[Case Study] How to 4x Your Revenue with Paid Traffic in Less Than 90 Days

Nehal Kazim Nehal Kazim August 15, 2019

[Case Study] How to 4x Your Revenue with Paid Traffic in Less Than 90 Days

If you own or operate a growth-stage company (or are looking to close on your next deal), I have written this thorough breakdown for you.

In this breakdown, I describe how we turned around a paid advertising campaign by scaling an ecommerce company’s ad spend from $100/day up to $5K/day to create momentum for backend profitability.

Due to the nature and the depth of our case studies, we will call the company “Femme.”

Bottom Line

If you’re like us, you spend a lot of time learning, listening, reading and consuming information. So, here’s the bottom line of what we accomplished in a 5-month period:

Spend: $394,448.98
Revenue: $367,723.25
ROAS: 107%

That means for every $1 spent, we get $1.07 back.
You might think: “Why is this a case study? There’s nothing impressive about that!”

The reason Femme is a great case study is due to the fact that a percentage of those sales are recurring customers with (nearly guaranteed) revenue to make this campaign and company very profitable.

The following breakdown is one of the driving factors to how Femme scaled from $100,000/mo in revenue to $400,000+/mo by building out/scaling the front end of its business.

Meet Femme

Femme is a hygiene supplement company that began to get traction in a short period of time. Femme’s major challenge with its Facebook ads was that the cost per acquisition (CPA) increased over time to where it was no longer sustainable for the business ($100+, considering average order value is $50).

Femme’s mindset was to focus on growing the front end of the business at a loss, which would create momentum and lead to profitability later. However, with $100+ CPAs, that wasn’t possible.

The Funnel:

The client has a traditional ecommerce funnel. The flow is:

  1. Prospects click the ad
  2. Visit the home page
  3. Visit the product page
  4. Visit the cart
  5. Initiate checkout
  6. Receive order confirmation

Now that we have a snapshot of the business, let’s dig deeper into what it took to turn around and scale Femme’s Facebook ad spend.

Enter Ad Pros.

Meet the Ad Scorecard

After launching thousands of campaigns and spending millions of dollars on Facebook advertising, we started seeing trends. So, we created a methodology to analyze, optimize and scale advertising campaigns (holistically), which is called the Ad Scorecard.

At a high level, here are the 7 elements of the Ad Scorecard:

  1. Offer
  2. Avatar
  3. Funnel
  4. Nurturing
  5. Ad
  6. Ad Optimization
  7. Tracking for Decision Making

After analyzing the account, we identified 3 core challenges holding back Femme’s ability to scale: the ad, ad optimization and tracking for decision making.

Let’s dive in!

The Ad

This element of the Ad Scorecard focuses on the ad that prospects see on Facebook and Instagram.

Ad Challenges:

When it comes to the ad, we spotted 3 challenges:

Ad Challenge #1: Not Creating Enough Ads

At this point, when it comes to Facebook advertising, our mindset is: creatives are 70% of advertising success while ad optimizations are 30%.

This 70/30 split is critical because our experience has shown that the more aggressively you optimize the account, the less of an impact you have on performance. In other words, once you’ve maxed out ad optimizations, you need to step up your ad creation game.

Currently, Facebook rewards the launch of new creatives. This contradicts what most media buyers believe, which is, “social proof on ads = better performance.” I wish that was the case (it would make our lives a lot easier), but we’re seeing that the launch of more creatives is leading to better performance for most accounts.

Ad Challenge #2: Minimal resources to create ads

Part of Femme’s challenge was not having adequate resources to develop and create enough new ads from both a copy and creative standpoint. This led to having similar assets being tested.

Ad Challenge #3: High-level winning ad metrics

When it came to defining the metrics of a successful ad, the focus was primarily on bottom-line metrics such as CPA and return on ad spend (ROAS) instead of leading indicators.

It wasn’t clear what to look for or how to define a successful ad (beyond CPA/ROAS). The opportunity here was, finding and isolating the nuance of the creative that was working. Meaning, if an element of the ad was working, we needed to determine how to pull it out and combine it with other winning elements.

Ad Opportunities:

Each challenge comes with opportunities, so here are the opportunities we spotted:

Ad Challenge #1: Not creating enough ads

The opportunity: This was our chance to create a system to identify what ads to create in the future; otherwise, a team can create ads simply for the purpose of creating ads. We developed a decision-making framework—that we explain below—that shows you how to define these winning ads.

Based on this framework, we implemented a system to create more assets (copy, graphics and videos) to test systematically and find winners.

Ad Challenge #2: Minimal resources to create ads

The opportunity: Awareness is key to understanding the limitations that need to be overcome. Since the campaign wasn’t working well for Femme, the reality was, it didn’t make sense to invest more time, money and resources to scale the ad creation at that point.

As an agency, we have an infrastructure to overcome this challenge. Our team has 5 people directly involved in the analysis, development, approval and launching of more assets. Here are the roles of these individuals:

  • Media Buyer: analysis
  • Strategist: direction
  • Copywriter: copy
  • Designer: images and video
  • Project Manager: speed

This system allows us to launch more assets faster.

Ad Challenge #3: High-level winning ad metrics

The opportunity: I will break this down in the “Tracking for Decision Making” section, but the opportunity here was looking at:

  1. Platform metrics like CPM, CTRs and CPCs
  2. Funnel metrics like cost per add to carts and cost per initiated checkouts (and their ratios)
  3. Bottom-line metrics like CPA and ROAS

We will dive into these shortly.

Ad Optimization

Ad Optimization is one of the most important elements of successful paid advertising for any platform, but specifically for Facebook. These are the ongoing, daily adjustments a media buyer makes inside of the account at the campaign, ad set and ad level. In this section, I will outline the low-hanging fruit we pursued and how that affected scale.

Optimization Challenges:

Optimization Challenge #1: No Automated Rules

Rules are guidelines that help you as a media buyer and organization make decisions to pause, stop and scale campaigns (more on this shortly). Facebook rolled out automated rules to help pause, stop and scale campaigns at any time of the day to help cut costs, increase profitability and scale campaigns further. These rules were not set up.

Optimization Challenge #2: No Manual Bidding

Automated and manual are the 2 forms of bidding. With automated bidding, you let Facebook decide which auctions you enter. With manual bidding, you decide by choosing a bid for an optimization event.

For example, the ideal CPA is $60 for Femme, so we can set bids at their target CPA, below target CPA or above target CPA. This way we can see what type of bid and what type of optimizations can get the ideal CPA.

Optimization Challenge #3: No Aggressive Campaign and Ad Set Testing

Most media buyers don’t test enough campaign structures or targeting options at the ad set level. There was a minimal volume of testing at the campaign and ad set level, and there is a direct correlation for the volume of tests and finding winning campaigns.

Optimization Challenge #4: No Same-Day Scaling Schedule

In the past, if you scaled campaigns too aggressively or frequently on the same day, it completely threw off your Facebook ads account. Now, we have seen that we can scale winning campaigns by 50% to 200+% the same day and see very profitable campaigns that day.

Optimization Opportunities:

Optimization Opportunity #1: No Automated Rules

The opportunity: Many rules can be set up to cut costs, increase profitability and scale. Here are the rules we established:

  • Reset rules to reset budgets
  • Cutoff rule if CPC is too high
  • Cutoff rule if ATC is too high
  • Cutoff rule if CPA is too high
  • Cutoff rule if ROAS is too low
  • Turn on the rule for delayed attribution (turn on campaign/ad set if sales come in later in the day)

Automated rules can be a bit complex. Message me if you have any questions about them.

Optimization Challenge #2: No Manual Bidding

The opportunity: Most media buyers aren’t doing this because it is intimidating for some reason (it was for us too).

So, instead of simply doing automated bidding, we tested manual bidding for ad set budget optimization and campaign budget optimization. You can learn more about campaign budget optimization here.

We tested 4 types of bids based on the target CPA:

  1. 20-25% below target CPA
  2. At target CPA
  3. 20-25% Above target CPA
  4. 50-100% Above target CPA

The bidding that will work depends on many factors, but bidding 20-100% above target CPA still generates profitable campaigns that hit the target CPA.

Optimization Challenge #3: No Aggressive Campaign and Ad Set Testing

The opportunity: This is one of the easiest tests to launch and has the biggest impact on performance.

Simply test more audiences. It sounds simple, and media buyers do this, but then I have noticed they stop testing. That’s why we test interests and lookalike audiences and found winners. Then we test more audiences like the winners to see if we can find more winners.

Optimization Challenge #4: No Same-Day Scaling Schedule

The opportunity: We set up a scaling schedule that allowed us to scale the same day for campaigns and ad sets that were performing. This has many nuances, but we did it primarily with CBO campaigns.

What we noticed is that when a campaign is winning, we can add more budget (25-200+% the same day) and scale campaigns profitably that are working.

We also noticed that the earlier we found winners in the day, the harder we could scale and the more revenue we could generate. Here are the time intervals of the day we would pause/stop/scale campaigns with automated rules and manual review:

9am
12pm
4pm
7pm
10pm (yes, manually in the initial stages; we looked obsessively at it)

It was important to watch the trends of when sales came in, when they slowed down (even when the ad spend was consistent) and when bumps/dips in traffic occurred throughout the day).

Our team had a pulse on the account – and it was working!

Tracking for Decision Making

As any organizations scales, challenges and opportunities are magnified for better (or worse). One of the challenges when scaling is communication and clarity of the vision for the business and the vision for scale.

The 3 main decisions that make the biggest difference in a campaign are when to pause, stop and scale.

This sounds simple enough, but different roles in an organization have different perspectives of the criteria for pause, stop and scale. Here’s what I mean:

The owner may think “I want to scale in a predictable way so our revenue grows month on month.” However, the media buyer who sees opportunities or a campaign that’s getting historically high returns may think: “I need to scale this now, and I need to scale this hard!”

How the owner would define the criteria for the 3 decisions is different than how the media buyer would.

All decision making starts with an analysis of data, and there are big challenges if the data analyzed is only inside Facebook. That’s why we created a key performance indicator (KPI) sheet for our clients to get the numbers of what’s happening in Facebook and what’s happening in real life.

Facebook pixel tends to over- or under-report, and there are nuances to the real cash collected that Facebook just won’t be able to capture. That’s why we collect 3 types of numbers:

  1. Totals
  2. Cost Per Metrics
  3. Ratios

Now that we have some context on what the numbers were on Facebook and in real life, here are the challenges and opportunities we spotted.

Tracking Challenges:

Tracking Challenge #1: Rough KPI Sheet

To make decisions, there must be a clear way to capture and analyze data. If this analysis is done only inside of Facebook, it usually paints only part of the picture. There is a lot of information that Facebook simply isn’t able to collect (which leads to under- or over-reporting).

Tracking Challenge #2: Rough Decision-Making Framework

It’s important that everyone is on the same page when making decisions to pause, stop and scale campaigns. Since most decisions were made based on CPA and ROAS, it was difficult to see which campaigns were working.

Another big challenge with Femme was end of day (EOD) attribution vs. delayed attribution vs. real sales generated in the store. More about that shortly.

Tracking Challenge #3: Emotional Decisions

Facebook presents many challenges: the platform goes down for a while, the winning campaigns stop performing or your winning ads aren’t winning anymore, etc. The reality is that Facebook is volatile.

If you prefer non-volatile environments, Facebook isn’t the platform for you. I prefer calm, steady, consistent campaigns, but Facebook isn’t the platform that provides that environment. In short, volatility leads to emotional reactions that lead to emotional decisions.

Pursuing stoicism in decision making is easier said than done.

Tracking Opportunities:

Tracking Challenge #1: Rough KPI Sheet

Opportunity: The first step of analyzing and decision making dictates the quality of the data. The quality of the data dictates the quality of the decisions you or your team will make. We set up a KPI sheet for each client we work with tracking: totals, cost per metrics and ratios.

Here is what this sheet looks like:

This sheet is a business dashboard that’s semi-automated to see performance on a daily, monthly and annual basis at any time.

Tracking Challenge #2: Rough Decision-Making Framework

Opportunity: Now that we have data, we need clarity. Clarity makes it easier to make decisions together (from the top-down and bottom-up). After analyzing past campaigns, here are the key metrics we defined targets for:

  • CPM: Cost per 1000 impressions
  • CTR (all), CTR (link): clickthrough rates for the overall ad + link
  • CPC: Cost per link click
  • Cost Per Add to Cart
  • Cost Per Initiate Checkout
  • Cost Per Purchase
  • ROAS: Return on Ad Spend
    • ROAS EOD: ROAS end of day
    • ROAS Delayed Attribution

This leads to rules to pause, stop and scale campaigns.

Tracking Challenge #3: Emotional Decisions

Opportunity: if you break down the process above, this is what we were able to do in a very short time:

  • Collect data on a daily, monthly, annual basis
  • Easily analyze this data to establish benchmarks and spot trends/issues quickly
  • Define benchmarks for future campaigns
  • Create projections for upcoming months
  • Create benchmarks for automated rules inside of Facebook

These are the tangible outcomes, but this process also creates confidence, creates cohesion and fosters an environment where decisions are based on metrics (not gut or emotions).

Here’s the Bottom Line Again

Spend: $394,448.98
Revenue: $367,723.25
ROAS: 107%

The breakdown above was one of the main factors for scaling Femme from $100,000/mo in revenue to $400,000+/mo by building out/scaling the front end of the business.

Author

Nehal Kazim

Nehal is the founder of Ad Pros, a Facebook ads agency scaling growth stage companies to $100,000+/mo in spend. Ad Pros is designed to equip entrepreneurs, marketing teams and media buyers with the tools, education and resources to scale paid advertising campaigns on Facebook and Instagram.

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Discussion
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  1. That’s an awesome guide. I have started using FB ads recently and learning from my mistakes. Although it was not a success, but I am learning gradually by running short budget campaigns on Facebook. Thanks a lot for sharing such a detailed guide.

    • Greg Elfrink says:

      Keep it up Santanu!

      Facebook ads are extremely powerful once you get the hang of it. Paid media in general can scale in ways more traditional SEO just can’t. Small test budgets are often a good way to get a bit of hands on experience with the platform, so good job getting those going

  2. Hey Rehan i am running a real estate business. I use google adwords campaing and facebook campaign also to generate leads. But i think that campaign leads are not relevant some time. Like they said didnt query about this. Also people visit my website but dont query sometime. So how i can improve these things.

  3. Hey Nehal. Interesting angle. We’ve never really delved into paid traffic before. We’re only using SEO and social media promotions.

    Nice that I can look back to this article and consider part of our budget for paid traffic.

  4. I think you got the revenue and spend backward. The way it is written, you actually got $0.93 ROAS.

    Also, it would be nice to know what the customer LTV is to help understand how profitable this actually is.

    Do they have a subscription model with their supplements?

    • Nehal Kazim says:

      Hey Jabien, it is a supplement. Once a new customer buys, a large percentage reorder and/or part of the 50% that are on a subscription plan.

      Did you get a chance to watch the video?

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