Ugly Shirts Fortune Lesson 7 How to Kill and Scale Ads

 

You’ve launched your first ad campaign on Facebook.

Now that your ads are up and running, you will be tempted to check them every few minutes to see how they’re doing.

Totally understandable. I’ve been there, felt that.

But you don’t need to do that.

It takes time for data to come in.

So even if you don’t see a single sale coming in, don’t freak out and cancel your ad in a few hours.

You should let your ads run for some time before doing anything to them (I’ll show you exactly how long later).

In this lesson, I’m going to teach you how to monitor your ad campaigns using a proven model.

I’ll show you when you’ll know the ads aren’t working and how to tell if it’s going well. I will also teach you how to scale a winner once you find one.

But before that, here is something worth understanding:

 

The big picture

For any Facebook ad campaign, assuming the offer is right; marketers need to optimize 3 variables in order to succeed:

#1. Ad CTR (click through rate). You need a high CTR ad to send traffic to your landing page.

#2. Landing page (or sales page). You need a landing page with a high conversion rate to convert prospects into buyers.

#3. Lots of targeted audience. And of course, you need to possess the skill to buy large amounts of targeted traffic at a cheap price.

Optimize all three and you have a winner.

However, this is easier said than done. To do that, it takes marketers a lot of testing and tweaking.

A lot of testing would mean spending a lot of money. Buy, test and kill, buy test and kill, the cycle goes on.

There’s a very small chance of success unless you have deep pockets. Honestly, few of us are blessed in such a way.

Therefore, the small guys with little money lose almost all the time.

That is why most people have the impression that the pay for traffic model is a high-risk business. Most of these small-time online marketers burn out fast and quit because they don’t know what they’re doing.

Seems like a bad news. But not to us.

We’re different. The beauty of using Teespring is that we only need to concentrate on testing our target audience; the other two variables have already been taken care of for us.

Your Ad: Your ad is your Facebook post. I have shown you how to optimize that.

Your landing page: Teespring has a proven landing page that is already optimized for selling t-shirts online. Over the course of selling my tees on Teespring, I have seen them repeatedly modifying it. I can go there in the morning and again in the evening with a different layout. Their effort never stops. So you don’t have to worry about that.

#1. Ad CTR- checked

#2. Landing page – checked

Since both the ad and the landing page have already been taken care of, the bulk of our effort will be on perfecting the 3rd variable of a successful ad – who our highest converting audience group would be.

Can you see why I want to segment our audience into small chunks?

Doing that helps us easily identify the group of people who are willing to buy.

Once we find them, we’ll keep spending money on ads to target that particular group of people and increase our sales.

That is the whole idea of how to optimize our ad campaign.

We’re now ready to start identifying the segment of people who are more willing to buy our shirts.

After getting enough data, I personally go through 3 phases of pruning my ad sets to identify the winners.

Here they are:

 

Phase #1: Get 500 impressions. Kill ad sets with a CTR of less than 5%

Here is Phase 1.

Once your ad has been served more than 500 times (500 impressions), check your CTR (click-through rate) first; kill the ad sets that have low CTR. I like to see at least a 5% CTR for mobile and desktop news feed ads.

A high CTR doesn’t always mean that people will eventually buy. That just indicates that our ads are targeting the right audience and people respond to it.

Look to CTR as a leading indicator of relevancy. Before any conversion (conversion means a shirt is sold) happens, this gives us an indication of whether we are on the right track or not.

If I don’t get at least one conversion, and I’m getting less than 5% CTR after 500 impressions, I’ll kill the ad set. That’s the first step you want to take.

In the past, I used to wait until I had 1000. Not anymore.

Why 500 impressions?

Reason #1: I have recently tested many of my Facebook ad campaigns and have proven without any doubt that there is no significant difference in CTR percentage between 500 and 1000 impressions.

Why should I wait when I can take action ASAP?

Reason #2: Facebook has a metric in ad reporting called the Ad Relevance score. Advertisers will be able to see this score once their ad has reached about 500 impressions. This tells me that 500 impressions is definitely the right mark for Facebook to start judging an ad’s relevancy.

The ad relevance score provides an estimate of how relevant an ad is to its target audience based on how the ad is performing and other factors.

When your ad’s relevance score is high, it’s more likely to be shown to your target audience than your other ads. This results in higher ad CTR; you pay less to reach more of your target audience.

Ad relevance scores range from 1 to 10. A relevance score of 10 means that Facebook sees your ad as highly relevant to your target audience while a score of 1 is exactly the opposite.

The Ad Relevance score is based on several factors, including positive (ex: clicks) as well as negative feedback (ex: someone clicks “I don’t want to see this ad”).

I don’t consider the ad relevance score as important; no one reports irrelevant ads all the time unless it gets annoying.

To me, CTR is still a more accurate metric when it comes to ad relevance.

Anyway, the bottom line is 500 impressions – and then I’ll start pruning my ads.

To find out your ad sets’ impressions, on your Ads Manager dashboard, click on the “Ad Sets” tab.

Next, click on “Columns: Performance” to reveal a drop down menu.

Select “Customize Columns”:

You will see a pop up block that looks like the screen capture below.

Type “impression” in the search box, hit enter, and then select “impression” from the search results.

Once you do that, the “impression” column will appear on the right of your working space. Like this:

Drag it to the top of the right sidebar using your cursor. Drop it there:

Once you have done that, click the “Apply” button in the bottom:

Once you done that, you will be able to see the “impression” column on your Ads Manager dashboard.

That’s where you find all your ad sets’ impressions:

Repeat the same process to create your “CTR” column on the Ads Manager dashboard.

Pause all ad sets that are over 500 impressions which are not getting a single conversion and which have less than 5% CTR.

To pause an ad set, toggling its on/off switch off. You can find the switches on the left of their names.

At this point, you have identified and killed the first batch of non- performers.

 

Phase #2: Kill ad sets with 1000 impressions that are not getting a single sale

Once you have killed the non-performers in phase 1, let the remaining ad sets continue running.

Check on them again at 1000 impressions.

I pause all ad sets that have more than 1,000 impressions without getting me a single sale, no matter how high their CTRs are.

For ad sets that pass this test, we want to monitor a couple of other metrics.

That’s phase 3.

 

Phase #3: Checkt 3 important metrics

This is what I do in phase 3 of pruning my ad sets to identify the winners.

When I start making sales, I check these three metrics in order to decide if I should kill or scale an ad set:

Metric #1. Amount spent

Metric #2. Cost per Purchase

Metric #3. Cost per post engagement

Now, let me explain one by one:

Metric 1: Amount Spent

Amount Spent is the total amount spent for the ad set. We want this number to be 50% or less than the profit per shirt from Teespring.

Assuming we make $11.73 per shirt off Teespring, we will take the total number of sales, multiply that by $11.73 and we’ll get our total profit. The amount spent on an ad set must be less than 50% of the total profit.

So, let’s say we sell 5 shirts. Our profit will be 5 x $11.73 = $58.65

Our money spent on ads must be <50% of $58.65, which comes out to $29.32 or less.

One thing to remember: Facebook does not always show the actual number of sales we make. This is because each purchase on Facebook equals one checkout.

If someone buys two shirts in one checkout, we will only see one purchase in the Facebook report. To get the actual number, we look at our Teespring report.

The reason for this 50% rule is that we need an allowance for when we scale the ad sets later. When we scale, the purchase is going to drop; no clear reason, that’s just how the Facebook beast works.

When we’re at the testing phase, we want to identify and scale only the ad sets that give us maximum potential. If the ad amount spent is higher than 50% of the profit, don’t scale the ad set. But don’t kill it, keep it running at $10/day.

You don’t want to scale it as your expenses will increase. Again, scale only the best ones.

Metric 2: Cost Per Purchase

This metric tells you how much money you are spending per sale.

We need the cost per purchase to equal 75% or less of the shirt’s profit.

Again, assuming we make $11.73 per shirt, look for $8.79 or less cost per purchase. Don’t scale those ad sets with a cost higher than $8.79. Keep them running at $10/day as long as they are making you money.

Same reason as Metric 1.

Metric 3: Cost Per Post Engagement

We run PPE ads. PPE stands for Page-Post Engagement – the interaction our viewers have with a post on our Facebook page.

(Note: Facebook allow us to run many other types of ads. Among them are Website Conversion, Lead Generation, Like Campaign…and so on.)

For PPE ads, we want Facebook to show our ad to viewers who are most likely to engage with our post. We want detailed information about their interaction and engagement with that post.

The metric we want to zero in on is called cost per post engagement. The objective is to create the most frequent interaction with that post as possible.

The reason the metric is called cost per post engagement is because each engagement has a monetary value.

We paid $10 for the news feed ad and want to get as much engagement for that $10 as we can. If only 2 people engage with the post the ad sends them to, our cost per engagement is $5. That sucks.

We want to bring that cost down to less than $0.10. At $0.10 per engagement, we know that people are liking, wowing, commenting, sharing, and clicking on the post.

That’s 100 engagements for $10. When that happens, it tells us our audience is engaging with our post. An engaging audience means 2 things. We hit our ideal audience on Facebook and our t-shirt quotes resonate with these people.

In my experience, whenever I hit $0.10 Cost per Post Engagement or lower, my shirts will convert nicely and I’ll make lots of profit when I scale the ad set. Without fail. So keep that in mind. Aim for a CPE of less than $0.10.

We can certainly keep an eye on other metrics, but Cost per Post Engagement gives us an immediate understanding of our ad set so we can make an informed decision. Never scale ad sets that greatly exceed the $0.10 benchmark.

Again, for ad sets that fail to meet this criteria, keep them running at $10 a day as long as they make money.

How to get these metrics

Here is how to get these metrics using the Ads Manager.

On your Ads Manager dashboard, go to ad sets.

Again, click on “Columns: Performance” to reveal a drop down menu.

Select “Customize Columns”:

You will see a pop up block that looks like the screen capture below.

You need the following metrics, so use the search column to find these metrics:

Metric #1. Amount spent

Metric #2. Cost per Purchase

Metric #3. Cost per post engagement

Click “Apply” at the bottom of your work space and the metrics column will show up on your Ads Manager dashboard.

Now, apply the rules that I have mentioned above to prune your ad campaign.

Once done, we will be left with the ad sets that we need to scale up.

We will scale up each ad set’s daily budget one by one.

 

How to scale

I only scale my ad sets up once a day. I normally do it after I check their metrics in the morning.

Every time I scale up, I double my last budget. Starting with $10, I raise it to $20, $40, $80 and $100.

When my daily budget reaches $100/day and sales are still coming in, I stop doubling my last budget.

Instead, I increase it by 10%-15% each day.

The reason is this: in most cases, my campaign screws up when I double it starting from a daily budget of $100.

When you spend too much too fast, Facebook is sometimes forced to spend your entire ad budget, and your campaigns are no longer profitable.

Yes, you want them to run a large ad inventory but what if they don’t have enough audience for your impressions? What do they do? The only thing that they do is show your ad to people who are outside of your targeted audience.

Facebook is in business; if you want them to spend a bigger budget within a short period of time, they will spend it, and not necessarily where you want them to.

Are all of your ads shown to the targeted audience you’ve chosen? I doubt it.

So, remember this: don’t increase your daily budget too fast once you’re at a $100/day daily budget. Increase it slowly; I usually increase it at a rate of 10%-15% each day so I’m not pushing Facebook to perform by showing my ads willy-nilly.

Let the budgets run through another 24 hours, then check the reports the following morning. If they are good and are on track, keep on increasing the budget until the campaign ends.

There is a ceiling to our daily budget though. You can’t keep on increasing it. The rule of thumb as to the maximum daily budget for each ad set is $10 per 10,000-audience size.

Let me explain…

When you set up your ad set in the Ads Manager, Facebook will indicate the potential audience size. If your audience is 10,000, the maximum daily budget for an ad set should only be $10.

No matter how profitable your campaign is, you should be guided by this rule.

Your ad set’s audience size decides its daily budget ceiling.

If, for instance, your audience size is 100,000, then your daily budget ceiling should be $100/day; 200,000 audience = $200 daily budget, etc.

The reason for this? It’s simple, really: we don’t want Facebook to force-spend our ad budget.

Done.

I’ve shown you how to scale winning ad campaigns, here is one last tip before we end this section.

Pay constant attention to ad frequency.

What is Ad Frequency? It is the average number of times someone has seen your ad.

The reason you should care about Frequency is: when the same people see your ad over and over again, they’re gonna get pissed.

Once people have seen an ad 3 times, they’re either interested and have clicked on it or simply ignored it. Showing it to them 10 more times won’t change things.

The result?

Lower CTR and increased cost per website conversion.

After a frequency of 3, we will start to see a decline in ad performance. You don’t want that to happen. Make sure ad frequency doesn’t exceed 3.

How to look for this statistic?

Again, on the Ads Manager dashboard, go to Ad Sets.

Click on “Columns: Performance” to reveal the drop down menu:

Select “Customize Columns”:

On the pop up screen, look for “frequency” using the search. Select it, drag it to the top of the right sidebar using your cursor and then click “Apply”.

You will then be able to check ad frequency on the Ads Manager’s dashboard:

Ads last for different lengths of time. If it’s a large audience group we’re targeting, the ads can stay a little bit longer. If you are targeting a very narrow demographic, your ads won’t last as long.

Saturation advertising, like you see on TV with ads running over and over again during ad breaks doesn’t work in the Facebook news feed.

Negative feedback (annoying people with your ads) will hurt your campaigns. Just remember that.

That’s it for this lesson. Up to this point, you have learned how to prune your non-performing ad sets and scale the successful ones.

In the next lesson, I’ll show you how to run retargeting ads along with your winners.