Facebook Ads Update: What it Means for Ecommerce and Why it’s Awesome

 

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Are you using Facebook ads to drive traffic to your ecommerce site? If you’re not, you’re missing a beat, especially because Facebook recently introduced a concept called lookalike audiences for your website visitors.

Let’s take a look at how awesome Facebook ads can be for ecommerce businesses and break down how traditional lookalike audience targeting works. We’ll also dive into the update from March 25th that makes it even better.

Introduction to Facebook Ads for Ecommerce Businesses

Facebook ads allow you to put your brand in front of your exact target market (at a rate that costs 1/10th as much as Google ads, by the way).

Let’s say you market a business that makes and sells maternity wear online, so you try Facebook ads. You can target Facebook ads exclusively at pregnant women under 45 who have stated, in no uncertain terms, that they are interested in maternity clothing.

Here’s how your Facebook Ad targeting might look:

Screen Shot 2014-03-26 at 4.45.51 PM.png

This will give you a reach (in Canada) of about 50,000 users. With that reach, a daily ad budget of $20 will generate between 20 and 95 clicks to your ad (depending, also, on how you design it and how engaging it is).

Let’s say your ecommerce landing page is converting at around 15% (pretty average). If your Facebook ad generates 30 clicks and drives 30 people to your website, 4.5 of them will convert to a final sale. If an average purchase on your site is $35 (let’s say), your Facebook ad has generated more than $157 in revenue for your business per day.

That’s a Return on Investment of 785%.

But what if you could be even more confident that the people you were targeting with your Facebook ads were likely to buy?

You can – it’s called “look-alike audience targeting.”

Introduction to Lookalike Audiences

Facebook ads allow you to import your existing contact lists (customers, blog subscribers, etc.), and target them with a Facebook ad. This is “custom audience targeting,” but that’s not what this article is about. Custom audiences are made up of people who have already bought from you. We’re looking for new customers here, right?

From a custom audience, you can create a similar audience: a lookalike audience.

3rd Party Providers, as well as the Google Chrome plugin Power Editor, take the demographic and interest details of your custom audience and generate a whole new group of Facebook users who share those characteristics.

Look-alike audiences are made up of individuals who share the exact demographics and interests of people who have already bought from you.

So yes, the click-through-rates on ads targeted at lookalike audiences are higher than those of traditional ads.

How Facebook has Amped Up the Lookalike Audience

On March 25th, things got even better for your ecommerce business on Facebook.

Whereas before Facebook only found users similar to people who had bought from you, they’ll now find users similar to people who looked at your website or ventured into your sales funnel, only to bounce out before they converted.

Here’s how Facebook puts it:

Say you’re an online florist that wants to reach people similar to those that made purchases on your website. Now you can use data from your Facebook pixels (Facebook Conversion Pixel or the Custom Audiences for Websites pixel) to reach people who are most similar to people who previously made purchases on your website or bounced before purchasing.

For those wondering how a Facebook Conversion Tracking Pixel works for ecommerce companies, check out Wishpond’s article “How to use the Facebook Ad Conversion Pixel to Track Ecommerce Checkouts

Basically, Facebook provides your business with a bit of code (a pixel, or “tag”) which you place on the checkout page of your website. This tracks the traffic that you generate on your site from Facebook. If they convert, you can retarget them with another Facebook ad (triggering the checkout pixel places them in an audience you can target with your Facebook ad builder).

If they don’t convert, the Custom Audiences for Websites pixel will be triggered. The WCA (website custom audience) pixel is also a bit of code you receive from Facebook. But this one you place on your website’s landing page. If that bit of code is triggered by your website traffic but the conversion tracking pixel is not, then a whole new list is populated.

Here’s where it gets exciting, though…

Facebook can now find users similar to people who visited your site or went a certain distance through the sales funnel. Just click “create lookalike audience” when you have one of your pixel-generated audiences selected.

This strategy will show your brand’s ads exclusively to people similar to people who have engaged with your business but not necessarily converted on a final sale.

Ecommerce company, Shopify, saw a 2x decrease in cost per lead when using lookalikes of their website visitors.

A little bonus: Facebook has also implemented the lookalike audience for your Facebook page’s fans – meaning you can find users similar to people who like your Facebook page without having to analyze your fans’ characteristics yourself.

This means you can target people very similar to your page’s fans with a “like-gated” contest and encourage them to “like” your business as well.

Conclusion

Hopefully this has given you a somewhat advanced idea of how Facebook ads can work for your Ecommerce business if you stay informed and implement the various features of ads to their full potential.

Remember to test your ad design and targeted audiences to see where you’re finding the best return on your ad budget.

And good luck!

Nick Steeves
This monthly Social Media for Ecommerce column is contributed by Nick Steeves. Nick is Chief Product Officer at Wishpond, a platform that makes it easy to run social contests and promotions on Facebook, Twitter, websites & mobile. +Nick Steeves
Nick Steeves

@nicksteeves

Chief Product Officer at @Wishpond.
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