What Analytics Actually Matter

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Often, we consult our clients on things other than Facebook ads – specifically the metrics that are commonly overlooked.

Our clients are putting everything they have into getting sales, but the capacity to look at the big picture can get tricky for a business owner wearing so many hats. This is where we happily come in to help!

One thing to note – we do not believe in shifting blame. As data comes in, there are specific, actionable metrics that we look at to improve the overall return for an online store.

How Important is Return on Ad Spend?

Return on Ad Spend (ROAS) is a macro that is ultimately determined by other micro metrics such as Average Order Value and CPA.

What we see a lot is the reluctance to optimize these two metrics – which will ultimately raise Return on Ad Spend.

Here’s an example that Alex, one of our account managers, explains from a recent experience with one of our clients:

A clothing boutique is trying to market single items of lower price for less barrier to entry.

The problem with this strategy?

Low AOV = Low ROAS.

When they see this, the “I’m not making money” thoughts start to settle in.

What we helped them through was a shift in strategy to marketing full outfits inside a collection and we started to promote the full outfit on ads.

Shoppers started shopping the whole “look” and buying the expensive items as well! AOV went from $70 to $100 to $250+.

A simple change of marketing strategy from product focused to personal styling to create a custom shopping experience paid some big dividends.

Selling Yourself Short IS NOT Sustainable.

You need a sustainable ROAS to keep investing into your marketing and growing.

To do this you need to always look for ways to raise AOV. This is not simply a matter of raising prices either. This would be an inability to see the big picture we’re discussing.

You must look at your products and find ways to provide a more upscale, custom shopping experience that increases the cart.

In our Agency’s case, we decided we wanted to charge more than $500-$1,000 per month for services.

We can’t simply raise the price to $5,000 and $10,000 – it’s not just a matter of adding a zero to the price. It’s a matter of providing 10x more value in our service that our clients are willing to pay for.

Now we can charge a premium price on a premium product.

The “Neighborhood” Mentality

When you go to a local shopping mall with multiple stores in close proximity, you’re able to shop around and find similar products for different, hopefully cheaper, prices.

With eCommerce, the landscape is so vast that this dynamic shouldn’t exist.

5 separate men’s athletic wear companies might show up on someone’s feed after they look at a pair of shorts online, but all 5 companies will have different marketing strategies and different “P’s” – price, product, promotion, package – for the same type of item.

The shopper ultimately has 5 different shopping experiences, and thus the company with a better marketing mix will win. If this company can charge 10-30% more for their product, they’ve created sustainability through their strategy, not necessarily their product.

Margins Matter

Running “Deals” can’t be your only strategy to increase ROAS. This is an example of how Return on Ad Spend can create limited thinking.

We recently took over a client’s ad account that was constantly running daily deals with mark downs, earning a 10x ROAS – great right?! Except… their margins weren’t great.

When we took things over, we made the decision to focus on products with higher margins and not on the “daily deal”. Our ROAS is currently lower than they were achieving, but they’re actually profiting more in their business than they were before!

Accept Areas for Improvement

The biggest pushback that Alex notes about making changes is often the time that it will take.

“Get me more sales and we’ll revisit this when we have more time” is a common phrase we hear. The thing is, the changes that we see are actually areas for improvement that we are finding based on data.

These areas for improvement could drastically enhance marketing efforts and increase important metrics like Average Order Value and Conversion Rate – which are huge micro metrics for increasing Return on Ad Spend.

Create an Engagement Strategy

Everyone wants to see sales. We get that. So do we! In this digital age, however, creating an engaged audience can be just as powerful as getting sales in the long run.

Building up retarget audiences with engagement and video views on social pays off immensely!

Your “Middle of Funnel” and “Bottom of Funnel” are your warmest audiences, and they only have one limitation – size.

To increase the size of your own personal brand aware audiences, you have to craft a strategy for engagement with cold traffic. The best way to do this that Alex has found with our clients is video.

Creating an engaging video that has users watching 25%-50% is extremely powerful in modern advertising. Even if you’re optimizing for sales, craft a video strategy to take advantage of these more brand aware video viewers in the highest converting layers of your funnel.

At the end of the day, marketing is all about getting shoppers’ attention and making them aware of who you are and what your product is. Don’t over-complicate it.

Authenticity Sells

In the internet bubble, shoppers are craving authentic content creators more than ever before. Influencers control a lot of online retail spaces simply because their content is engaging and real. As an online brand, it will be more important than ever to craft a strategy of authenticity that is both engaging and purpose driven to build your brand loyal audiences.

Spending to Grow

A lot of times, our clients get so wrapped up in their own bubble that they can’t see what’s clearly right in front of them. If you’re earning a healthy return on ad spend and your business isn’t growing, it’s probably because you aren’t spending enough on advertising.

How much of your revenue should be put back into advertising? That percentage ultimately comes down to other factors at play such as Cost Of Goods Sold, but we can’t stress enough that you should push that percentage PAST the point of comfort.

Alex notes that we had a client earning multiple 6 figures every month from ads with a very healthy Return On Ads, but they weren’t seeing much growth in their overall business. Come to find out, only 3% of their revenue was being invested back into ads. Once we increased that, their business started growing rapidly.

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