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Dynamic Facebook Ads Reduce CPA by 72.4% for E-Commerce Company
Our e-commerce client, Teddy the Dog, is a pun-filled clothing brand that focuses on dog-centered apparel and breed-centered products.
Teddy the Dog’s business is a social-centric brand and it relies heavily on paid traffic from Facebook for purchases. Therefore, they are always looking for ways to lower cost-per-acquisition (CPA).
As a partner, it is our job to test new ad types and audience features to help brands accomplish their goals. When Facebook released dynamic ads, we knew based on dynamic advertising in Google Ads that this could be a game-changer for our client because of its expansive product catalog.
Dynamic ads work so well in Facebook with brands like Teddy the Dog due to the amount of audience data available in the platform. Facebook offers audience targeting that relates to things that overlap with our client’s products like dog breed interests, pop culture, performing arts, and more.
The Solution: Dynamic Facebook Ads
For these dynamic ads, we let Facebook dynamically choose products from the 5000+ item catalog with no limitations. Facebook automatically chose items and populated different ad types dynamically. After showing variations in products, Facebook “learns” and begins showing the most popular products to audiences.
Audience targeting was minimal so that this test could focus on the ad type. This gave Facebook the freedom to find low-cost, high-intent customers.
A campaign with normal targeting would usually test things like custom audiences or interests, but with this dynamic campaign, we tested different periods of time, or lookback windows, from when a user viewed a product.
We targeted 3, 7, and 14-day lookback windows segmented at the ad set level and excluded the smaller window ad sets from the longer ones to avoid audience overlap. We then leveraged Facebook’s algorithm even further for it to allocate budget amongst these audiences to find the lowest CPA.
The Results: Lower CPA
Instead of paying $6.80 per acquisition (the average for our client’s other remarketing campaigns), we paid $1.88 per acquisition – a 72.4% decrease. By paying less per acquisition, our client benefited from increased profit per purchase.
Additionally, this strategy has allowed us to reduce budget for Teddy the Dog’s other remarketing campaigns, and reallocate that budget towards prospecting.
We recommend that clients allocate 70% or more of their budget to prospecting. Teddy the Dog previously allocated more than 70% to remarketing and prospecting was secondary. The former strategy constricted the funnel and contributed to a long-term decline in revenue.
By shifting the budget from the remarketing campaigns, due to the lower CPA, to the prospecting campaigns, our efforts are helping to fill the funnel and further fuel the dynamic remarketing campaigns showcased by this case study.
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