A Smarter Way to Optimize Your Campaigns on Facebook

Kalle Tiihonen Dec 03 2014 9 AM | 4 min read

We work daily with the largest e-commerce companies in Europe and have learned valuable lessons about the optimal way to plan and build your Facebook® campaigns. The topic sounds straightforward, but a lot of advertisers struggle with the best practices. If you want to spend your advertising euros as effectively as possible, an optimized campaign structure is crucial.

Rule Number One: Fine-Tune Your Sales Funnel

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Drawing the funnel helps you to understand the most valuable steps in the sales process. The deeper the visitors are in the funnel, the more potentially valuable they are, because the likelihood that they will consider buying from you is higher. For example, use high bids and budgets for the ad sets that are targeted to people who have added an item to the shopping cart. The ad sets that are targeted to those who have only visited the main page should have lower bids. It represents their lower purchase intent and value for you.

In e-commerce, advertisers typically only track a website’s main page and checkout page. The two steps, however, are not enough. You should also include Website Custom Audience (WCA) pixels to the add-to-cart page, category page, product page, and search. The more data you collect, the more opportunities you have for optimization, targeting, retargeting, and AB-testing. Lookalikes from different product page visitors give you more targeting options than the lookalikes from the checkout page. WCAs and lookalikes allow you to categorize the same mass of people on Facebook to specific targeting categories, whereas your competitors might only use the age and gender splits. Install the conversion pixels to all the steps as early as possible in order to collect data for retargeting and lookalikes. The more data you collect, the more AB-testing possibilities you will get.

Rule Number Two: Understand the oCPM

The oCPM algorithm requires at least 25 daily conversions in order to work effectively. Thus, you should continuously analyze the conversion pixel data in the sales funnel to recognize the ones that fulfill the requirement. If your Website Custom Audience or lookalike size is too small for the oCPM, you can utilize oCPM reach or CPM. The oCPM reach looks for unique impressions and CPM can show the ad many times to the same people. Again, without testing, it's hard to say which option is better for your audience. It’s important to control frequency with core audiences: you don't want to show the same ad to your most loyal customers too many times in a row.

One more thing to AB-test is a 1% lookalike with oCPM (reach) against a 5–10 % lookalike with oCPM (website clicks) and let the oCPM choose the right impressions.

Rule Number Three: Prioritize Right

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Who are your most important customers with the highest estimated lifetime value (LTV)? One method to find out is to create custom audiences and lookalikes from your customers who have spent more than €1,000 over the last 12 months or who purchase items regularly. Make sure the bids and budgets for customers with higher LTVs are higher than for the average LTV segments. You are more likely to reach most of your high-value customers that way. In addition, remember to exclude people who purchased something from your store in the last seven days, since the probability of getting them to purchase again is not very high. How long does it take for a customer to buy again from you? If it’s less than seven days, refine the exclusions. Use a different ad creative for people that have recently purchased something from you if you want to target them. Remember to exclude the already-used customer segments from your ad sets to avoid deduping!

Which ad do you want to show to the most important customers? Do you prefer them to see your app install ad or a daily offer from the web page? You can show an ad only two times per day per person (with the exception of your Page fans, who can see four ads per day) in the news feed. You have to prioritize and choose the right order for the most important audiences: WCAs and small lookalikes. Do you see your most important customers buying again via your mobile app in the future? If yes, one idea could be to show the mobile app ads for people who have made a recent purchase from you and exclude the audience from your other campaigns. We have discussed more about the duplicate targeting challenges in our previous blog post.

Rule Number Four: Iterate and Test Everything

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We hear a lot of questions about optimal lookalike sizes, WCA retention times, optimal oCPM actions, and deduping prioritization. We have the same answer every time: understand the basic concepts such as deduping and prioritization by LTV estimations, and then test, iterate, and learn from the results. With Smartly, you can create several lookalikes and WCAs at the same time, which makes it easier to AB-test different options.

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Kalle Tiihonen

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