Selling expensive products with Meta ads is playing the game on hard mode. I’ll explain why, and how to do it successfully anyway.
This content was first published in the No Best Practices newsletter on 08.27.2023.
Selling things priced over $500 with Meta ads is hard. But is it impossible? Not necessarily. I’m going to explain why $500 is the cutoff price for “hard mode” on Meta, then walk you through three types of expensive products (and how to market them).
Why $500+ AURs = Hard Mode
There are two reasons that selling products with a $500+ AUR (average unit retail) is playing the Meta performance marketing game on hard mode.
The first reason is simple: when you’re selling at such a high price point, your potential audience of impulse buyers is very, very small compared to a $100 product. Many working millionaires will still scrutinize a $500+ purchase, especially if the product is not in one of his or her pet categories.
First purchase profitability on Meta typically depends heavily on impulse purchases from in-market shoppers. You get in front of people who are already pot-committed to making a purchase in your product category. Your product happens to win out, and they buy it.
Fewer impulse buyers = smaller in-market audience = that audience is harder and more expensive to find. This makes it hard to limit marketing to 25-40% of first purchase AOV (a typical goal for those seeking to profit on the first order).
The second reason is that higher AURs require you to spend more on advertising before you know what ads are working. To get a campaign out of learning mode you need to spend (your AOV * 50)/7. This is because you need 50 conversions per week to get out of learning mode.
For a brand with a $100 AOV, you’re spending a minimum of $715 per day. For a brand with a $500 AOV you’re spending much more–almost $3,600 per day! That is a tough pill to swallow for a brand that’s just starting out.
That $3.6k daily budget assumes you’ve identified some ad creative that will perform consistently at that level of spend. At a $500+ AUR you have to spend more on testing, and run ads longer, to determine if something is a sustainable winner.
Despite these obstacles, running Meta ads successfully for a high ticket product isn’t impossible. But, like most things in eCommerce, your success comes down to your product’s positioning.
Expensive Categories
There are some product categories where most or all of the options are priced above $500. There may be enough of a broad, in-market audience for these products to run Meta ads profitably. Especially if the product or category is trending culturally.
Case in point: the ever-so-trendy cold plunge tub. Most of these options for the 7 Best Ice Bath Tubs of 2023 are over $500. If you want something more sophisticated than a Home Depot bucket, you’re going to have to pony up some dough.
Another example: cookware. Hexclad sells some pricy cookware sets. Although they have a diverse product assortment with several entry-level price points, many of their Meta ads link to landing pages promoting the $699 12-piece set.
The common thread: a steady, sizable stream of high-intent buyers that are educated on the category. If your product checks these boxes you have a shot at successfully running a Meta-first performance marketing strategy. But nota bene: Hexclad (and a lot of similar innovation-driven brands) is not driving growth through Meta alone.
Value-Based Pricing
If you needed a drug to stay alive, you’d probably be willing to pay a lot for it, regardless of the COGS. That is the gist of value-based pricing, which I delve into in more detail here.
But the TL;DR: you can convince people to pay $500 for something if you can convince them that it will deliver much more than $500 of immediate value.
The classic example is info products: “Learn how to make millions drop shipping in my $1,399 mastermind course!!!1” (barf). Not all info products are scams! But they all rest upon the premise that a few videos or a PDF are going to 10x your investment in a short amount of time.
Trust is a key component of making the sale here, so you’re unlikely to succeed with nothing but paid media. But once you’ve validated product-audience fit, paid advertising can help you profitably reach more prospects, faster. It can also help you build your organic audience.
The same principle goes for products that are not founder-driven. You need to build a baseline level of trust around your promises if you want anyone to convert.
Intermission For You To Misinterpret My Message
“So Alex,” you may be asking, “can I sell cars online using nothing but Meta ads?” No! That’s not what I’m saying at all.
But auto sales are another helpful case study re: selling high ticket items online. Most performance marketing efforts for car dealerships drive to appointment setting, not conversion. You’re trying to drive or capture demand at an earlier stage in the path to purchase, then pass the prospect off to a real person.
This is the same funnel used by many other sellers of five- and six-figure products, from B2B SaaS to haute joaillerie to strategy consulting. If you’re selling a big-ticket item, you should consider a similar strategy.
Luxury Goods
Meta is not a go to market strategy for luxury brands. I repeat: META IS NOT A GTM STRATEGY FOR LUXURY BRANDS.True luxury goods combine three factors:
- The best materials and craftsmanship
- Cultural relevance, which is determined by cultural authorities
- Status, which is determined by how the world and your chosen in-group perceives the brand
A DTC luxury brand driving growth through Meta ads cannot exist, because luxury brands are a dialogue between the brand and the world in which it exists. That dialogue can’t take place in the domain of hyper-personalized advertising, which shuts out the rest of the world.
Yes, brands like Louis Vuitton and Gucci run Meta ads. No, those ads are not the main driver of their sales growth.
Even if you’re not aiming for traditional luxury positioning, it’s still incredibly hard to find an audience for expensive, taste-driven products online. The TAM for luxury goods is small. The TAM for luxury goods with your specific aesthetic is smaller.
The smaller and more nebulous your TAM, the harder it is for Meta to find that audience efficiently. You’re searching for a needle in a haystack.
If you want to launch a luxury brand, you need to build credibility (and a customer base) in the real world first.