Anna and Caroline chat about strategies to make the most out of your Facebook Ads spend based on your type of business.
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Anna: Welcome to our second episode of The Elevatory podcast. Now, today I'm joined by Caroline, and she is The Elevatory's head of digital. Caroline teaches and coaches on all things marketing strategy, sales funnels, email marketing, Facebook and Instagram ads. Now Caroline's been with The Elevatory since 2018. She's run her own e-commerce store, and I think you sold it in the end as well. Didn't you.
Caroline: Yeah. A couple of years ago.
Anna: Time flies. And she spent many years working in the world of Facebook ads and she's even headed up and run our Facebook ad agency for the last couple of years, you know, where we spent, millions of dollars in revenue across multiple businesses. She's been teaching digital marketing to our clients for over four years. So she's definitely well-versed for the topic for today, which is all about Facebook ads. And I know it's a world, well it's a place that a lot of people are really inquisitive in terms of learning, whether it's the right place for their business. And that's kind of what spurred this episode on today was we get this question a lot from people is Are Facebook ads right for my business? What do you reckon should re break it down Caroline?
Caroline: Sounds good. What a good question.
Anna: It is a good question because it's, well, Facebook ads aren't necessarily right for every single type of business or certainly not at every single stage of the business journey. Right. So with that in mind, what stage of the journey do you think people need to be in, in order to use ads? And maybe we can break it down by business type? Cause there are lots of different business types.
Facebook Ads for Ecommerce Businesses
Caroline: Yeah. Sure. Like you said it's going to be different for different types of businesses, for e-commerce to start with, you really want to make sure you've got a tested product first off. You don't want to be running ads to just anything, you want to be doing your research or to be making sure you've got a strong, clear offer as well. And you want to make sure you've got your USPs and your points of difference down pat. Once you've got that and you're pretty confident you've got that, ads can pretty much start straight away. One thing you do you want to make sure though, is you're funnelling ads to somewhere that's optimised, so you don't want to have a naff website or a slow website. Or a really bad customer journey when it comes to the cart, you don't want to be paying to send people to a bad experience. So just be conscious of that, make sure you've got all your pages and assets and things optimised.
Anna: I think that's a really good point. I was going to say, you've heard me say this before. I think that that's why I'm so wary of people early in the journey who want to use ads going straight to an ad agency because, the ad agencies aren't looking all of those things. You know, we look all those things with our clients because we want to make sure that the journey is brilliant so that when the ads go on that they actually work. But the ad agencies, that's not their job. Their job is to run ads and test creative and write copy. But at the end of the day, they're not there to make sure that the business is working as it should. So it's really important that the whole journey is right.
Caroline: Yeah, a hundred percent and it's so easy to just put money down the drain then as well, because you know, my link is looking good, you might be getting the clicks, but you're not getting the conversions that come off the back of it. As you said that's not the job of an ads manager.
Anna: And then it gets bloody expensive, right. And then paying it and paying the agency fees. And then you're paying for your potentially good ads not to work because other things are broken.
Caroline: Yeah, so once you've done your research and you've got a good product and you definitely got your assets optimised, everything can be pretty good to go in for an e-commerce store. I mean, after all you're online, you want to be found online. So more traffic that you might have already had at that point,
Facebook Ads for Local Service Businesses
Caroline: And if you are a local service business, then it's slightly different. Obviously you're going to be wanting a lot more awareness and we want people to know you exist. You want to be going to run ads to the local audience or a small audience. You can use these early on pretty much. Even if you're launching, like you can have an opening offer, a launch offer or something like that. You can definitely run ads to that. Sometimes even messenger campaigns for local work really well.
Anna: I was going to say, yeah, from our experience, local businesses, whether you're a personal trainer or you are doing eyebrows or something like that, some of our clients, their messenger campaigns work exceptionally well in terms of getting bums on seats into their office.
Caroline: And the beauty there is you don't need your pages. You don't need a website. You can run a messaging campaign, get people booking appointments, inquiring, getting an offer, whatever it might be, starting conversations with people. So local service, definitely a good way to get in front of your audience just around you. Rather than putting flyers in cafes and things.
Anna: Yeah. I was going to say people like to connect with people. So I think it's a really good, it's good for starting conversations and asking questions. So when it's right there, people then can click and ask questions. And I think that that's what we see a lot is conversations happening, phone calls happening. So local services, definitely a win early on. And then what about traditional service?
Facebook Ads for Service Businesses
Anna: So coaches, consultants, website designers, creatives, you name it.
Caroline: So for everyone else, service-based, it's a bit different to your normal e-commerce because you're not really making sales so much from your ads. You're more list building, awareness building, audience building. So you would definitely be running ads to grow your email list, maybe to encourage people straight to your Facebook group. You've got certain different types of ads like engagement ads, video views ads, if you're using it to build audiences, there's so many things you can do, whether you're launching and you might have a webinar or a challenge, something like that, where you might have an evergreen funnel, you can definitely run to all those things. So yeah, pretty much, I guess, making sure your assets are optimised again, if you're a coach or a consultant, whatever it might be, you know, you want to be sending someone, people to a good page, but otherwise yeah, go for it.
Anna: Yeah. I would say that definitely with service that, the difference between local service and e-comm and then the traditional services, it's not necessarily as conversion focused in terms of making a sale then and there. It's more about getting people into your world and along the journey into the next experience. So as you said, from the list into a Facebook group, or, you know, sending emails and then in the emails, you book them in for a call. So there's kind of like a longer journey. But for us, Facebook ads have played a huge role in being able to build an audience over time. And I think it plays a role in the growing of the business for the future, as opposed to always about something happening right now, because there's a lot of people who will opt in for something, and they're not quite ready for what you've got to offer, but they will be. And you want to make sure that you have that bank of the 'will be's' otherwise, you know, you're going to come unstuck down the track.
"The difference between local service and e-comm and then the traditional services, it's not necessarily as conversion focused in terms of making a sale then and there. It's more about getting people into your world and along the journey into the next experience." - Anna
Caroline: Yeah, and I guess that's an important point as well, as you know, with your email list, you own your email list, and it's yours. So all those contacts, which you might've paid for ads to get them onto an email list, but they're then yours to love and nurture and sell to down the track. So, it might be a bit sort of a later reward where the income comes in for a service based business, but you are building that audience to sell to essentially.
Anna: Well, there are other tips though that we teach, I guess when it comes to email marketing and then using a Facebook group and other things in order to actually start conversations and generate leads. But yeah, certainly the ads are more about bringing in the audience, not necessarily the conversion, the conversion happens through other means. Awesome. Okay. So basically we genuinely believe that Facebook ads are pretty much great for every single type of business in some form. They definitely work, in lots of different ways and give you lots of different opportunities from awareness to purchase and conversion. Do you think there are any business types out there the ads aren't the right fit for, or kind of product / services that are not a good idea?
Where Facebook Ads aren't right sometimes
Caroline: Sure. I mean, there's definitely, spaces where it's gonna be more difficult. If you're selling, I don't even know something that's really, really competitive, even skincare and you don't have a really strong point of difference or really clear offer, it's going to be hard. Like you might run ads, but you might not get the return you're expecting, you might not get the return that you want straight away. Especially with someone like a skincare brand who might actually get your return down the track, when your customers become more loyal and they get repeat purchases. So those depending on your industry and niche, they can be tricky. Especially if it's competitive and cluttered.
Anna: Do you think with competitive spaces, and I think the problem is with competitive spaces, is you can't stand out, but there's also a lot of people competing, but it comes down to the amount of money you're willing to put in to get share of voice. Is that correct?
Caroline: Yeah, sure. So it's an auction. So however much you bid is, you know what you're putting forward. It's like the same as bidding for a house in an auction, like you're saying, 'Hey Facebook I've got this much money to get these people. Like, will you show my ad?' So if you're, playing small and you're not spending much, then you're not going to be able to get in front of as many people as you want to. You're not going to win the auction. You're not going to get the results that you're looking for. So yeah, you've got to be committed to spending. So I guess if you don't have budget, it's probably not the best place, but that said there are certain types of ads, you might run it for awareness, but you wouldn't be expecting conversions off the back of them. So yeah, budget definitely plays a part into who can compete. But you got to remember like we're here spending, you know, maybe $50-$100 on a campaign. And then there's people who are spending tens of thousands, if not millions in the ad account. So when we say go big, put a hundred dollars on it, you know, there's already someone out there trying to bid a thousand dollars in the same space. So just something to be mindful of I guess.
Anna: Definitely. And I think in that vein as well with regards to, competitive spaces, as you said, you have to think sometimes about the average lifetime value of that client. So even though it's competitive and it might be a bit more expensive to get that initial lead, if they come back and spend again and again, you might lose on that first client, but over time, your profit comes. I think another space worth talking about is those in the maker space. I don't want to tarnish all makers with the same brush. That's not right, but it's more, those that have got a low value item. If you hand make something and you're selling it for five or 10 or $15, it's quite hard for you to make money on products of that level.
Caroline: Yeah, definitely. But again, it's, you know, you come back to that bid amount as well. So you're not going to be bidding $30 to sell a $10 item. You need to be clever in your pricing strategies and what you're offering. So looking at your average order value and how you can increase that. If you're selling $10 earrings, maybe they have to buy a pack of five. So it becomes $50 product, rather than a $10 product. But yeah, you gotta look at your average order values. And then you've got to decide by looking at your margins and your numbers, what your cost per acquisition is ideally going to be on Facebook. So that might be, if you're selling a $20 product, you want that to be $10. And that might just not be viable in the market that you're in or with the competition that there is, or just with all the factors that come into, into play. So yeah, I guess for makers, it's tricky if you've got low dollar items, and low margins as well. You can actually have a more expensive product, but if you haven't got good margins on that product, you've not got a lot of wiggle room then you can't afford for a few ads to be that expensive.
"So you're not going to be bidding $30 to sell a $10 item. You need to be clever in your pricing strategies..." - Caroline
Anna: Well, that's it. You can't afford the cost per acquisition. So you've got to take those things into account where the cost per acquisition can end up costing you money. It's almost like you end up paying the customer. You give the customer stuff for free and you lose money, which is not great. But again, it depends on the average lifetime, whether you can make that back over time, but generally what you don't want to be doing is spending $25 and making minus five. So these are definitely things to think about. So this is why we do a lot of work with clients around their product margins. And quite quickly we can see if their margins aren't up to scratch and it’s going to be really difficult for them to do ads, but equally alongside that, as you said, look at the average order value and see how you can bundle things up and make it more attractive for people to spend more so that you can acquire that person and then sell to them again and again. And budgets.
Caroline: Oh budgets. Oh, it depends. It really does though. I think you can start small, like you really, really can, but as we have been chatting about, it is an auction. So you do want to have a bit of skin in the game. You do you want to be putting your best foot forward because you're more likely to win auctions. You're more likely to get results you're looking for. There are definitely strategies. You can run for like $5, $10 a day, but they're not going to be the conversion return on ad spend type strategies you're probably wanting to hear about. So e-commerce budgets. It depends on the price of your product. So look at your average order value and consider your lifetime values as well, but comes back to that CPA. What can you afford? How much do you want to spend to get that customer basically? So if you come back and say you've got a $100 product and you're happy to pay $30-$40 to get that customer I'd recommend starting there as your daily budget $30-$40. Generally go to this for all your e-commerce, it's nice to start around there, it kind of feels a bit manageable to you around the thousand dollars a month type spend, you can get a nice campaign on and you can test a few audiences. You can test a few ads, and then hopefully you can start scaling.
Anna: Well, that's it. I think for people that are scared when they hear a thousand dollars spend, the view is that you should be making money back, even if you're just breaking even initially as you learn, in which case you haven't lost anything, you've just gained customers and you've gained insights and then you can make things better as you go. It's like anything in marketing. I think everybody expects when ads to turn on or things that just happen straight away. And that's not the case. You have to test lots of different scenarios and creatives and in service businesses, lots of different types of funnels and some will work better than others. On that note. So talking about local service businesses with messenger campaigns and things like that. I mean, relatively, they are quite small budgets, aren't they?
Caroline: Yeah. I mean, you've got a fixed audience, so you're not trying to reach the masses. So yeah, 10 bucks a day will do you good I reckon for a messenger campaign, obviously you spend a little bit more and you're going to get more messages in more likely than anything. It can depend on timeframes and things. But as you were saying earlier, you're not committing masses of budget ever really, because if something doesn't work, you turn it off. It's not there forever. You're not spending and spending and spending and losing and losing and losing. You might be testing and tweaking and trying, but you're not just putting it on and it's disappearing down the drain. Yeah, we definitely don't want that. Smallish budgets for local, I mean, you could certainly spend more, but it'd probably be a more of a fixed term campaign. So like a flash sale or some kind of offer for three or four days where you go a higher budget and you'd smashed everyone. It's only the people that are local to you that you are trying to get in front of anyway. So you can get an audience you can target.
Anna: Because otherwise if you want it too much, right, the frequency will be too high. And then people just get bit over your ad.
Caroline: Yeah, they get over it, but you see that in the data, the numbers tell you what's going on. You start to see fewer conversions or fewer messages, or people just stop responding and then you can turn it off and try a new offer or a new creative even for the same offer.
Anna: Nice. Okay. And then what about service businesses?
Caroline: Service. So, as we were saying earlier, it's more about your audience building, your list building. So there's definitely a strategy that we run with pretty much all of our clients, which is engagement ads. And it's a really nice place to start. You can start running those for like $5 a day. Just to start building your audiences essentially to re target. So that's one campaign that, that could go on for five bucks a day. That's pretty nice way to start. List building - it's gonna really depend on the algorithm and how much your leads are costing. So if your leads are costing $10 and you've got budget of $30 a day. Then you're getting three leads a day, which is okay for the algorithm to continue learning and working a lot. But if you've got a budget of $10 a day and your leads costs $50, it's going to struggle because you're already going to get one lead every five days. It's going to be a very slow burn. It's not going to be great for optimisation. So there's a little bit of, it depends, because it depends on how much a lead is going to cost. And you don't really know that until you start going. And there's obviously different benchmarks and standards for different industries, but you don't really know until you try your brand in your audience.
Anna: And equally, as I said before, you've got to think about the onwards journey of that lead. So if that lead goes into a Facebook group and you can convert them into a sale, then you know, spending $50 a day for five leads and one of them converts is a no brainer, you know? So you've got to think about from there, what, what happens next, or if it's just list building for a launch, you might have a lower budget that's on continuously for a longer period of time. So I think it depends on the strategy. Definitely.
Caroline: It's a way to speed everything up isn't it? You could do all of this without ads and you know, it's a slow burn. You could put a video on Instagram, you can invite people in Facebook groups to join your Facebook group, but it's going to be a very slow burn and you're going to be on there 24/7. But if you're using ads is fast tracking all these things to happen for you to eventually get that dollar at the other end.
Anna: Well, I'm glad you said that because I think that's an interesting thing because a lot of people, I think are a bit nervous about ad spend and things like that, which actually brings me on to the next point, which is all about mindset and everything else. But generally, yeah, we don't want people to freak out about spending money and thinking about it as money down the drain or, you know, that kind of thing. We want to think about the fact it's expediting results. And we should be focusing on the outcomes that it creates, and I think a lot of people, if you don't have a budget, I understand wanting to do things organically, but there is a lot of time that gets involved in posting in groups, asking people to join your groups, to kind of show up on socials, do videos and reels. And I think this sort of stuff gives you a mass audience really quite quickly, and if you can then get onward funnels, right, then you can certainly be moving things a lot faster in your business versus organic, not knocking organic. Cause I think organic can be fantastic and obviously it should be a holistic solution. But, I mean, I think we've definitely always been of the pay for traffic, get it done fast, keep moving, in terms of time. But anyway, so let's talk about mindset for success because I think there is a fear about people spending. What would you say to people who were thinking about spending?
Caroline: Oh, yeah, it is a mind game. It really is. And you can love Facebook or hate Facebook, but it's still, you know, it's really good platform for getting in front of people, building those audiences and awareness. So just being in that mind frame that you are testing and learning constantly, so it's not money down the drain. You know you are that step closer to finding out what works. If you find out what doesn't work well, that's close to finding out what is going to work for you. But it really is a testing game. There's no like one quick solution, put this on. This will work. This will bring you the dollars. It's just doesn't work like that. So just being in that mindset, I guess, of having maybe it's a testing budget, it's being prepared to spend that and just, you know, having it there and just say, this is why I'm spending this, this is why I'm doing this. And this is what I'm learning as a result. So yeah, massively around the money factor of it, which we totally get. Just around that breakeven point as well. It's like, you won't be expecting to put something on and be a success overnight. Like if it was that easy, everyone would be doing it. So it is around thinking about what it's bringing you, you know, it might even not be getting those many clicks, but you're getting impressions. You're getting brand awareness from all those people, seeing your ad, they might be seeing you, you know, organically somewhere. They might be on your email list; they've seen an ad and that's all helping with the end results. So it's that sort of holistic view on, you know, what's going on with all the elements of your marketing strategy? Spending money to make money. If you don't start spending, you are not going to be making the big ones at the end. So you just got to think about how much you're putting in, is going to result in how much you put out. So I think that's particularly important for people when they start scaling, because often you'll just have a budget and be like, this is my budget. This is what I'm spending. No, no, no. This is what I'm spending. And it's like, but this is working. If something is working don't you want to put more into it and get more out of it. And as we said earlier, if that that process doesn't work it goes off, it's not forever.
Anna: Yeah, I was gonna say scaling can be an interesting one because you can suddenly scale and then everything bombs. 'Yeah. Let's Scale. Oh, no, it's not working' You need to move up to a whole other bracket for it to work. But, yes, it's definitely a game to play, but one that can be incredibly lucrative in terms of reach, awareness, conversions, you know, revenue coming in, but you do have to be in it to win it. So I'm always about focusing on the outcomes and the long-term of what these things are gonna create for you rather than the short term bad pain. But also, yeah, you want to be making sure that you're keeping eyes on new data, so you're not just haemorrhaging money and you make good decisions from it. And I, and I think that all of this really ties up for me in that it's really important that you don't just try Facebook ads on your own. I think just go out there and, you know, there's a lot of people that I speak to that just boost posts or they just go out there and, you know, they start running ads and they wonder why they're not working. And you know, there's quite a bit to it. And I know having been and written courses with you and gone through the ins and outs of things that it's pretty epic what goes on behind the scenes. And if you don't understand it, then unfortunately you can lose a lot of money and we don't want that.
Caroline: No, you definitely don't want that. But you want to learn, you want to empower yourself to know what's going on so that you are able to take control of it. Yeah, just go along for the ride.
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