Why can't you improve your Facebook advertising performance?

Reddit user WizardOfEcommerce shared their experience of running $20 million worth of Facebook ads. His post received a massive number of likes, prompting him to write a follow-up about common mistakes made when launching ad campaigns.

Mistakes you make when launching Facebook ads:

Complex ad account structure

Every month, we review dozens of ad accounts, and what we see is simply staggering.

Recently, we came across an account with six campaigns, two of which were conversion campaigns — ABO with over 10 ad sets, each spending $30 a day to target a similar audience. Then, two other campaigns with CBO, featuring the same ad sets and ads — just a waste of money. The fifth and sixth campaigns were retargeting campaigns set up for people worldwide, despite the main target audience being the USA.

There's no need to run multiple ad account structures unless you're selling in different countries with different time zones. For example, have a separate campaign for the USA and another for the UK.

There's no need to run retargeting campaigns unless you have 1000 product items. You can launch a catalog retargeting campaign to remind users of their purchase, but it's literally 3-5% of the total daily budget.

To optimize these numerous campaigns, it requires a lot of work.

Going back to my previous post, the campaign structure needs to be simplified for effective advertising.

No creative testing

You can't scale advertising accounts if you're not conducting weekly creative tests.

Creating new creatives has never been easier than it is now. All smartphones over $500 have decent cameras, allowing you to shoot videos and photos of your product. Most of our most effective ads were shot on an iPhone.

Try to test at least 5 new creatives per week.

I've seen accounts spending $20 thousand a day and only broadcasting UGC videos. For them, the next literal step is testing static images to capture the attention of a new audience.

If you have friends and family, ask them how they consume content on Meta. Do they react more to video ads or graphic creatives? By asking this question, you'll get an idea of what type of content you need to create.

Ignoring new customer acquisition

If your ad set frequency is above 1.6, guess what? You're mainly engaged in retargeting, and your ads aren't reaching a new audience. To grow, you need to reach new users.

You can go into your ad accounts and quarterly review reach, impressions, and frequency metrics. Check what you spent the most budget on. What's the frequency? If you see a frequency above 20, congratulations, you've spent on an audience that should have been buying from you anyway.

There's absolutely no need to spend thousands of dollars on retargeting an audience you can reach through email or social media posts.

Pay attention to your frequency: if it's above 1.5, you need to create ads that attract a new audience. Your ad sets should have a maximum frequency of 1.2.

Lack of Knowledge About Numbers

This applies to those who sell more than one product. If you only look at daily return on ad spend and nothing more, you're in for a surprise when you analyze the numbers.

Take a table and create the following columns:

• Facebook Ad Spend
• Google Ad Spend (if applicable, create a column for each channel you're spending money on)
• Website Revenue
• Revenue from New Customers
• Total Orders
• New Customers

We consider Facebook ads as an acquisition channel. So, every month, you should be acquiring new customers.

Calculate the return on ad spend for new customers: total revenue from new customers divided by total ad spend. If the figure is not above 1.1, you're overspending on retargeting. The return on ad spend for new customers is an indicator of how effective your marketing ecosystem is in generating additional revenue, not just reactivating existing customers.

We had 60% repeat customers and 40% new customers. 60/40 is the ideal split, but it's not about the percentage of new and returning customers; it's about how much these new and returning customers spent compared to what was spent on acquiring them.

Ultimately, a significant portion of your budget should be spent on finding and attracting new customers.

Brands that don't track return on ad spend and cost per conversion for new customers are essentially running blind.

Recently, we audited an account where 80% of the monthly revenue came from repeat customers. When they calculated their unprofitability, they were shocked, realizing they had spent all their net profit and even more on advertising to existing customers.

To avoid this, check the metrics daily:

• Total cost per conversion
• Cost per conversion for a new customer
• Return on investment for your ecosystem
• Return on ad spend for new customers

Track each quarter:

• Purchase frequency
• 90-day customer lifetime value (LTV)
• 90-day net margin

No Direction

If you're not testing ads weekly and tracking metrics daily, you won't have a clear understanding of where to take your brand.

And when you start tracking everything, you'll see a host of problems. I suggest solving one problem per month. If you're struggling with acquiring new customers, focus solely on that until it's resolved. Then move on to the next task—increasing the LTV of customers who buy from you.

E-commerce and any customer acquisition business come down to numbers. Track, find the most critical problem to solve now, and solve it.

Then move on to the next one—don't do 5 things simultaneously.