How do we get positive ROI on Facebook ads for a $20 product?
We dabbled in Facebook ads in 2011 and built an acquisition model for a $20 product that worked then. But now Cost Per Clicks have risen astronomically! Does anyone have tips or hacks for still getting positive ROI for lower priced products?
Are you bidding at a CPC level? If so, one solution could be to change your bid strategy to a CPA bid of however much you are willing to pay for a conversion to stay ROI Positive. If that means you are willing to pay $10 to sell the $20 product, then you would bid $10. Sometimes it makes sense to bid to a higher CPC if the user is more likely to convert. For example: it's better to pay $4 for clicks that has a 10% conversion rate than to pay $3 for clicks that has a 5% conversion rate.
In order to optimize to conversions, you should create a campaign with the conversions objective and create a conversion event to optimize to, which you would select when creating the campaign.
For this to work, you must the Facebook Pixel set up on your site. This will allow Facebook to track a user's behavior on your site after clicking on your ad, including recording a conversion when they reach a thank you page. You can learn more about setting up the conversion pixel here:
In addition to tracking and bid strategy, targeting can be a major factor in how much you are paying to reach users. One of the best tactics for finding an audience that will convert at a high rate is using Lookalike audiences. If you have a large enough list of customers' email addresses, you can upload that list to facebook and create a lookalike audience of those customers. Facebook will then target a % of users that look the most like your list. Not only that, but if you are optimizing to conversions, Facebook will learn what users are most likely to convert as you sell more products and will start to improve the targeting on its own. You can learn more about lookalike audiences here:
Bidding on a CPA basis is nice sounding and fine in theory but in practice, you don't get much traffic even when you set a very high daily budget. Facebook always seems to prioritize those paying for clicks and impressions since it is guaranteed revenue (with no risk) for them. To get me $20 CPAs there algorithm needs to go through a learning phase during which they are losing money, whereas the CPCs and impression folks could pay for those 'wasted' clicks.