01 Jun Contextual Facebook Advertising Strategy for Ecommerce
One of the biggest mistake Facebook advertisers make, is neglecting unconverted visitors. This article shares how contextual Facebook advertising for ecommerce businesses done right can multiply your ROI instantly.
I’ll be laying out how we strategize an effective Facebook advertising strategy for our ecommerce clients. This is a long article, consider bookmarking for future reference.
From our experience working with over 6,000 participants to our Facebook advertising classes & workshops since 2016, we discovered that over 90% of Facebook advertisers do not pay much attention to their unconverted visitors.
Contextual Facebook advertising allows you to target unconverted visitors to increase ROI
Let’s agree on a very simple fundamental: Nobody (almost), would buy from you the first time they see your ad.
If you agree on this fundamental, you need to work on your Reminding Strategy. There are 4 steps in building an optimized Contextual Facebook advertising strategy for ecommerce businesses:
- Illustrate customer journey
- Audience segmentation
- Identify the right objectives
- Continuous optimization
Before we jump right into the how-to, let’s take sometime to understand what is Contextual advertising? How can we take full advantage of the methodology to multiply our ROI?
Contextual advertising is a form of targeted advertising in which the content of an ad is in direct correlation to the content of the web page the user is viewing. (Source: Wikipedia).
In short, it means advertising to target audiences based on their “recent behaviour”, it means “deliver the right content, to the right people, at the right time”, based on your customer journey or sales funnel.
Deliver the right content, to the right people, at the right time.
It starts from visualizing your customer journey.
Pro tip: Visit my YouTube channel for daily Facebook advertising tips.
Step 1. Illustrate Customer Journey
I believe you’re familiar with a sales funnel. To match it to the target audiences for Facebook advertising strategy, refer to the figure below.
Basically there are 4 types of target audiences:
- Cold audience – strangers that fits into your audience targeting (gender, age, geo-targeting, detailed targeting, etc.), basically your potential customers that DO NOT know about your brand/product/services yet.
- Warm audience – people who saw your ads and (1) watched your video for more than 25%, (2) people who visited your website BUT didn’t purchase/convert.
- Hot audience – people who enquired via your website, people who asked question via Facebook Messenger, etc.
- Conversion – people who purchased.
It is pretty straight forward as you can see, and to put into ecommerce perspective, it should follow your customer journey. Refer to the figure below.
For ecommerce businesses, this is a typical customer journey. However, I always encourage business owners to start from obtaining a good picture of the overall conversion rate from one funnel stage to another with the help of Google Analytics or Facebook Analytics.
I personally prefer Facebook Analytics because it is natively integrated with Facebook advertising platform, it is people-based and supports omni-channel tracking.
A few things to find out from your customer journey before we continue:
- What is the overall conversion rate? (how many visitors purchased?)
- What is the conversion window? (how long it takes for them to purchase?)
- What are the conversion rates for each layer of funnel? (to identify growth opportunities)
Regardless what is your conversion rate, we’re not trying to work on optimization here but to illustrate a journey on how your customer moves from being a stranger, or cold audience, to become warm audience and ultimately a customer.
Step 2. Audience Segmentation
Once you’ve got your customer journey crystallised, you’ll have a better idea on what are the critical milestones that you want to capture throughout the customer journey.
For ecommerce businesses, these are the few audiences that you’d like to capture and segmentize them for your contextual Facebook advertising campaign planing.
- Website visitors who didn’t purchase in the past 30 days
- Added to cart/initiated checkout in the past 14 days
- Purchased in the past 30 days
- Purchased in the past 180 days
- People who watch your video up to 50% (if you use video as ad media) in the past 30 days
- People who engaged with your page (including those who liked, commented, or PM-ed) in the past 30 days
You’ll need to create Custom Audiences based on the identified segments above. To use Facebook Custom Audience based on website visits, you first need to install Facebook Pixel. Learn more about how to setup Facebook Custom Audience here.
In my opinion, Facebook Custom Audience and Facebook Pixel are pretty tailored for ecommerce businesses. If we take a look at the Pixel standard events, you’ll see almost 80% of the them are optimized for ecommerce.
You may be asking: why segmentize the audience in such great detail? What’s wrong if we only advertise to the target audience we select since Facebook gives us such powerful targeting options as we’re reaching our audience multiple times anyway?
Remember the fundamental we discussed at Step 1? That nobody (well, almost), will buy from you the first time they see your ad. So this IS the Reminding Strategy.
The whole idea is to achieve 2 key objectives:
- Increase advertising ROI a.k.a. higher conversion rate
- Lower cost per order
By segmenting your audience based on their recent activity or “funnel layer”, we can immediately work on a relatively smaller audience size for greater advertising control, such as frequency and objective optimization.
Smaller audience size for greater budget and frequency control
In short, we can spend less, reach our audience with higher frequency, within a controlled period, with different advertising objective, ads format and optimization methods.
All can be achieved with lower budget. Let’s take a look at the audience size breakdown.
|Visitors who didn't purchase - 30 days
|Added to cart/Initiated checkout - 14 days
|Purchased - 30 days
|Purchased - 180 days
As you can see, the audience sizes for each segmentation is relatively small. Based on current averaged Facebook advertising cost, theoretically you can reach all of the 1,600 people above for more than 10X/month by spending RM500 or below.
Remember this, Facebook charges you by impression. The more niched your audiences get, the higher possible ROI it gets.
Step 3. Identify The Right Objectives
When you have got your customer journey and audiences ready, you’re ready to work on the next step, which is to choose the right objective for your Contextual Facebook advertising campaign.
A contextual advertising campaign usually have multiple campaigns running simultaneously by serving different ads to different segment of audiences, targeting different actions to be taken.
The whole idea is to work on the audience as they evolve, or move from one funnel layer to another, and it has to happen instantly.
For example, I’ve clicked on your ad and landed on your website but I wasn’t convinced to buy yet and left. Your retargeting advertisement should commence instantly as I exit your website, not a week later.
It is important to understand that from being a complete stranger to your business to becoming your customer, it involves a series of actions, a.k.a. your customer journey (see step 1). It is important that you plan your campaign based on the actions that you want your customer to take, one action at a time.
Contextual Facebook advertising involves a series of actions that leads to your end goal, which is to convert a customer.
Facebook advertising objectives ARE actions that you can target your customer to take.
There are 11 Facebook advertising objectives available, some even have sub-objectives.
The Facebook advertising objective you choose decides the audience that are more likely see your ads. Facebook advertising objectives works based on “actions most like taken” by the audience when they come across an ad.
For example, if you usually use the “boost post” feature, whether by clicking on the blue button on your Facebook page or selecting “engagement” objective in Facebook ads manager, you’re optimizing to get “reactions (including likes), comments, and shares”
Try to recall, when was the last time you “liked, commented or shared” a post from a Facebook business page? If you don’t, you’re less likely to see the ad.
So the whole idea is very straight forward, if your action is to lead people to click through to your website, you use traffic, not engagement, not conversion.
In short, it is utmost to understand the key characteristics and pros and cons of each Facebook advertising objective, to help you master Facebook advertising strategy development. I’ll try to write more in the future, alternatively you can join our Master Class.
Now let’s take a look at the Contextual Facebook advertising strategy for ecommerce businesses.
Let me break it down for you.
Firstly, we usually recommend to use carousel ad to target cold audience. As we can add up to 10 images/videos in carousel ads, we usually suggest to pick 10 items to be highlighted.
Campaign 1 will be a carousel ad will lead audience to individual product page, using traffic objective. From here we will have 3 possibilities: exit or proceed to other products, add to cart and purchase.
Consider spending 50%-60% of your overall budget in campaign 1 to drive healthy inflow of warm audiences into the funnel.
Then we will move our audience to our campaign 2 and 3.
Campaign 2 will be dynamic product ads, using catalogue sales objective. This ad format retarget audiences based on the product they visited, and similar product within the same category. I’d suggest to allocate 25%-30% of your budget here in campaign 2.
The retargeting combination offered by catalogue sales is powerful.
While catalogue sales Facebook advertising objective is powerful, there are a few considerations to make:
- Retargeting duration – you must know how long does it usually take to decide to purchase your product. Overlong targeting will cause budget waste
- Optimization – if you’re retargeting for longer duration, e.g. 30 days, you might want to consider switch to daily unique reach optimization to avoid ad fatigue
- Exclusion – remember to exclude those who purchased in the past 30 days
Campaign 3 will be single image ad using conversion objective, targeting those who added to cart/initiated checkout in the past 14 days. As this audience size is usually smaller, consider spending 10%-15% of overall budget here.
The whole idea is to offer a discount code as a stronger push for them to purchase, as well as reminding them about your brand. This campaign should exclude those who purchased in the past 30 days as well.
Last but not least, we will have another campaign 4 targeting those who purchased in the past 180 days (exclude purchase past 30 days), using carousel ad format and traffic objective.
This campaign serves as a reminder to your past customers. While we wish to increase customer lifetime value by upsell or cross-selling, this can also serve as a branding campaign.
That should serve as a wireframe for you to start planning your Contextual Facebook advertising strategy for your ecommerce business.
Step 4. Continuous Optimization
You can’t stop here. In fact, everything just got started.
Factors such as behaviour change, festive seasons, political issues or any happenings might affect the effectiveness and performance of your Facebook advertising campaigns from time to time.
It is important to continously optimize your Contextual Facebook advertising strategy to reduce cost and increase ROI.
While there are countless optimization opportunities we can work on, I’ll highlight a few key optimization areas ecommerce businesses should consider focusing.
AB split testing
AB split test is particularly important during the early stage of the campaign. Do not assume, as a business owner we can never really think like our customers. It is important to stay humble and test, let the number speaks.
You can start with AB split testing below variables:
- Target audiences – don’t treat everything in your target audience as the same, even if you’re using detailed targeting. Try grouping them based on gender, age group, geolocation, etc. to find the best combination.
- Optimization methods – While most will go for objective optimization (e.g. clicks, engagements, video views, etc.), you can opt for impressions or reach optimization for certain ads.
- Ad placements – There are 13 placement options to choose from, not all works the same. For example, at least test to find out if Facebook gives you better result or Instagram? That’s a good start.
- Ad creative and copies – Don’t use just 1 ad and 1 creative and expect it works like a snap. Test different design using different USP, message approach, etc. to find the best combination.
Optimizations will never end. Revisit your campaign performance at least once a week even if you have reach the perceived best combination as there are many factors that might affect the effectiveness.
Landing page optimization
This is another area that is critical yet you can’t rush into perfection. Landing page optimization is a continuous thing that requires a lot of data gathering and testings.
It is always good to revisit your funnel, and check the conversion of each funnel layer from time to time. For example if you have good number of people added to cart but big drop at checkout, it could be something wrong with your checkout form.
Increase customer lifetime value
Next important optimization is to find out ways to increase customer lifetime value. It should start from reducing churn rate, make them come back more often and buy more.
You can test different upsell and cross-selling options via channels like newsletter, Facebook advertising retargeting, even consider creating a loyalty system as statistics shows that your customers are 7 times more likely to buy from you again.
Don’t forget to monitor and benchmark your overall Facebook Ads conversion as well.
I believe now you have a better idea on how to create a Contextual Facebook advertising strategy for your ecommerce business.
Remember the rule of thumb here: keep testing.
Do share with us your success stories or any strategy to help more e-tailers success in the crowded ecommerce scene.
If you need help with your Facebook advertising campaign, join our Facebook ads training. If you need personalized help, we offer 1-on-1 Q&A and we’re more than happy to assist in your Facebook advertising success.