2018 Ecommerce Holiday Advertising Guide
‘Tis the season [to make money], tralalala... 🎶
It’s that time of year again, where Ecommerce brands hop on the Holiday Campaign sleigh and buyers jump on great value deals. It’s truly a win-win season for both business owners & customers, and it is quite literally an opportunity that only comes around once a year. As a business owner, it’s important to be prepared, and Adjust Media is happy to navigate you through this lucrative time period❗
This Article will cover the Holiday season purely from a Facebook Advertising Perspective. We will walk you through the Planning/Executional steps, you as a business owner, should take in order to be prepared and successful this Holiday Season.
“Always Plan ahead. It wasn’t raining when Noah built the ark.” – Richard Cushing
Planning is the first and most crucial part of preparing for the Holiday season. Without appropriate planning, your business will not be able to fully take advantage of the Holiday season. The last thing you want as a business owner is to be leaving money on the table by running out of inventory, investing too heavily or lightly on a specific day or wasting precious hours scrambling to get half-baked offers & creative together last minute. We have identified 3Pillars of Planning that all Ecommerce Business Owners or Marketing Managers should consider well ahead of the Holidays.
Planning Pillar 1: Timing 🕗
You can’t plan for the future if you don’t know what the future holds. Adjust Media has compiled a list of key dates in the 2018 Calendar that you will likely want to print out and stick on your wall:
As obvious as these key dates are, the Timing Pillar also considers which dates your ad-budget support. Depending on where your business is in its lifecycle, the budget may ‘restrict’ you from supporting all key-dates or it may allow you to advertise during all of them. All businesses will be in a different situation, but it is vital that you prioritize your budget to what you can adequately support – do not spread yourself too thin.
How Long your offer will be advertised for is a key component to the Timing Pillar. If, for example, you start supporting Black Friday on the Monday prior, your audience may not receive it well and your advertising efforts will be null - by the time Black Friday comes around, your offer is already going to experience diminishing returns and the whole campaign would have suffered. Adjust Media always recommends a range of 12-48 hours for Holiday Offers, with rotating creative within each ad-set. More on this can be found in the executional section below.
Planning Pillar 2: Forecasting 📈
Business owners who we talk to year-round generally fall into 1 of 2 categories – Creative People and Numbers People. If you fall into the Creative category, we apologize but you’ll want to read this. If you’re Numbers person, you’re welcome in advanced 🤓. There are 2 elements in this Pillar – Forecasting Spend and Forecasting Inventory. Here are the exact formulas we would use for our Forecasting.
Assuming you are advertising to your warm audiences [Customers, Video Watchers, Engagers, Subscribers]. What you’ll want to do is the following:
⚉ Find audience size in Custom Audience Tab and divide that by 1,000
⚉ Find your past CPM of that audience [if not available, find your historical total AVG CPM] and multiply that by 1.25 [25% Buffer for Holiday Competition CPM’s]
⚉ Multiply the buffered CPM by the Audience Size that was divided by 1,000
⚉ Audience Size: 35,000
⚉ Divide by 1,000 = 35.
⚉ Historical CPM of this audience = $9.25
⚉ CPM to a multiple of 25% = $9.25 x 1.25 = 11.56
⚉ Buffered CPM x Audience Size / 1,000 = $11.56 x 35 = $404
In this scenario, $404 would be a healthy budget to support your campaign. This method is accurate most of the time, but it is not the gold standard. This is how the Media Buyers at Adjust Media forecast spend throughout the Holidays. Depending on your niche, you may experience higher/lower CPM premiums; therefore it is always recommended that you keep a close eye on your metrics. If frequency rises quickly, switch the creative. If it remains low and performance is strong, you will want to up your budget.
Uri, our President/Founder used to work for a business that would sell flowers at University Graduations. 75% of the time, he would hit his flower-sale quota and leave with unsold product, but 25% of the time he would completely sell out. Great, right?
When he would leave with product, he posted a minimal ‘cost of goods’ loss [sub-$200], but when he sold out, his opportunity cost would be extremely high. Dozens of customers would come to the booth looking to buy flowers for their graduate, but he had nothing to sell [+$1,000 opportunity loss]. This was a forecasting error. Learn from his mistakes.
Though Adjust Media specializes in Facebook advertising for businesses, we often venture into the business-consulting side of Ecommerce. Much like the example just given of forecasting budget, we will give you a formula to use to forecast inventory sales attributed to ads.
⚉ Find your AVG CPA throughout the year. If you have ‘Flash Promo’ data, use this number.
⚉ Give it an expected negative buffer [~15%-30%] based on your offer that will lower your CPA.
⚉ Take your Budget and divide it by this number.
⚉ Take this number and buffer it by 10%. Order this many units.
⚉ AVG CPA: $8.75
⚉ Negative Buffer: 30% [0.3]
⚉ AVG CPA x Negative Buffer: $8.75 x 0.7 = $6.12
⚉ Budget: $404 [taken from previous example]
⚉ Budget / CPA Buffer: $404 / $6.12 = 66 Units.
⚉ 66 x 10% Buffer = 66 x 1.10 = 72 Units
Using historical data to forecast your spend and projected CPA will help you best plan for any scenario. Although this was a basic example, you may use these formulas and manipulate the numbers to make them more relatable to your business. The key takeaway is that appropriate planning is needed to maximize the effectiveness of your advertising campaigns during each Holiday period.
Planning Pillar 3: The Offer 🎁
The Offer is the last of the 3 Planning Pillars - it is what sets you apart during the Holiday period. Further, customers have come to expect better value propositions from companies on these special dates. If you run your regular [non-promotional] ads throughout the Holidays, your message will be blocked out by customers seeking a better deal elsewhere.
It’s vital that you craft an offer that sets you apart from your competition, that your business can afford and that is easily communicated through ad creative.
In this section, we have compiled different types of Holiday offers that you can utilize in your Holiday strategy, and have identified the type of business that will be the best fit for each.
At Adjust Media, we always advise our clientele to stray away from discounting where possible. Rather, focus on adding value or increasing cart values by utilizing different methods:
Free Gift 🎁
Giving a Free Gift with a cart over $X amount is an effective way of raising cart values that don’t hurt your margins. The gift can be as small as something such as branded sunglasses or a tote bag – or as large as a best-selling product. Your store can frame the offer as a transparent gift, or a surprise gift that will come within the package you ship.
The Transparent Free Gift promotional strategy works exceptionally well for subscription-based businesses. Adding a limited-edition product that increases the value of the box during Holiday period is a phenomenal tactic to reduce CPA’s, if you’re transparent about what said-product is.
Buy 3️⃣, Get 1 1️⃣ Free
For merchants who sell sub-$50 products, the Buy 3 Get 1 Free promotion may be the most lucrative offer for you.
This structure allows the customer to get more value for their dollar spent on your store, rather than discounting the price of the products. In addition, the AOV of your carts will significantly increase in comparison to just running a deep 30% discount that requires no minimum. However, if your products are $50 or above, consider Buy 2 Get 1 Free if your margins allow for it. If not, we recommend taking a look at Tiered Discounts below.
Tiered Discounts are a powerful tool for Ecommerce Merchants that sell $50+ products. The basic concept is used in retailers across the world – the more you spend, the bigger the discount and therefore the stronger incentive for customers to spend. The goal here is to structure the tiers in a way to entice the user to spend more money.
Let us provide an example for an Ecommerce store with products hovering around the $50 range:
⚉ Tier 1: Spend $55, get 15% off
⚉ Tier 2: Spend $110, get 20% off
⚉ Tier 3: Spend $160, get 25% off
In the scenario above, you will notice that we have structured the tiers to be slightly out of reach if the customer is to purchase 1 product for a $50 value. Further, the incentive for discounts climb as the customer adds more value to cart. This type of pricing strategy can be used across all types of Ecommerce stores, but it is crucial that you know your AOV so you can structure the first tier appropriately. We have seen amazing returns with the Tiered Discount strategy in 2017, and we will be implementing this across most Ecommerce clients this year.
We mentioned above that we tend to avoid deep discounting, but this still seems to be the most popular tactic of promotions across the Ecommerce industry. Deep discounting is the easiest and quickest way of structuring a sale. It’s important that you are aware of your gross margins before picking a percentage that makes sense.
⚉ Product Price: $50
⚉ Product Cost + projected CPA’s: $30
⚉ Gross Margin = [$50 - $30] / $50
⚉ Gross Margin % = 40%
Therefore, you can choose to discount your product anywhere up to 40% before you no longer can be profitable. It is recommended not to go above 30% in any situation.
Though we do not prefer straight discounting products, we understand there will always be situation where it is appropriate. Therefore, for merchants that are planning on executing this strategy, it is important to do it right. As mentioned in the timing section above, do your best to make this a flash offer– 12-48 hours. As a merchant, you will not want your discounted prices to be advertised for too long, or you will start experiencing diminishing returns and possibly hurt your brand image perceived value. When you are amplifying this message via ads, the focal point of the ad-copy should be that this offer is expiring – create the urgency from the get-go.
Deep discounting is the most versatile pricing strategy as it works effectively across all types of Ecommerce & Subscription Box businesses. Just ensure that you stand out from the crowd with eye-catching creative, much like the GIF below.
EXECUTING YOUR PLAN
“Without strategy, execution is pointless. Without execution, strategy is useless.” – Morris Chang
In the planning stage, you’ve identified your time frame, forecasted your spend & inventory, crafted your offer and invested in producing creative. Without proper advertising execution, you aren’t maximizing the potential of the strategy you planned. Therefore, it is crucial that you execute effectively.
This year, we will be executing similar strategies across all of our clientele. Though the offers differ from business to business, the executional strategy remains the same – focus on warm/hot audiences first, then use incremental budget to target Interest and Lookalike audiences. We have compiled a list of warm/hot custom audiences that is highly recommended that you include in your advertising mix, and identified the best placements to optimize your spend.
Do yourself a favour and screenshot the following:
FB & IG Feed Placements
⚉ Customer List Upload
⚉ Top 20% LTV Customer List Upload
⚉ Past Purchasers [180 Day from Pixel]
⚉ Past ATC [180 Day from Pixel]
⚉ Past VC [180 Day from Pixel]
⚉ Past Web Visitors [180 Day from Pixel]
⚉ Top 25% Web Visitors [180 Day from Pixel]
⚉ Top 10% Web Visitors [180 Day from Pixel]
⚉ 50% + Video Watchers [365 Days from Top Videos]
FB Feed Only
⚉ FB Page Likers
⚉ FB Post/Ad Engagers [365 Days]
IG Feed Only
⚉ All IG Engagers [365 Days]
By including all of the above audiences within a Holiday campaign, you are sure to reach everyone who has interacted with your brand throughout the previous year in any form. These middle and bottom funnel users are more likely to become customers or repeat buyers, and therefore they should be the primary focus of your ad-budget. In addition, custom audiences are generally cheaper to reach than cold audiences, therefore negating the CPM premiums to a certain extent.
It’s important to point out the structure of how you should be targeting all these custom lists. DO NOT combine them all within 1 ad-set, but rather create many ad-sets with the same ad. The rationale for this is purely based on the idea of control. If you were to amalgamate all the lists into 1 ad-set, you will lose the ability to see which custom audience is performing best. If you make a sale after spending $8, how do you know if it is from your past Customer list, or your past Instagram Engager list? By spitting the lists into their own unique ad-set, you’ll be able to analyze which lists perform well, which don’t, and Adjust your budget accordingly. Please refer to screenshot below as an example of how the breakout should look:
If you are working on a limited budget, it’s best practice to target bottom funnel lists. However, if you have more money to spend, use the additional budget to support prospecting audiences that have worked for you in the past. Sort through your data, identify the audiences that have the lowest CPA’s or the highest ROAS and place them in a different campaign. The Holiday Season is not just an opportunity to maximize sales, but it is also a chance to acquire new customers at a lower cost.
To summarize, the combination of proper planning and effective execution is required to maximize your Holiday advertising effort. Prioritizing which Holidays you will support, determining a budget, forecasting inventory, crafting an offer and knowing who to target with your ad budget, will result in optimal performance.
Whether it is your first Holiday sales period, or you’ve been a merchant for years, we hope you can take away some valuable lessons in this post. It is our gift to you this Holiday Season.
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