Currently, Facebook’s social network consists of over 1.5 billion users with around 1 billion of those users interacting with the network every day. Advertising on Facebook provides an opportunity to reach this huge social network on a platform where AdWords, Bing, and marketplace ads like Amazon and eBay cannot be seen. One form of Facebook marketing, Facebook Dynamic Product Ads (DPA), enables you to re-engage shoppers by promoting relevant products from your product feed. Shoppers will see Facebook ads for products they viewed, products left in their shopping cart, or for similar products based on previous purchases from your website.
How do Facebook Dynamic Product Ads work?
Facebook DPA utilizes a Facebook pixel that you must install on your website to track events performed by shoppers on your website. There are three main events that must be tracked for Facebook DPA to work properly:
1. Viewed content,
2. Add to cart, and
The pixel collects visitor and event data based on user behavior on your e-commerce site. Facebook Dynamic Product Ads allow you to group these visitors based on one of those events they performed on your website. These groups of visitors are also known as “audiences” because they represent users that you want to re-engage to your website because of their likeliness to make a conversion based on their previous behavior. Your audiences may have originally come to your website from organic searches, paid searches, product listing ads, and various other traffic sources.
Once you have defined your target audiences, you can start creating tailored product ads by utilizing a product feed and Facebook’s advertising platform. Facebook can ingest a product feed daily and enable you to use product-specific data to create product ads tailored to your business. In order to succeed with product ads, it’s essential to provide the most recent and error-free feed so that the product ads display correct product information and in-stock items to your audiences.
The key to effectively managing a successful Facebook DPA campaign is having an organized campaign structure.
The first step to an organized campaign structure is to separate the audiences into three main remarketing groups:
1. Abandoned cart
2. Viewed product page
3. Past purchasers
The second step involves taking the three main remarketing groups and further segmenting them by time-frame window. This segmentation gives you the ability to bid differently for shoppers that abandoned their cart in the last 2 days versus a shopper that abandoned their cart in the last 3-7 days. We have found that conversion rates differ by time-frame window and should have different bids based on performance.
Lastly, the remarketing groups should be separated by the placement of where the product ad will be shown: desktop news feed, desktop right column, and mobile.
This is an important last step because product ads for each placement differ in size, click through rate, cost, and often, conversion rate.
The Campaign Structure
Aside from keeping your ads well organized, a clearly defined campaign structure allows you to overcome the hurdle of Facebook only allowing one bid per ad set. Unlike Google, Facebook does not allow for bid modifiers where you can increase/decrease the bid based on device type, location, time of day, etc. With no bid modifiers, it’s important to create separate ad sets by ad placement so you can bid differently for desktop and mobile devices, which often perform differently.
Additionally, creating a campaign structure based on audience type, time frame window, and ad placement helps you bid quickly and effectively. An example of a Campaign and Ad Set structure would be:
Campaign Name: Abandoned Cart 7 Days
Ad Set Name: Abandoned Cart 7 Days | Desktop News Feed
This naming convention tells you that this target audience has added a product to their cart (but did not purchase) within the last 7 days. The portion after the pipe in the Ad Set name means that the related ad will be shown only on Facebook’s news feed for desktop devices.
What We’ve Seen
During the past few months, we’ve experienced a lot of success managing Facebook DPA campaigns. The growth in revenue has been coupled with a high return on ad spend (ROAS). Recent performance metrics show that the cost per click (CPC) on Facebook DPA is generally much lower than the CPCs seen on AdWords and Bing Ads. Additionally, the ROAS through Facebook DPA campaigns is on par with, if not greater than, AdWords and Bing Ads. Below is an average of the performance for our book of clients:
Average performance for the month of March 2016
• Return on Ad Spend: 900%-1,200%
• Product Catalog Size: 350-700 Products
Not Your Typical Remarketing
Like all remarketing, slight cannibalization may occur for other channels. Since Facebook DPA remarkets to shoppers that are lower in the purchasing funnel and closer to buying, sales may be attributed to Facebook rather than a prior click that could have occurred organically or from a text ad. Additionally, Facebook reported sales may be higher since Facebook reports any click in the purchasing funnel as a referred sale. For this reason, you might want to compare Facebook reported sales with internal or third-party sales reports to get a more accurate picture of your Facebook remarketing efforts.
When evaluating your overall marketing strategy, it’s important to note that, due to the nature of remarketing, cutting budgets or discrediting sales from channel clicks further up the funnel may cause downstream effects, like having a smaller pool of people to remarket to.
Facebook provides a great opportunity to grow revenue by advertising to a network outside of AdWords, Bing Ads, and marketplaces like Amazon and eBay. With its 1.5 billion users who on average spend close to interacting with Facebook, it has become a channel worth exploring.
If you’re not advertising with Facebook Dynamic Product Ads yet, contact CommerceHub to set them up today!