and decreased Amazon orders, it's important to remember that correlation does not imply causation. There could be various factors at play, including seasonal fluctuations or changes in customer preferences. It is crucial not to jump to conclusions without thoroughly investigating the situation.

Strategies to Prevent Inventory Shortage

To avoid the risk of running out of inventory and damaging his rankings on Amazon, The Candle Daddy should take concrete steps to prevent a shortage. It is advisable to track the inventory levels of all products regularly and ensure that ads are adjusted accordingly to promote products that have ample stock. Additionally, preemptive communication between The Candle Daddy and his ad manager will allow for better planning and decision-making regarding ad campaigns and inventory management.

Launching New Ads and Targeting Strategy

The Candle Daddy has planned to launch new ads featuring videos and graphic designs. This multi-faceted approach aims to capture the attention of potential customers from various angles. By incorporating videos showcasing the best-selling products - such as the medium rose cake hose candle and the medium k-cups - The Candle Daddy can appeal to different consumer preferences. However, careful consideration should be given to the landing page destination for these ads. Should customers be directed to the k-cups page or the medium bag page? Analyzing customer behavior and preferences can help make an informed decision.

Incorporating Retargeting Ads

In addition to the new ads, The Candle Daddy should also consider incorporating retargeting ads into his marketing strategy. Retargeting ads can be highly effective in capturing the attention of potential customers who have already shown interest in his products. By utilizing retargeting videos and graphic designs, The Candle Daddy can increase brand recall and encourage repeat visits and purchases.

Monitoring Progress and Future Plans

With the new ads set to launch tomorrow, The Candle Daddy and his team should closely monitor the performance and impact of these campaigns. Regular tracking of metrics such as click-through rates, conversion rates, and cost per purchase will provide valuable insights into the effectiveness of the ads. This data will serve as a basis for making informed decisions and adjustments to the advertising strategy moving forward.

On Wednesday, it will be crucial for The Candle Daddy to regroup with his ad manager to evaluate the progress made since the launch of the new ads. This meeting will help assess the performance of the campaigns, address any issues that may have arisen, and plan the next steps to ensure continued success.

In conclusion, The Candle Daddy's journey to scale his business and navigate the challenges of supply shortages and shifting ad campaigns requires careful planning and adaptability. By making strategic decisions on product promotion, targeting, and inventory management, The Candle Daddy can overcome obstacles and achieve his goal of reaching impressive monthly sales figures. With a combination of data-driven insights, creativity, and a willingness to take calculated risks, The Candle Daddy is on his way to becoming a shining star in the candle industry.

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