Podcast: Download (Duration: 45:02 — 62.1MB)
Today I’m thrilled to have Reza Khadjavi on the show. Reza is the founder of Shoelace which is a company that boosts your sales with automated retargeting journeys. We’ll get into exactly what that means in a moment.
But Reza is a master of running retargeting ads in the context of ecommerce and selling physical products online so today we’re going to pick his brain. Enjoy the episode!
Get My Free Mini Course On How To Start A Successful Ecommerce Store
If you are interested in starting an ecommerce business, I put together a comprehensive package of resources that will help you launch your own online store from complete scratch. Be sure to grab it before you leave!
What You’ll Learn
- Why Reza founded Shoelace
- The main difference between sequential and behavorial retargeting
- Some good metrics to gauge yourself against other sellers
- Guidelines on ROAS, CTR vs AOV
- The best converting types of ads
- Some good guidelines for running dynamic product ads
- What to set as your budget depending on audience size
Other Resources And Books
Payability.com – A financing company that provides high growth Amazon sellers with daily payments. With Payability, you can say goodbye to cash flow issues and stockouts and hello to scalability and profits. Click here and receive a $200 credit upon signup.
Klaviyo.com – Klaviyo is the email marketing platform that I personally use for my ecommerce store. Created specifically for ecommerce, it is the best email marketing provider that I’ve used to date. Click here and try Klaviyo for FREE.
Privy.com – Privy is my tool of choice when it comes to gathering email subscribers for my ecommerce store. They offer easy to use email capture, exit intent, and website targeting tools that turn more visitors into email subscribers and buyers. With both free and paid versions, Privy fits into any budget. Click here and get 15% OFF towards your account.
SellersSummit.com – The ultimate ecommerce learning conference! Unlike other events that focus on inspirational stories and high level BS, the Sellers Summit is a curriculum based conference where you will leave with practical and actionable strategies specifically for an ecommerce business. Click here and get your ticket now before it sells out.
Steve: You’re listening to the My Wife Quit Her Job podcast, the place where I bring on successful bootstrapped business owners and delve deeply into what strategies are working and what strategies are not in business. Now today I’m happy to have Reza Khadjavi. And Reza is the brains behind Shoelace, one of the leading Shopify apps that automatically handles your Facebook retargeting ads. And in this episode, we’re going to discuss the intricacies of running great retargeting.
But before we begin, I want to give a quick shout out to Klaviyo who is a sponsor of the show. Always excited to talk about Klaviyo because they are the email marketing platform that I personally use for my ecommerce store, and I depend on them for over 30% of my revenues. Now, Klaviyo is the only email platform out there that is specifically built for ecommerce stores, and here is why it is so powerful.
Klaviyo can track every single customer who has shopped in your store and exactly what they bought. So let’s say I want to send out an email to everyone who purchased a red handkerchief in the last week, easy. Let’s say I want to set up a special auto-responder sequence to my customers depending on what they purchased, piece of cake, and there is full revenue tracking on every single email.
Klaviyo is the most powerful email platform that I’ve ever used and you can try them for free at mywifequitherjob.com/K-L-A-V-I-Y-O. Once again that’s, mywifequitherjob.com/K-L-A-V-I-Y-O.
Now I also want to give a shout out to Privy who is also a sponsor. Privy is the tool that I use to build my email list for both my blog and my online store. Now there are a bunch of companies out there that will manage your email capture forms, but I like privy because they specialize in ecommerce.
Right now I’m using privy to display a cool wheel of fortune pop-up. Basically, a user gives their email for a chance to win valuable prices in our store and customers love the gamification aspect of this. And when I implemented this form email signups increased by 131%. Now bottom line, Privy allows me to turn visitors into email subscribers, which I then feed to my email provider to close the sale. So head on over to Privy.com/Steve and try it for free. And if you decide you need some of the more advanced features, use coupon code MWQHJ for 15% off. Once again, that’s P-R-I-V-Y.COM/Steve. Now onto the show.
Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.
Steve: Welcome to the My Wife Quit her Job Podcast. Today I’m thrilled to have Reza Khadjavi on the show. Now Reza is the founder of Shoelace which is a company that boosts your sales with automated retargeting journeys. Now we will get into exactly what that means in a moment. But I actually met with Reza’s team over at the Ecommerce Fuel conference, and I heard great things about this company from my buddy Mike Jackness and other attendees at the conference.
And in fact Reza is a speaker at my conference the Sellers Summit this year. Anyways Reza is a master of running retargeting ads in the context of e-commerce and selling physical products online. So today what we’re going to do is we’re going to pick his brain. And with that, welcome to the show Reza, how are you doing today man?
Reza: I’m doing great, excited to be here, thanks so much for having me on.
Steve: Yeah so give us the quick background story, tell us kind of how you got started with Facebook ads and specifically retargeting?
Reza: Sure. So I can kind of give you a step back of how we started the company. So we were with three co-founders of Shoelace. Right now our team is about 23 people. We started a little under three years ago where the three co-founders we were working together at a startup in Toronto, and we had joined that company pretty early on and started to work very closely together.
And at some point along that working experience, we realized that one day the three of us wanted to leave and start a company together. We didn’t know what we were going to do or what we’re going to build and have a specific idea in mind, but just the three of us we felt were the right ingredients of a founding team.
Steve: So why retargeting?
Reza: Right so when we quit we didn’t have a specific idea, but there was a theme that we were very interested in and the theme was we looked at a lot of people who were creating software products, and generally the way it goes is the way to get value out of a software product is that you kind of need to have a strategy in mind. You need to learn how to use the software tool. You need to go into the software tool, do some work. And then it’s through that process where you extract value out of that software product.
One of the ideas that we were exploring was this idea that we wanted to help businesses who shared a similar audience cross promote each other. So let’s say you have somebody who sells like women shoes, and then you have another brand that sells women purses for example. What if you can have these two businesses cross promote each other and send traffic to one another? And one of the ways that we thought that we could do this kind and we kind of just assumed that everyone is doing retargeting, everyone is doing it well and that there’s no particular opportunity there.
But what if we can do this advanced clever method of retargeting where when somebody buys a product from business as A, they’ll start to see retargeting ads for business B and vice versa. So I was like an idea that we were exploring. We talked to a bunch of merchants and started to get feedback and people were overolling telling us that’s something really cool idea. I’d love to try that when you have your beta program ready and you have a few partners for me.
But in the meantime like this retargeting thing, I’ve got to have something set up and I don’t know that I’ve done it as well as I should have and I’ve not given it as much attention and I know I probably should. It’s pretty smartly, can you help me figure it out and meet me.
Steve: Just for the benefit of the listeners, who might not be that familiar with just retargeting in general, let’s just start from the basics. So what are the different — so first of all what is retargeting, and then what are the different types of retargeting that you can run?
Reza: Sure, so yeah I mean in a nutshell retargeting is this idea that if you have an online store or any kind of online business and you look at the conversion rate of that traffic, for the most part something like 98% of visitors to a website will leave without buying anything or doing the conversion action whatever that may be. And then some of those people may have left an e-mail address and you have a way to contact those people and kind of send them follow ups to encourage them to come back and complete the purchase.
But for the majority of people that may have visited the website and left without buying anything, the only other way to get in front of those people or one of the only other ways is to do retargeting which is the idea of showing advertising on Facebook, Instagram, or throughout the web to people who have left a website without buying anything. So it’s not concerned with trying to drive brand new traffic to the store, it’s this idea of being you already have an existing set of traffic that has been to your site or engaged with your content and can you show high retargeted ads to do those people to encourage them to come back and complete that action.
So that’s retargeting in a nutshell. You take everybody who’s been on your site no matter what they did, no matter what pages they visited, no matter how long they were on the page, and you show all of those visitors the same retargeting ad for a number of days after they leave. So it’s kind of in our opinion not the best way to do things, but if you have a really small audience, you don’t have a ton of traffic; it’s not a horrible way to start. At least you are getting in front of those people to encourage them to come back.
But then the next level of retargeting we like to think about is this idea of behavioral retargeting. So take the actions and the behavior the visitors did while they were on your site and then segment those people to show retargeted ads based on what they did. So if you look at an e-commerce store and you think about the customer journey funnel, somebody may land on your home page and then they might look at a collection, then they might look at a product and they might add a product to cart, and then if you’re lucky then they might buy something from your store, and then eventually come back and buy from you again.
So that kind of funnel drips down and not everybody that visits your home page obviously is going to make it all the way down to buy. And so for behavior retargeting, we think that it’s a really cool idea to take various parts of this funnel. So take people that left on the home page for example and didn’t even look at a product or didn’t add to cart and segment those people into a unique audience, and take people that have added an item in the cart and who are much lower along in the funnel, take those people and group them into an audience and show them the retargeting ad.
So to take the various parts of that funnel and create an audience segment based on the behavior the visitors did on the site and show them a highly personalized ad. So for example, if somebody leaves the site after just having viewed the home page and your ad copy is like aggressive sales copy that says like come back and buy now, it’s like it might not resonate with somebody who didn’t even look at a product. Whereas somebody who went as far down in the funnel as adding an item in cart, they might resonate well more with an aggressive like discount offer to join cart and to come back.
And so the idea is to speak to people based on which stage of the funnel they left and we think about that as behavior retargeting. And the third part which we think is really sequential retargeting where if you imagine that you’ve segmented your audience in the behavioral funnel and you’re showing somebody who left the homepage a retargeting ad, that’s pretty good. But if you show that person the same retargeting at over and over again for months after they leave, at some point they’re going to get banner blindness and ad fatigue, and they’re just going to start to become annoyed with your brand frankly.
Especially in the context of social advertising, we like to remind people that just think about your own native experience browsing through Instagram or Facebook the moment you see a piece of content that you saw an hour ago or the day before just like instantly scrolling past that piece of content. And so the same is true with advertising, and if you watch advertising in places that people are hanging out like on social media, then the idea of having that content of all those people are being exposed to your ads we think is really powerful.
So sequential retargeting is this idea that as people leave your site, they’ll see a sequence of ad experiences. And that doesn’t necessarily mean that they need to go through a specific sequence. We’re doing a lot of research right now to understand what was the best way to execute sequential retargeting. And the idea is instead of showing the same ad over and over again, they should be exposed to overwrite the same example if somebody has left off of the home page and that’s the only action they took.
Maybe it makes sense to show them a block content and something that adds value and kind of builds a brand relationship and gets the visitor to learn about the brand a little bit more. And then maybe a day after or a couple of days after they can see a carousel ad of some of the best selling products to encourage them to come back and look at, or maybe on a different day they could see a video that your brand has made. It’s a really interesting video that exposes your brand. I think there’s — I forget the number but there’s a stat that a consumer needs X amount of touch points.
Steve: It’s like eight touch points I believe.
Reza: Right and so using those different touch points to kind of tell your brand story in a variety of different angles I think is really important. So those are the three different ways if you think about retargeting. Even it doesn’t have to stop with people who haven’t bought from you. So you take your audience of customers that have bought from your brand and you repeat, you have an aim that you can kind of drive repeat purchase. You can have a retargeting ad that is specific to people that have bought and show them for example your rivals and things like that.
So I think that there’s a lot to retargeting than just kind of setting up one dynamic product ad and letting it run which is what most people do, which again is better than nothing. But especially when you’re getting into kind of like high volume traffic, there’s a lot of interesting ways that you can slice the audiences and get highly targeted.
Steve: Let me ask you this before we go on to sequential dynamic product ads because they’re showing different images in the carousel, does that somewhat mitigate ad fatigue in your opinion?
Reza: Yeah, I think that it does. I think for the most part they do show a variety of different carousel ads. But when you think about the experience, it’s still very like just product focus and it kind of depends on the type of e-commerce store. If you have some for example general stores that are very, very product oriented and there isn’t much emphasis on the brand, and the reason to buy from the store is kind of a relationship with the brand and it’s very much like a very trendy product or gadget, or something like that. And I think in those cases, they tend to work really well.
But for example if you are building a brand and one of the reasons why somebody would shop from your brand is what you stand for and the messaging of your brand and the story of your brand, I think there’s a lot of cases where those are some of the selling points that the brands are using to compete with kind of big box stores. And again those cases while it does mitigates some version of being fatigued with advertising, it doesn’t do a particularly great job at building a relationship and telling a brand story, which again depending on the type of store and the nature of the business can be very important.
Steve: That makes sense. So can we kind of talk about specific use cases and kind of what Shoelace does behind the scenes. So first off it probably creates a bunch of different audiences, right?
Steve: So what are some of these main audiences that it creates, and how do you use them?
Reza: So behind the scenes what we’re doing is creating a product catalog, creating a bunch of different audiences. And these audiences are based on a number of things. They are based on the behavior of the people that were on the sites, the people who just viewed the products, the people who added to cart, the people who purchased, the people who just looked at a home page. And then we create audiences that are based on the number of days since that person has been on your site and having done that action.
So we’ll create like one day, two day, three day, five day, seven day, 30 day audiences in a variety of these behaviors and these are used over time. They are all used on day one but they’re kind of used so that we can track the audience size of some of those small segments which kind of unlock the ability for us to create a very specific campaign. So as an example, when we create a variety of these campaigns, and then one of the campaign suggestions that we’ll send to someone is let’s say a multi-stage retargeting journey that targets people who have looked at [inaudible 00:14:50].
And then in that case the audience may not have been big enough for us to create a specific journey. By the way, we refer to as kind of sequential retargeting which we call those journeys in our product. And so somebody’s audience of people who added to cart over let’s say the last seven days, if that audience size isn’t at least something like 500 or 1,000 people, then the audience is way too small for us to create a journey specific to people that added to cart.
But we have those audiences created so we’re monitoring the increase of that traffic, and as soon as it does become that minimum audience threshold in order for it to make sense to start adding more complexity to the retargeting, then they’ll receive a notification from us with an additional campaign created and in a preview set. I think the idea is that as audiences grow and as the traffic to an ecommerce store increases, the complexity of how to segment the retargeting audiences and what to do there starts to change. And so one of the places that we add value is to monitor the increase in that traffic and make those suggestions accordingly.
Steve: I think the best way to help the audience understand this is to actually walk through a specific example of a company that uses you guys. And if we can talk about the different retargeting ads along this journey, that would be great. So I don’t know if you have a company in mind that we can talk about?
Reza: Let me let me pull something up and then and walk you through it specifically. So, one example of a customer that is using us is a company called Wee Squeak. So Wee Squeak is pretty a successful Shopify brand. They sell shoes for kids, and so I’ve heard from a lot of people that tends to be a very difficult niche, but they’re doing pretty well. And on their retargeting journey, here is what it looks like. So on the first day after somebody leaves the website, they’ll see a combination of two different ads.
Steve: This is they haven’t added anything to the cart or anything, just a home page abandon?
Reza: Right so these are people who have viewed at least one product.
Steve: Okay got it.
Reza: So viewed a product journey and so on day one they will be exposed to two different ads. And these ads are targeting that audience at the same time, so they may see one, they may see the other, and they will likely see both. So what happens to our campaign, the product, those always when you include them are often in the journey. And another one is a lifestyle ad where we’re pulling a carousel of lifestyle images from their Instagram feed that are tagged with a product.
And so in the carousel, instead of it being very product specific with a white background and just like clear product shot, it’s a carousel lifestyle images that are a lot more engaging and interesting. And so in the first day those are two ads that they will be exposed to.
Steve: What does the landing page look like for the lifestyle images?
Reza: So the lifestyle images if they’re using — so we have an integration with an app called Foursixty. Foursixty creates these shoppable Instagram galleries that allows you to tag your products and have a shoppable experience on your web page that when you put the destination, you see the lifestyle image but then you also see on the side of it the products that are contained in them and you can shop that experience.
So if we’re doing this with Foursixty integration, the landing page that we take them to is that shoppable experience by Foursixty that would show the lifestyle and niche that they clicked on, but then also has a buy experience that they can do on site [overlapping 00:18:30] will be directly to the product page. And in this case…
Steve: Real quick before we move on, that tend to work better than just a standard dynamic product ads like the lifestyle images?
Reza: Yeah so we still have a lot of work to do in terms of putting together all the data from being able to give a definitive answer of like which one of these is working really well. It’s very hard to say at the scale that we’re working on running kind of millions of dollars with retargeting per month. It varies a lot from customer to customer, and so we don’t have a kind of canned answer of like this is better in all cases. In some cases some things work better and other things, other things work better, and we’re doing a lot of work to try to figure out those answers.
But they are going to be mostly around in this kind of a vertical, these tend to work better, in that kind of vertical, this kind tends to work better, in this kind of an average order value this tends to work better. But from just thinking about for example if you have an audience that is in Instagram a lot, and if Instagram is a platform that they’re directly typing to, then that lifestyle resonates a lot more with them [inaudible 00:19:45] and tends to work a lot better from a click through rate perspective. But yeah it’s hard to give a specific answer. Generally I think it varies a lot for people and who their audiences are and what type of store they run.
Steve: That makes sense, that’s why you run both?
Reza: Right. And then for this person, then the next stage of ads would be an ad that links to a place of a page on their website that is a sizing chart. And so it’s not easy to…
Steve: Is this on the first day or is this on a subsequent day?
Reza: This would be on a subsequent day. And so we also play with these stages as well. They aren’t necessarily running day one, day two, sometimes they are — that first stages is running for like two or three days and the next stage is running for two or three days after that. So that’s an area we’re doing a lot of testing too to understand what is the best kind of staging experience for these kinds of ads.
Our goal is to show variety of ads. The specific mechanism by which to make that happen we’re still exploring a lot to understand what the best way it is to do it, and we run a lot of those experiments up against to show and provide. And so the next day’s case would be the second day. One of the ads is to make it to the sizing chart to help our visitor to make a decision about what size might be the right size for their child, and so it links that page.
Steve: So the landing page is like it links directly to a content page, it shows them how to size something?
Reza: Correct yeah.
Steve: Got it.
Reza: So this brand will have a sizing chart on their page and it links directly there. And so it’s not like an aggressive buy now type of ad, it’s more like maybe one of the objections to making a purchase. So like how do I know what size works for my child like on that landing page. There’s probably some content around if it doesn’t fit you can return it, and kind of showcasing that return policy.
And then another ad in that stage as well is a video ad. It’s just like a cute little fun video that they’ve made for their brand that has a little toddler kind of wobbling and walking, and wearing one of the Wee Squeak shoes. And it’s just kind of a fun interesting video that it’s kind of hard not to enjoy watching it’s brand and it starts to resonate with customers like what Wee Squeak is about, like there’s a sense of humor and stuff like that.
Steve: Can I ask you a question before we go on?
Steve: Are all these ads leading to conversions, like when you calculate the return on ad spend, are you just aggregating all these together?
Reza: Right yeah. So that’s how we like to look at it these. We look at the total conversion from the entire journey and not necessarily like is that specific video ad driving immediate conversions for example. I think and so yeah we tend to look at it holistically, but then also do look at which of these ads are doing well from things like click through and engagements and stuff like that.
Steve: So what are some of your guidelines? For example that sizing ad what would be like a good click through rate, and what would be a good watch through rate for the video?
Reza: Yeah. I think in this case the video is very short. I think it’s something like, it might be something like ten or eleven seconds. So I mean in this case we’d like to see a really high watch through rate, something like 90% is have maybe a majority of people watching most of the video is what would be expected here. And then in terms of click through, I don’t have a specific…
Steve: I’m just curious if you have any guidelines, or like how do you know if it’s just like a total dud for example?
Reza: Right. I think Facebook’s relevance score helps but also sometimes that’s misleading. So relevance score, if it’s like seven, eight, or nine, that’s generally a really great sign. And I think from a click through rate perspective, I think you generally want to see something around like a full percentage or more. If there’s a click through rate that it’s like really close to zero, that’s bad and if you have two, three, four percent click through rate, that’s wonderful.
And I think in this case because the audience is relevant, it is not cold traffic, you do want to see some pretty good metrics there. So if you compare it to your kind of cold audience maybe dud, the result should be a little bit better. For example in terms of click through rates, so that’s a good way to compare for example if you’re running cold audience then you’ll never – cold traffic to people who have never heard about your brand before and you have somebody who [inaudible 00:24:27] then maybe you want to see your retargeting do a little bit better than that because [inaudible 00:24:36] isn’t good.
But the overall success I think is based on a couple of things like we’re introducing some things into your own product to be able to show us a lot better. But for example if and we talked earlier about showing retargeting ads to various stages of the funnel. If you have a retargeting journey targeting people that have left off the homepage, then the immediate success metric isn’t necessarily how many of those people came back to buy a product. It will be more about how many of those people were able to move to the next stage of the funnel which would have been to look at a product.
And the calculation of like true ROI there is going to be a lot more holistic to think about overall what is like lifetime value of a customer through these various touch points, how much are they all totaling up together to have some rough idea of what is my retargeting cost for a net new customer. But then it’s kind of a lot more complicated than just looking at a success of a specific campaign.
They should all be measured in the exact same way. I think the overall measurement is performance, is conversion, is sales, but to kind of look at every single ad, you look at every single ad set with the goal of like each one is going to drive immediate return on not spend, that I think is probably not the best way to look at it.
Steve: I just want to take a moment to thank Payability for being a sponsor of the show. If you run a successful e-commerce business like I do, you probably know that the worst thing that can happen to you is to run out of stock. Now my wife and I regularly import container loads of merchandise from China, and having the cash flow to do so is very important.
Right now Amazon pays you every couple of weeks, but imagine what you could do if you got paid on a daily basis. My friends over at Payability make that possible for thousands of Amazon sellers. Right now high growth Amazon sellers are using the extra cash flow from Payability to buy more inventory, stay in the buy box, and keep up with demand.
Here is how it works. Every single business day, Payability gives sellers 80% of their Amazon earnings from the prior day for an initial 2% flat fee on gross sales. The remaining 20% is reserved to cover returns and charge backs, and is released to you on Amazon’s regular 14 day schedule. Over time as you stay on their platform, Payability will increase your advance rate up to 90% as well as reduce their fees to only 1%. Your money isn’t doing anything for you if it’s sitting at Amazon, so why not get it faster.
Sign up now and put your earnings to work today. Go to Go.payability.com/Steve to get started, and receive a $200 credit upon sign up. Once again, that’s Go.payability.com/Steve, and get a $200 credit upon sign up. Now back to the show.
So far we have DPA and lifestyle images on day one. Day two it sounds like it’s more of a content play, what do the other days look like in the funnel?
Reza: So in the last couple of days, then we have a bestseller carousel, so this is a carousel of specifically products that are doing the best in that month. So, some of the products that are just doing really well and selling well. So those it’s a carousel but it’s not a dynamic product one that is set to a carousel. It’s our system taking the winning products of that month and plugging it into a carousel app to showcase more curated list of things that are doing well.
The ad copy will be calling that out and saying like here are some of our bestsellers this month, check out what the people are buying. And then on the final day, we’ll go back to a dynamic product ad and have it be pretty kind of product specific based on their visiting behavior. And that’s the example of this person’s funnel.
Steve: So this is a four day funnel then?
Reza: Yeah, so this is a four stage funnel. It lasts for – this funnel lasts for about seven days. So the kind of third stage and fourth stage, each run for a couple of days longer. And then that’s also a really big area of experimentation that that we try to run different things to understand based on the type of your store what should the right duration of a retargeting funnel be. So for example the easiest example I like to refer to is like if you have a store that sells like t-shirts or fidget spinners or something that is more of like let’s call it an impulsive purchase that doesn’t have a really high average order value.
In that case people aren’t necessarily thinking long and hard about making a purchase of that product. It’s more just like if they find it interesting, they might buy, if not they’ll kind of move on pretty quickly. But if you are for example selling jewelry or something luxury and the average order value on those items are in the mid hundreds, then that that is probably a bit more of a considered purchase and would take some time for people to make a decision. They might be looking at the competitors and so on.
And so in some cases the answer of like how long should a retargeting ad, a retargeting journey run for varies from person to person and it is among the things that we’re researching pretty intensively to try to find out answers to those things that are big hit into our products so that people don’t have to necessarily individually go and try to find these things and we can do it for them and also use the collected data that we have from all of our customers to try to make better decisions or obvious things. But that’s a good example of like how length of a retargeting journey not necessarily being the same for everyone.
Steve: I’m just curious like how this would perform versus just a straight DPA ad. Did that company use just straight DPA before?
Reza: Yeah so in this specific case, we have a case study that just kind of based on her experience and looking at the results that she had gotten previously that this retargeting journey outperformed her DPAs. It doesn’t always happen that way and I think that again among the things that — one of the things that I like to say a lot to people and we talk about in Shoelace is that we’re on — our mission is to first of all understand what it means to be the world’s best retargeting expert and then turn that into software.
And the answer is generally not so black and white. I think there’s a lot of things to research, a lot of things to understand and we’re doing a lot of that to try to figure out in what case is something like this better than just a straight up DPA. And if a DPA is a lot better, are we talking about success metrics in exactly like in understood way. And if you think about for example, some people will look at performance — I think like one of our biggest challenges in trying to figure out what is better than something else is to get on the same page about how do we define success.
If somebody for example is purely interested in multiples of ROI and that is the only thing they care about for example, then it’s like, okay, maybe we can just narrow the ads down to people that have added to cart? And the ROI multiple on those ads are going to be phenomenal because these are like a really hot audience, these are people who have shown a lot of interest, but it’s not a scale to provide really huge sales just because that audience size is pretty limited.
And so instead of going up and plan this game, we’ll say — and because of trade off which will return a revenue generated, like sales lived through these activities and people have different levels of preference. Some people have their on levels with data, are happy with what’s called like anything above 3X, I’m willing to spend just the minimum amount of money to get returns at that multiple whereas other people have different preferences. So it’s kind of like it’s really important to get on the same page about how do we define success, and then think about how some of these different ways of doing things can compare against each other based on that metric.
Steve: Yeah I guess I’m just curious. So first of all for the audience, DPA stands for Facebook Dynamic Product Ads, and that’s basically where you’re shown an ad based on what someone actually looked at, at your store just in case we’re using acronyms that people don’t understand.
Steve: I’m just curious, so in terms of scaling, like if you just had like a top of funnel plus DPA, I was just kind of curious again your experience at least whether these journeys end up as a whole as a collective out performing these just straight dynamic product ads?
Reza: So I think if you are just trying to get return multiple or is it that maybe in spending a certain amount just showing the same ad will have a return of multiple. But then if you increase your budget to that same audience, there starts to be kind of diminishing returns on that one ad. It’s a difficult thing to answer and I don’t want to kind of mislead your audience to just be like these are better than that.
I think our approach has been just kind of thinking about this from first principles to say in our experience, it is a more pleasant experience to not be seeing just the same kind of rotating product ad and to see a variety of different things. And starting from that kind of first principle, we’re doing a lot of research to figure out in what case is that true and what case is that not true, and how do we take those learnings and continue to make our product experience better. But we’ll have a lot more to share on this as we kind of release a lot of our research on the topic and I’ll be sure to forward that off to you so you can share with the listeners who are very interested in the kind of the nitty-gritty of the data around this.
Steve: Along those lines then what are some of your frequency caps then on your ads that you like to keep below?
Reza: Yeah, so frequency is also an interesting topic I think for people who for example let’s call it for retargeting. If you just kind of run with all of the default placements and you look at your placements being like Facebook mobile, Facebook desktop, Instagram, right hand placement, audience network, etcetera. And you just have to leave all of those things on and then you look at the frequency number based on that. You might find for example that the frequency number could be really high.
Let’s call high being anything over 10 starting to become potential concern to ad and you dig in and get a lot of [inaudible 00:35:32] placement which in itself is questionable whether it’s a valuable placement or not. But for example if a lot of the frequency comes from the right hand side, then it might not be as concerning as a really high frequency that is just coming from desktop or newsfeed mobile because people aren’t really paying that much attention to the right hand side. It’s not as kind of a disruptive experience as you might see if you got.
And so I just wanted to add that as like additional thing to think about when thinking about frequency, but we usually I think like to see mid to high single digits is probably a good range for frequency on retargeting. So anywhere from like five to nine is probably a good ratio to look for.
Steve: And so by obviously introducing more variety in your ads, you’re much better able to fall below this cap right, because people are seeing a variety of your ads?
Reza: Right. And so the frequency per each one I think for us we’d like it to be even lower. I think the idea is collectively on if we’re running four, five, or six different [inaudible 00:36:44] the idea is for each of those to be seen [inaudible 00:36:50] so there’s like some good variety.
Steve: Okay and I did want to touch a little bit about kind of what return that you can expect to get kind of depending on what your average order size is, your average order value. Do you have any guidelines along those lines?
Reza: Yeah, so we’ve seen a very good correlation between kind of return on ad spend and average order value, which makes a lot of sense, right? I think when looking at the return on ad spend, the biggest kind of variable there, the two big ones are how much was spent and how much was made. And the idea of how much was made; it has a lot to do with what the average order value was in each of those purchases.
So if you make ten sales for example, and each sale is worth $20 and in another scenario you make ten sales and each sale is worth $150, almost like the same number of sales can have a really big difference on the actual ROI. So in Facebook ads and retargeting, it’s also no different here. [inaudible 00:38:01] the higher correlation, the threshold is where below a certain number it starts to become pretty difficult to see good returns.
It’s like under $30 for example; an average order value of less than $30 starts to become pretty tough to see great ROI on. And the lower the average order value, the more important it is the quality of the traffic, which is another variable there. If you’re driving high quality traffic even though the average order values are low, the quality of that traffic is really good, then enough of them will convert to make math work.
But the place in that quadrant that you don’t want to be in is have really low quality traffic and really low average order value. That’s going to be a nightmare to try to get good returns on. Where you want to be is pretty good conversion rates, high quality traffic, and pretty high average order value. So anywhere in the kind of 60, 70, 80, 100 dollar average order value or higher starts to become a lot easier to see a good return on ad spend.
Steve: Okay, so just to kind of summarize then, if your average order value is below 30 from what it sounds like, you should try to do things in your shop to kind of boost that value up to make just Facebook advertising easier in terms of getting better ROI?
Reza: Right or spend a lot more time thinking about like what is the source of the traffic here? Are you driving traffic that isn’t the right kind, and if that’s the case like we try to only going to advertise to traffic that’s already been to your site, and if traffic was not good traffic to begin with, then it’s just like pouring more money away to advertise to not great quality traffic. And so there’s a lot to be said about just auditing the quality of the traffic that is coming to the store to begin with before even trying to optimize the retargeting campaigns, because those two are very, very closely connected.
Steve: But along those lines, if you’re just targeting people who have added to cart for example, that’s generally going to be high quality traffic?
Reza: That will be yes, but generally people — if people have trouble getting high return ad spend on an add to cart audience, something is wrong there. Generally with such a small audience, so the cost of advertising them is not very high, and it’s as you said highly engaged, good quality traffic to add that too. So [inaudible 00:40:29] turn out and which is generally a pretty good starting point as well. If someone is just trying to figure out what kind of retargeting to do, that’s a good place to start is to just kind of retarget to people who added to cart and start getting an understanding of how is that performing, and it kind of becomes a baseline to start comparing as you move higher up 70 higher up in the funnel.
Steve: Yeah and if people are having problems converting on those ads, then chances are there is something wrong with the site, right, or something is wrong with the messaging and that sort of thing?
Reza: Right yeah.
Steve: Reza, we’ve been chatting for quite a while. Where can people find more about your company, and where can people get ahold of you?
Reza: Sure yeah. So our website is Shoelace.com, so people can find us there and learn more about the product there or also available on Shopify app store. If you search Shoelace there, I’m always happy to connect with people who have questions about this sort of thing. My email is Reza@shoelace.com. I think one of my favorite topics is just around like performance and how to compare one thing over another. I hope that the answer is that weren’t trying to avoid the question. It’s just more about it’s complicated and we want to try to be very clear about our messaging.
[inaudible 00:41:48] just about that and has some inputs or opinions about how they think about measuring performance or how they would look it if they were comparing the performance of one thing over another thing. And I’ve always loved to hear from people on that regardless of anybody who is listening and wants to shoot some thoughts on that topic. I’d love to hear from you and also in the other topic as well.
Steve: I’ll be honest with you Reza, if you gave me definitive answers, I would have been worried because this is such a broad type – I mean it totally depends on what you sell, the type of product, whether it’s an impulse buy or just come like a long term seller. There’s just too many variables here. So I was just kind of curious. I think you gave good guidelines without giving definitive answers which you can never really give in this case.
Reza: I’m glad.
Steve: So thanks a lot for coming on the show Reza, I really appreciate it and I’m looking forward to seeing you at the summit.
Reza: Yeah, I’m looking forward to as well, thanks Steve.
Steve: Hope you enjoyed that episode. I apologize for the audio quality, but I believe we were recording actually during a blizzard in Canada. In any case, I’ve actually been running straight dynamic product ads with my store, and I actually learned a ton about sequential retargeting from Reza. For more information about this episode, go to my wifequiteherjob.com/episode206.
And once again, I want to thank Privy.com for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers. They offer email capture, exit intent, and site targeting tools to make it super simple as well. And I like Privy because it’s so powerful and you can basically trigger custom pop-ups for any parameter that is closely tied to your e-commerce store. If you want to give it a try, it is free. So, head on over to Privy.com/Steve, once again, that’s P-R-I-V-Y.com/Steve.
I also want to thank Klaviyo which is my email marketing platform of choice for e-commerce merchants. You can easily put together automated flows like an abandoned cart sequence, a post-purchase flow, a win-back campaign, basically all these sequences that will make you money on autopilot. So head on over to mywifequitherjob.com/K-L-A-V-I-Y-O, once again, that’s mywifequitherjob.com/K-L-A-V-I-Y-O.
And finally I want to thank Payability as well. If you’re looking to take back control of your cash flow, and scale your Amazon business fast, then sign up for Payability and say goodbye to cash flow issues and stock outs. With daily payments, you can speed up your supply chain, buy inventory at optimal times and stay in the buy box. The more control you have over your cash flow, the more buying power you will have. So visit Go.payability.com/steve to get started, and cash in on a $200 credit just for being a My Wife Quit Her Job listener. Once again that’s G-O.payability.com/Steve.
Now I talk about how I use all these tools in my blog and if you’re interested in starting your own e-commerce store, head on over to mywifequitherjob.com and sign up for my free six-day mini course. Just type in your email and I’ll send you the course right away. Thanks for listening.
Outro: Thanks for listening to the My Wife Quit Her Job Podcast where we’re giving the courage people need to start their own online business. For more information, visit Steve’s blog at www.Mywifequitherjob.com.
I Need Your HelpIf you enjoyed listening to this podcast, then please support me with a review on Apple Podcasts. It's easy and takes 1 minute! Just click here to head to Apple Podcasts and leave an honest rating and review of the podcast. Every review helps!
Ready To Get Serious About Starting An Online Business?
If you are really considering starting your own online business, then you have to check out my free mini course on How To Create A Niche Online Store In 5 Easy Steps.
In this 6 day mini course, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's absolutely free!