Running Facebook ads for Shopify is one of the best business decisions you can make in 2022. But if you lack these simple details, you will FAIL miserably.
Look, most Shopify Facebook ads guides on the internet are trash. That’s just the truth. They show you how to start running Facebook ads for Shopify (technically), but they don’t tell you what you ACTUALLY need to know.
Seeing how to click around ads manager is nice, but they don’t tell you the economics of paid traffic, the high-level concepts you need to know, how to determine your success, when to scale, when to stop ads, what makes ads successful, and so much more.
Which inspired me to create this higher level guide of Facebook ads for Shopify.
If you are looking for a video or tutorial on how to click around inside of Facebook, you will find one at the bottom of this page, but I highly suggest you read (and fully understand) the bigger picture (detailed in this resource) before you start running ads.
If I had known what I’m about to share, before running my first Facebook ads, I’d have A LOT more money in my pocket right now.
So read this a few times, bookmark it, and enjoy!
Outline:
- Our experience with Facebook advertising for Shopify
- What is the cost of running Facebook ads?
- The Brutal Truth of Facebook ads and YOUR business
- The 2 forms of FB advertising
- 3 components of running successful Facebook ads
- Measuring success and KISSing the metrics
- When to GIVE UP on Facebook ads (and when not to)
- 2018 Shopify Facebook Ads Case Study
- The Best Facebook Ads app for Shopify
Our experience with Facebook advertising for Shopify
If you’ve ever searched around the web for Facebook ads, you’ve probably noticed the wide variety of pre-pubescent boys and self-proclaimed guru’s, ranting about Facebook ads.
Although I kinda sorta have a baby face, I do want to highlight out our deep marketing background.
Our experience with advertising on Facebook (for e-commerce) goes back many years and millions of dollars in ad spending.
Here’s a screenshot of one of our many accounts, where we manage hundreds of thousands of dollars in ads every month.
I’ve also personally built some of the most popular Facebook marketing tools on the internet.
I’ve learned a lot from these experiences and I’m excited to share my top learnings with you, that include everything I wish I’d know when I first got started.
From the beginner stuff to some advanced tricks, it’s all in here so read until the end and subscribe to our blog for more!
What is the cost of running Facebook ads
Many people getting started with Facebook don’t understand Facebook advertising, and the cost structure works, so let me explain!
Facebook ads are not like a product you pick-up off of the shelf and buy. Meaning there is no fixed-rate for buying Facebook ads.
When you buy Facebook ads, you are paying to “use” their service. Their service, of running ads for you, is built on top of a complex auction system, that you essentially pay to compete in.
But when it’s time to actually pay Facebook for the ads, they give you a choice as to how they charge you…
Facebook ads charge you either per-click or per-impression. You get to decide when building your campaign the 2017 average costs are $0.97 per click or $7.34 per 1000 impressions.
And there is no minimum. So you can spend as little as $1/day or up to $1,000,000/day, and you will have access to the same “product”.
But rather than focusing on the amount you pay per-click, I would challenge you to focus on the ROI (Return on Investment), which we’ll detail in the following few sections…
The Brutal Truth of Facebook ads and YOUR business
So we understand the cost of running ads, but here’s something most people neglect.
Facebook Advertising (or any advertising) is just an amplification of your business.
That’s it.
Sure they have amazing targeting, a massive user base, and some great Shopify apps that help you create smarter ads..
But your Facebook ad performance is directly correlated with the products you are promoting
So if you are amplifying crap, you will see crap results.
That’s the brutal truth.
Now, before you show up at my house with pitchforks, give me a second to explain.
From our experience, if your business falls into any of these three categories, you will struggle with Facebook ads:
Reason #1 why FB Ads won’t work: Lack of PMF (product-market fit)
The biggest reason for the struggle we see is that you lack product-market fit. To be frank, most of the people that complain “Facebook ads don’t work“, are often times the same people that log into their Google Analytics and see little to no sales. That’s OK, most companies have re-position their product/service/offering to entice people at the beginning, but if you can’t get customers (who aren’t family/friends) through other channels, it’s silly to expect Facebook ads to be some magic solution.
Reason #2 why FB Ads won’t work: Super-low LTV (customer Life-Time Value)
Another type of business we see struggle with Facebook ads is the ones with really low lifetime values. Meaning, the average a customer will spend with (give) you over their lifetime.
But to keep things super simple, let’s assume your customers only buy once from you. Then their Life-time value would be equal to your average order value. Which is the amount they spend with you on a given order.
If you have an LTV less than $15 – 20, you are going to struggle to make the economics work.
If you are selling inexpensive products, I suggest you find either a way to increase purchase count, increase your average order value, and or incentivize people to spend more on your store when running Facebook ads.
Two quick tips on incentivizing people to spend more, one, use “free shipping with orders over $40 with promo code XX”, or two, bundle your products together and give an exclusive discount when running your ad for this.
We’ve seen both of these work very well.
Reason #3 why FB Ads won’t work: You’re too niche
The third category we see of business who struggle is brands that offer something too niche. Meaning, their audience is so small, that most of the people you get in front of, have no interest in your product.
Now, your definition of “too niche” may be different than mine, so let me give you a real example.
This was a brand that sold a subscription box of flowers. They had a great product, a great brand and a great website, but in our opinion, a product that was too niche.
How many people do you know that’d be interested in (and actually pay for) a subscription of flowers?
Maybe your grandmother or mom, but probably not too many others.
That’s not a knock on them like I said, they did everything right (and had a great story), but the audience they successfully converting into customers was very small.
And that reflected in their ad performance.
Only 1 website purchase with $224 in ad spend. This data is from a 14-day time range but these results were consistent over a much longer period of time.
So relying on Facebook ads with an EXTREMELY niche product may not be a sustainable strategy overall.
That said, if you are able to successfully get website traffic (who have intent-to-buy) initially through other sources (like google ads), you can most definitely use Facebook ads (Retargeting) to generate sales.
Which brings me to another critical aspect to understand, the two forms of advertising.
The 2 Forms of Facebook advertising
Now hopefully I didn’t discourage anybody that may have related to some of the categories in the previous section, because there is some good news. Facebook ads can actually still work for you! You see, there are two forms of Facebook advertising or any advertising for that matter. Prospecting and Retargeting. Here’s the difference
Prospecting
Prospecting is the act of running ads to an audience of people who have never heard about you. The goal is obviously to change that (and convert them into customers), but prospecting is easier said than done. Most people call this targeting “cold audiences”. We won’t go too in-depth on this topic here (because it will take a while), but make sure you do your audience research and set-up retargeting before you get serious about prospecting with Facebook ads.
Retargeting
Retargeting is the act of runnings ads to people who already know about you. There’s a sweet science to retargeting but most novice marketers call this targeting “warm audiences”. Whether they’ve visited your website or viewed one of your videos on Instagram, retargeting is a more profitable form of advertising because people who know you, are easier to convert into customers! We love retargeting (so you should follow our blog) and suggest that most business to AT LEAST run retargeting ads on Facebook.
3 Components of running successful Facebook ads
Now that we understand the difference between prospecting and retargeting, I want to help you understand the 3 components of running successful Facebook ads.
This may be one of the most important things you’ll ever hear about successful facebook advertising, so please take a note of this.
Successful facebook advertising comes down to three simple things.
Only three, but if you miss any one of them you will fail.
Targeting. Creative. Offer.
Let me explain:
Targeting – The actual audience that you target and show your ad. You need to target highly relevant (and ready to buy) customers to make your Facebook ads work. Easier said than done? Absolutely.
Creative – When designing your ad, you need to use a creative that draws attention, stands out, and persuades people to take your desired action. This primarily includes your ad creative (image/video), the ad copy (message) and the format of your ad.
Offer – The actual promotion or offer that you are running needs to be enticing. Whether it’s a seasonal sale, limited time offering, or exclusive product, the best ads we run include an offer that feels novel, rare to come by, and instills a sense of FOMO (fear of missing out).
It’s well worth exploring each one of these topics in greater depth, so browse around our blog for more on these individually, but I’ll leave you with this tip:
Never test more than 1 of these 3 components at a time.
For example, if you are testing a new audience, use an ad that you know works. Or when you are testing multiple new audiences, segment them at the adset level so know which works best (and you can turn off the others).
Segmentation is an absolute key here because if you get even one of these areas wrong here, your ads will underperform (and you won’t have any idea why!).
Measuring success and KISSing the metrics
So, we’ve talked about a lot but this area is one that frustrates me most.
Measuring success and analyzing ad metrics.
Because many people overcomplicate it (including Facebook!).
You need to KISS it!
Keep It Simple Stupid
If you are running ads in e-commerce, the only metrics that really matter at the end of the day are your Spend, CPA and ROAS.
Ad Spend – The amount your spending on ads.
CPA – Cost Per Acquisition. Technically, this is the cost to generate an “acquisition”. Where the “acquisition” is usually a purchase or customer. Often times, “CPA” can be synonymous with a customer (CAC) or cost per website purchase (CPP), but this number is absolutely crucial. You want your CPA to be as low as possible because it directly impacts, the MOST IMPORTANT metric…
ROAS – Return on Ad Spend. The ratio of sales revenue you receive in return for your ad spend. (Sales revenue divided by ad spend).
So, if you spend $100 on ads, generate 1 sale, and that customer spends $100 at your store, you have a $100 CPA and your ROAS is 1.00x
Which is clearly not sustainable, but it’s just a good example.
In e-commerce, you’ll want to aim for a 2-4x ROAS on average for your Facebook ads.
This obviously varies per industry and business, but that’s a good threshold that works economically for most businesses.
If you want a breakdown on prospecting vs retargeting ROAS, here’s what we usually see in e-commerce.
ROAS on prospecting ads should are usually around 1.5x – 2.4x in a healthy account.
ROAS on retargeting ads are usually above 3.6x in a healthy account.
So keep these in mind, and only look at Ad spend, CPA, ROAS.
Because those are the only metrics you can take to the bank 😉
Unless you are an advanced marketer of course and have a specific reason to analyze other metrics.
When to give up on Facebook ads (and when not to)
One of the most difficult (and easiest for some) things to do is to give up.
Facebook (and Instagram) ads are still one of the best opportunities in marketing today. However, there is a point in time when you SHOULD give up on them.
This really only applies to business who have found product-market fit.
When you…
- Have had an experienced/professional marketer manage your ads
- Have unsuccessfully promoted your best seller.
- And can truthfully audit your account and say you have great creative, targeting, and offers.
While seeing underperformance/unsustainable results for at least 3 consecutive months, that is when I would consider giving up on Facebook ads as a growth channel (until something fundamentally changes in your business).
From our experience, that is when it makes sense to pause things.
However, when here’s when you shouldn’t give up on Facebook ads.
When you…
- Know you have a winning product/service/offering
- Know you can be doing a better job with your targeting, creatives, or offer
- And have seen underperformance/unsustainable results, but know you’re there’s room for improvement.
Because you (or someone else) can almost always make Facebook ads if you meet those conditions.
The last note I’d leave you with on this topic is the amount of data you’re looking at. If you are an absolute beginner and you draw the conclusion that Facebook ads don’t work after $100 in ads, you’re doing yourself a disservice.
Make sure you have enough data to analyze before making the decision to give up on Facebook!
2022 Shopify Facebook Ads Case Study
If you are looking for a specific Facebook Ads case study for Shopify, I’d actually caution you to take a step back.
It’s quite silly to search for such a thing because Shopify itself has nearly nothing to do with your Facebook ads.
Shopify is just a tool for building & hosting your site.
But since this topic is commonly searched, and I want to help you find you what you’re searching for ( and rank well in Google :p ), here’s an example of a brand, Bombas, who hosts their website on Shopify, that succeeds with Facebook ads.
If you are looking for “step-by-step build an entire business with shopify and facebook ads drop shipping tutorial”, I’d suggest you search for them on Youtube.
I was going to include one in here, but I struggled to find any truthful tutorials that aren’t faking statistics just to sell their overpriced info-products 😉
The Best Facebook Ads App for Shopify
The last thing I wanted to share with you is a Shopify app that helps you create and automate your Facebook ads.
It’s called Turbo Retargeting on the Shopify app store.
It’ll help you follow all of the best practices laid out in this article, and create smarter, more profitable Facebook (and Instagram) ads!
If you’re anything like our average customer, you could see a 60-400% lift in ROI when you use our Shopify app!
Conclusion
Running Facebook ads for e-commerce is a complicated, yet still a very intelligent investment when done properly. By focusing on the metrics that matter, using the right Targeting, Creative and Offer, along with everything less discussed in this article, you too can see the tremendous power and results of advertising on Facebook.
Let us know in the comments below what you think or if you have any questions and as always…