How (Almost) Any Brand Can Make Facebook Ads Work

We’re a small brand who grew through SEO. Can we make Facebook ads work, even if we’ve been burned in the past?

This content was originally published in the No Best Practices newsletter on 6.12.2022.

We’re a small DTC (eCom only) clean cosmetics brand named Red Apple Lipstick that has been in business for the past 10 years. We were one of the first on the market when this was still a niche category. In 2018 our revenue took a major dip and hasn’t really recovered since then. We want to return to growth and achieve revenues in the low seven figures.

My question: how can we differentiate ourselves via email and SEM marketing now that the market for clean cosmetics is much more competitive? It’s difficult to speak to our quality without bringing up what the competition lacks, which we are wary of doing. Our competition is spending way more on paid social advertising and our customers’ inboxes are more crowded with promo offers than ever.

I asked a follow-up question: Is there a reason you want to focus on email and SEM? Are you 100% against paid social advertising? And what is currently your #1 source of new customer acquisition?

We’re not 100% against paid social, but we haven’t seen success in the past. As our sales have declined, so has our budget for paid media. We get more for the money in SEM advertising. We haven’t unlocked the ability to make creative that converts on paid social, nor have we been able to find an agency that can make the economics of the channel work for us.

Right now organic search is our top source of new customer acquisition, but this took a hit in 2018 when Google made an algorithm update.

No Best Practices Answer:

Great news: there is a lot of high potential raw material to work with here. After reviewing your product offering and positioning, I think that the total addressable market for your brand is higher than the low seven figures.

But to unlock that potential we need to reframe the question. You don’t have an email problem or an SEO problem or an SEM problem, you have a customer acquisition problem. Most consumer brands selling online are a “leaky bucket”: for every 100 customers you acquire in year one, only 20-35 will come back and buy again in year two. If you don’t continuously fill up the bucket through customer acquisition, your sales will stagnate.

Here is a simple numerical example:

  • This year you acquire 100 customers who spend an average of $100 each. You make $10,000 in total sales.
  • 25 of those customers come back and buy again the following year. They spend more–$125 each–but that only gets you $3,125 in sales.
  • If you want to comp last year’s sales total of $10k, you’re going to need to drive $6,875 worth of new customer sales.
  • If you’re able to consistently acquire 100 new customers per year, your sales will grow at a slow but steady pace. If you’re able to acquire 70 new customers after year one, your sales will remain relatively flat. Any fewer customers than that, and sales will start to decline.

Based on the information you provided, it looks like your new customer counts have declined pretty rapidly since 2018, probably due to SEO issues. If you want to get the business growing again and get revenues into the seven figure range, you’re going to need to find a sustainable source of profitable customer acquisition.

There are two obvious choices here: SEO and paid social advertising. Each approach has benefits and drawbacks.

SEO appears to be one of your brand’s core competencies because it’s how you built up your customer base to begin with. When I look at your website, it’s text-heavy compared to other eCommerce sites, which is an SEO-forward approach. But it sounds like something happened in 2018 where Google is no longer optimizing for your preferred approach.

You could seek out another SEO specialist or agency, but you’re going to have to go beyond technical optimization if you want to reignite traffic and customer acquisition. This means a content and PR strategy–that will take some time to gain traction. So this option requires a decent up-front investment but the payback period is uncertain.

SEM (paid search) could be another option, but it sounds like you’re running ads here and it’s not enabling you to scale to your seven figure sales target. Paid search ads are tricky because they can only help you capture existing high intent demand. If there isn’t enough interest in the marketplace for the terms you are bidding on, you’re stuck. But if this channel is working, it may be worth testing into new keyword strategies.

This leaves you with paid social as the obvious remaining choice to kick-start customer acquisition. Before we go any deeper, let me say that I empathize with your struggle to make the channel work. There are a lot of paid social practitioners out there who do not approach the channel through a strategic lens. They apply a bunch of “best practices” (sorry!) acquired during the arbitrage era of paid social but don’t know what steps to take when those don’t work.

I asked around Twitter, and the going rate for paid social campaign management (including creative development, landing pages and media buying) is $3-5k per month, on top of the cost of media. At your current size, I’m guessing that might be more than your budget can accommodate.

No matter what you decide re:third party campaign management, I think your best next step is to learn more about how Facebook ads work and then do some of your own experimentation. Ideally, you’d be able to land one or two of your own ad creative/campaign/lander funnels with economics that work before you start looking for a partner.

Why take this approach? You’ll probably be able to reach seven figures this way without bringing in a third party if you invest in some training first. It will also make it much easier for you to find a partner who knows what he/she is doing when that time comes.

I’m going to share some resources for learning about Facebook ads at the end of this post that come highly recommended by my network. I learned Facebook on the job, so I haven’t personally used any of the paid resources listed. But they will help you develop a baseline understanding of the Facebook advertising ecosystem and tools so that you avoid costly beginners’ mistakes.

The reason I strongly advise you to look into some training resources before you start experimenting: there is a right way and a wrong way to set up ads in the platform if you want to do profitable customer acquisition. There is also a framework for campaign setup that will give you your greatest chance of success. You shouldn’t write off Facebook ads until you run a campaign this way:

Product: Some products just “work” better on Facebook. It’s hard to say if your product is among them until you run some ads. But products that “work” usually have one or more of the following attributes:

  • Bright, eye-catching colors or patterns
  • Priced under $250
  • Address a common problem (weight loss, cellulite, back pain)
  • Have a catchy visual hook aka watching the product in action is entertaining
  • Lends itself to before & after images/videos

You also want to try and position your offer so that your customers’ first purchase is at least $50. This might require you to bundle several products together and offer a slight discount on the bundle. The reason? It’s much easier to run profitable campaigns if your AOV is at least $50. That’s not a hard and fast rule though.

Business Cost Structure: Your products will typically need to generate at least a 50% margin if you want any digital acquisition channel to be profitable. If your product margin in the DTC channel is lower you need to fix that (raise prices or reduce cost of goods) before you address customer acquisition.

“Funnels”: You want each Facebook campaign to have a clear message aimed at a clear audience so that Facebook can find relevant prospects efficiently. This positioning should flow through your ad creative, campaign targeting and landing page.

“People who want clean makeup” would be your broadest addressable audience. But you’ll probably have more of an edge if you zero in on sub-audiences who would prefer your brand over other clean makeup brands. Based on your site and your question, older women and women with sensitive skin would be good places to start.

Ad Creative: All of your ad creative versions for each campaign should clearly communicate the value proposition of a specific funnel and speak to the target audience. You can do this via your choice of creative format, models and copy.

Almost every creative format is worth testing–static images, image slideshows, UGC-style videos, etc. Try to test at least one of each format. Develop as much creative as your resources allow, but don’t invest too much into production until you have a general sense of what works.

Videos and photos should immediately capture the viewer’s attention. The list of creative tips & tricks is too extensive to cover here, but check out the Facebook Ads libraries of brands like Jones Road Beauty, Athletic Greens and Prose Haircare for inspiration.

Targeting: No hard and fast rules here either. Try broad targeting with no exclusions, targeting based on relevant interests, and targeting based on lookalike audiences modeled from your best customers. A 1-3% lookalike audience modeled on your 500-1,000 best customers is a great place to start for smaller brands.

If you can get your campaigns to “work” with broad targeting you’ll have an easier time of maintaining profitability though.

Landing Pages: You can point your ad traffic at any page you want, but there should be a logical connection to your ad creative. A traditional sales-style landing page like this could help reinforce the points you made in the ad creative if more nuance is required. Sometimes the homepage, PDPs or PLPs work well too.

I would suggest that you try some custom-built landing pages that click through directly to the relevant product detail page. Your website isn’t as brand- or imagery-forward as other brands in the beauty category. This might throw people off when they land on your site after clicking through an ad, especially younger shoppers who are used to “DTC aesthetics”.

I don’t think you should revamp your entire site just yet, but this is why I recommend testing out custom landing pages for your campaigns.

Figuring out how to acquire new customers in a way that is affordable and scalable is honestly really hard. But it’s something that every business needs to figure out. I recommended Facebook because the variables are pretty straightforward, even if they have become more challenging in the past few years.

If there are other customer acquisition ideas you have that don’t require you to build up new skills or capabilities, I encourage you to give those a shot too.

I hope this was helpful!
Alex

Resources For Learning Facebook Ads:

These are not affiliate links, FYI. They are the resources with the most mentions from people I trust after I posed the question on Twitter. My recommendation: start with the free resources and then select paid resources based on the way you absorb information best (books, videos, interactive, etc).