By simply testing how to prioritise brand or conversions, and narrow or broad target audiences, advertisers can drive significant improvements in the cost, lead generation and return on investment of their Facebook campaigns.
30 november 2021
By Nicolas Arrivé and Peter Buckley
Many direct-to-consumer (DTC) businesses have been built on efficient conversion marketing through digital channels. However, as they grow it can become more expensive to find new customers. It is common for them to start reaching a ceiling as they mature.
Some DTC brands have tested extensively on the Facebook platform and moved past that ceiling. Some landed up to a 50% decrease in cost per acquisition, a 1.6x increase in leads or a 73% lower cost per incremental conversion. These are not small numbers.
Diversifying product offering, moving into new markets, launching physical retail locations, or even trailing traditional media channels can certainly also help DTC businesses grow. While these approaches may bear fruit, they can be labour-intensive and expensive to execute. And while they are important options to consider, there are opportunities to find additional growth by simply making slight changes to the way you plan your advertising campaigns on Facebook.
When you buy advertising on Facebook, the same budget can deliver very different results. This is because the Facebook Ad Delivery Platform is auction-based. It means a state-of-the-art ad delivery system assembles the right audience based on hundreds (if not thousands) of signals generated by people’s behaviour, which more accurately predict an outcome. Stating what marketers want to achieve with this ultra-sophisticated platform is business-critical. We call it your ‘buying objective’ (eg ‘I would like to generate as many conversions as possible, regardless of their individual cost’).
Two of the key planning decisions are the buying objective and the audience targeting. We’re increasingly seeing that DTC businesses are boosting growth by experimenting with these decisions. They’re finding they can further expand their customer base while maintaining efficiency by trying new approaches to their Facebook planning.
Typically, DTC businesses have focused their advertising investment on conversion marketing, using narrow target audiences (eg heavily restricted interest-based targeting or very narrow retargeting audiences) and conversion buying objectives to find buyers at the lowest possible cost (the bottom left of the quadrant below). This approach is great for driving acquisition of new buyers efficiently in the short run, but eventually can lead to a growth ceiling if used exclusively.
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By Albert Abello Lozano, head of automation, Treatwell
To avoid this ceiling, DTC marketers should test broadening their targeting or adding brand buying objectives to their campaign mix. Below are three examples where DTC businesses have successfully used these approaches to further boost growth.
Afound (part of the H&M Group) wanted to make as many people as possible in the Netherlands and Sweden aware of the brand while keeping the cost to acquire new customers below a pre-set target. To achieve its target, Afound decided to work with a broad audience and to let the Facebook algorithm find the right users. It focused on reaching new customers with distinctively branded creative assets that built the brand with every interaction.
Afound allocated 90% of its budget to prospecting ads and 10% to retargeting ads, and targeted a broad audience of people aged 18 to 65.
Through testing, it found that the strategy resulted in over 630,000 people becoming aware of the brand and a 104% increase in new customers. Additionally, Afound saw an almost 50% decrease over time in the cost of new customer acquisition in the new Netherlands market, a result that directly correlated to an increase in brand awareness.
Buying objective: conversion
Audience targeting: broad
Three easy ways to boost growth for DTC businesses on Facebook
BROAD TARGETING
CONVERSION
BUYING
OBJECTIVES
BRAND
BUYING
OBJECTIVES
NARROW TARGETING
MOST DTC BUSINESS START HERE
BROAD TARGETING
NARROW TARGETING
CONVERSION
BUYING
OBJECTIVES
afound
BRAND
BUYING
OBJECTIVES
Case study: Afound
→Find more case studies here
Buying objective: brand
Target audience: broad
Case study: Pandora
BROAD TARGETING
NARROW TARGETING
CONVERSION
BUYING
OBJECTIVES
Pandora
BRAND
BUYING
OBJECTIVES
Pandora, the global jewellery brand, had experienced strong growth and wanted to continue to expand its customer base. To counteract audience saturation and reignite growth, the brand wanted to see if it could increase reach through branding activities while still maintaining efficiency in performance campaigns.
A series of tests were conducted to identify best practices for running a full-funnel strategy that includes a mix of brand- and conversion-based Facebook campaigns. Both objective and creative were tested. Creatives highlighted the distinctive brand assets Pandora stands for: hand-finished jewellery made from high-quality materials. The approach drove a number of strong results, including 73% lower cost per incremental conversion when using a brand buying objective than when going without, 2x higher brand awareness and a 4x increase in retargeting audiences.
Following the effort, Pandora made deploying the full-funnel best practices a top strategic priority.
Buying objective: brand
Audience targeting: narrow
Case study: Heycar
BROAD TARGETING
NARROW TARGETING
CONVERSION
BUYING
OBJECTIVES
heycar
BRAND
BUYING
OBJECTIVES
Heycar specialises in offering automotive dealer inventory. It launched in the UK in July 2019. Having invested heavily in conversion advertising, Heycar experienced increasing cost-per-lead prices over time. This triggered the question of how brand investment could benefit always-on lead generation.
The campaign added brand and consideration activity to the existing conversion activity and saw a 1.6x incremental increase in leads (versus conversion activity alone), 2.4x greater reach by focusing beyond the existing direct-response objective and audience, and a 8.5-point lift in brand awareness.
Conclusion
These are three of many examples showing how DTC businesses can benefit significantly by experimenting, augmenting their existing approach with broad audience targeting and brand buying objectives to find the next stage of growth. The ideal mix of tight or broad targeting and mix of objectives on Facebook have to be thoroughly tested. It may differ from client to client. However, it can lead to longer-term bottom line benefits.
We hope this article sparks ideas of where your business should test next.■
→Read the full case study here
→Read the full case study here
BROAD TARGETING
NARROW TARGETING
CONVERSION
BUYING
OBJECTIVES
BRAND
BUYING
OBJECTIVES
BROAD TARGETING
NARROW TARGETING
CONVERSION
BUYING
OBJECTIVES
BRAND
BUYING
OBJECTIVES
BROAD TARGETING
NARROW TARGETING
CONVERSION
BUYING
OBJECTIVES
BRAND
BUYING
OBJECTIVES
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