How we sold $7+ million worth of soups with Facebook ads in 4 years
Facebook ads are the darling of the DTC world. The majority of the industry relies on demand generation through Facebook ads.
So far that roughly $0.40c of every VC dollar gets spent on Facebook or Google ads, you need to have an edge.
Food CPG brands are faced with a unique challenge.
DTC playbooks are usually not transferable to Food CPG products because of the nature of the products themselves.
Products aren’t self-explanatory and people are forced to change their habits when buying them.
Naturally, the early adopters of the DTC world all bundled around what’s working best and is easiest to sell.
This left us with two problems:
- Lack of playbooks and skilled talent
- Lack of support from agencies with a track record
Existing playbooks weren’t fit for our product, so we had to patch together playbooks from different industries.
There wasn’t any talent with experience in this matter so we had to develop talent in-house.
Agencies focused their playbooks on clients they can serve the best. This led us to be burned by agencies because their playbooks didn’t work in our industry.
(In hindsight, we should’ve known by looking at their case studies and success stories that their experience might not be transferable to us)
Two Main Lessons
The main lesson we learned can be summed up in two main points:
- Convexity with focus on long tail
- Maximization of your leverage with process
Convexity means making thousands of small bets to get outsized returns when you eventually hit a home run.
So you need to be testing a lot and with small and limited downside.
There are two things you should be testing with regard to Facebook ads:
Ad creatives
This doesn’t mean testing tens or hundreds of different ads: we tested literally thousands of ad creatives over the past 4 years.
We are constantly testing at least 10 creatives a week.
That includes images (product, brand, or stock), gifs, Videos (stock, custom videos, animations), Copy (long-form copy, short-form copy, small tweaks to the copy, completely new angles), etc.
This is what the graph looks like when you test thousands of creatives:
We limit our downside by quickly cutting the losing ads, and this exposes us to potentially VERY high returns.
Since you can’t predict what is going to work, you need to be testing.
We conducted a case study with Facebook to test different lengths of videos and how they impact our sales:
This is also important as you will reach a saturation point quickly when spending a 6-figure budget a month.
Landing pages
This is one of the most overlooked aspects of DTC playbooks.
When you take a holistic view of the Facebook funnel or acquisition channel, landing pages are the only thing that you can truly control in the whole process.
This is your asset built on your domain and it’s completely customizable to your needs and how you want the flow, design, feel, and copy to be written.
That’s why it’s critically important that you optimize this for conversion so that you can extract the maximum revenue from every paid click you send from Facebook ads or any other paid channel.
Let me illustrate this with numbers:
Facebook CPMs — CPCs and Revenue Per Visitor on Black Friday 2020
When CPMs are crazy, you could end up paying $6 per click.
So to breakeven only on ad spend, your RPV needs to be more than $6. This is the main reason why smaller brands got burned this past Black Friday.
What we did to win is we tested 100s of variants of landing pages and continuously optimized the RPV number.
We tested headlines, offers, product bundles, conversion elements, social proof, different copies and angles, length of the landing page, etc.
Landing pages are going to be even more important next year because the CPMs are only going up from here.
The main metric is to optimize revenue per visitor. This is done by improving the conversion rate and Average Order Value.
There are dozens of different things you should be paying attention to, and because it’s so important to do so here’s the 80/20:
Improve your Conversion rate
- Send people to a landing/sales page that is designed to convert them;
- Clean up the navigation — the only option on the landing page should be to buy the product;
- Avoid analysis paralysis for customers. People want to be told who the best seller is and what the best option for them is;
- Add conversion elements like social proofs, testimonials, celebrity endorsements, risk reversals, security badges, handling objections, scarcity, and free shipping;
- The landing page needs to have only one unique selling proposition;
- Give people an offer to buy for the first time;
- Bundle products together — People want to try bundles with multiple products.
Increase you AOV
- Bundle products together;
- Use Post-purchase upsell apps like Carthook or One-click upsell, and conduct experiments on upsell pages;
- Tiered discounts — Incentivize people to buy bigger packs by offering them bigger discounts on the highest tiers.
Tactical things
- Analyze the data every single week. This will help you understand where you are at and where you can improve;
- Use heat maps — we use Hotjar to analyze what people are actually doing on our landing page;
- Use surveys on the landing page to understand why people aren’t buying;
- Pairing indicators — always have one main KPI and optimize it, but look at the pairing indicators that need to be maintained at the same time
Now that we covered what we’ve tested, here comes our secret sauce:
Leverage maximization process
Given that the two most important steps to winning with Facebook ads are about testing, you need to have a structured process for testing.
The main goal of this process is to maximize the leverage of your actions.
We’ve developed a process based on Silicon Valley’s best practices used by Facebook, Dropbox, Hubspot, and others.
It closely resembles the scientific experimentation process and ensures we extract maximum learnings from each test and prioritize our following actions to have the biggest impact we can.
What does this mean?
In general, you will never be limited by ideas about what to test, but you will always be limited by the amount of resources you have.
We had to get good at prioritizing our tests to get maximum impact at each test run.
We were trying to find leverage points that we can actually influence with our actions, understand their impact, and prioritize accordingly.
This is done by closely analyzing the results of each test.
The vast majority of our work is about analyzing tests, extracting learnings, and deciding what to test next. That’s the single most impactful activity that we could be carrying out.
Have structure in testing
You need to make sure you have in mind a clear hierarchy in terms of what you are testing and why.
Testing different value propositions has a much bigger impact on future testing than just tweaking a few words in the headline.
Both of them are useful but you need to understand this tradeoff for every test.
Small changes will give you incremental gains, which can be significant over time. However, those small changes can reach a point of diminishing returns and get you focused on optimizing for the local maxima.
That’s when you need to take a step back and take some big and more uncertain swings that could potentially lead you to the global maxima.
Analyze the results
It’s very important to share the learnings back with the creative team.
The creative team needs to understand what is working and what isn’t, so you can optimize the internal process of creating ads.
The analysis also drives your roadmap by showing you what and where opportunities are and what to focus your time on.
Media buying
Media buying comes last as it’s the most simple of all steps and has the most resources out there.
The only problem with Facebook media buying is that there are many options to choose from and so much to test.
So if you were to apply the same scientific method, you would never stop testing.
But Facebook is also very 80/20 — you can get 80–90 % of results with just 10% of the options on there.
That’s why experience is key when managing the actual ad accounts.
Facebook media buying can be summarized in a few main points:
- Have a simple if-then rule book that will drive your decision-making. This will capture 80% of the optimizations you are conducting on your campaigns;
- Focus on the key proxy metrics that will save you a lot of money;
- Keep testing structures for your campaigns — Facebook often changes its algorithm so you need to keep testing what works best at any given moment;
- Keep testing audiences — Different types of audiences perform differently when Facebook changes its algorithm;
- Understand the incrementality of your audiences (how much incremental sales you are getting by advertising to a specific audience)
(We conducted an experiment through which we learned that the majority of our retargeting audiences didn’t bring in incremental sales — meaning that they would still buy from us even if we didn’t have a retargeting campaign. That means that we were wasting budget on those retargeting audiences).
Need help with your paid advertising?
Based on all of this, and the obvious gap in the market for quality growth services in the CPG space, we decided to create a service based on the playbook we’ve built over the last 4 years.
We are currently accepting clients in the CPG space to help them grow their paid advertising.
Our service includes full-funnel management of the Facebook channel. That means that we own the Facebook part, from creatives to media buying as well as the landing page optimization, all using our Leverage maximization process.
The first step to working together is to have a discovery call. This would be a no-pressure call to understand more about your current DTC situation and if we can fit it into your equation.
The brands that we want to be working with must have a DTC channel that is making 7-figures in yearly revenues. They also need to have a retail presence and be growing fast. We can have the most impact with companies that are already spending $30–50k a month on Facebook ads and want to take it to the next level.
If this sounds like you, email us at filip@kangaroo-agency.com