$7. 2 million in extra sales is what I was able to add to an e-commerce business in just 6 months by changing the Facebook ad strategy and in this video I'm going to show you what that new Facebook ad strategy was and why it worked so well okay so it's business case study time and I want to start by going through a little bit information about the business and provide a bit of context um so you can see what it like before we made the change and then we can go through um the results of of after and obviously talk about the strategy itself so let's have a look at this business a little bit so it's an e-commerce business um operating in the baby knee sort of newborn specifically most of their products are catered towards newborns but they do have products sort of go up a little bit older you know to 2 3 4 uh years of age just about um average order value $115 the average order value has always been really good in in this business and part of that reason is because of the market dynamics is because of the purchase behavior of the potential customers and if you think about it the purchase window for a business like this is always going to be quite small cuz effectively people live their entire lives not buying anything for newborns and every now and then you might buy a gift if you know a family member or a friend has had a baby but if you're going to have a baby yourself which obviously the most of the target market um you don't buy anything for newborns and then you buy a lot of stuff for newborns in really quite a small purchase window just a few months and then once the baby's born arrives uh grows up a little bit you don't need those products anymore so they move through um quite quickly now there are disadvantages to that and this strategy I'm going to go through in this video combat some of the disadvantages that come with that really short purchase window but there are also advantages to it and one of the things is that the market refreshes automatically really quickly so if you think about the average person has a six-month buying window maybe another six-month one when they have another kid something like that right but it's a short buying window and six months might be a bit generous in terms of the time frame um it means if you find a strategy uh an ad creative and offer products that work really well you don't need to do as much as The Advertiser changing things up because the market itself is changing if new people are in that audience today U and those are very different from the ones that were in at 6 months ago you just don't need to refresh things um as much and if you find a winner you can you can get more out of it there are other markets if you think about like hobbyist markets that you take fly fishing for example people are typically into that and they're likely to be into that for many many years maybe Decades of their life um obviously people come in and out but it's it's a much more static audience and therefore you need to do more changing in terms of AD creative and refreshing things whereas an audience like this that is very much centered around around a time of life um the market automatically refreshes and like I said there are advantages to that for sure okay so business context before Revenue they were doing about $800,000 per month so you know this is a good siiz business It's Just sh of10 uh million um per year the metad spend is about $7,000 per day comes out about two 210,000 uh per month so good siiz budget um the majority vast majority there new customer acquisition is coming from meta ads so Facebook and Instagram ads and this business specifically it's very Instagram heavy as you would uh as you would expect given the uh the products that are being sold in in the target market so the average Ros this is all before remember before we made the change to 3. 2x um which is okay um Ros typically drops the more and more you spend so you know this business could achieve a much higher Roos with a significantly lower ad spend so that needs to be factored in when assessing results so it's okay but you know this part of the reason why we got involved was to really help improve that at their break even is 2.
5x and it's really important metric for every Facebook Advertiser to know you have to know at what point am I actually losing money what point when I break even at what point am I making money and their Break Even was 2. 5x which roughly works out by the way if you do the math that they have about a 40% um gross profit margin now just a little aside I've been recommending this business for a long time that they need to increase the price of their products and increase their margin 40% lower than I would like it to be if I was to run an e-commerce business like this I would be shooting for 60% gross profit margins cuz it's going to make your advertising easier it's going to make you more profitable as you scale all that sort of stuff but they wanted to be price competitive I totally get that that's just a l as side by the way that I would be shooting for um higher gross profit margins but yeah so a 40% gross profit margin works out at about a 2. 5x uh Break Even rowers that's the point at which they're acquiring customers they're not making money but they're not losing money so with the 3.
2x you know this business is profitable but not massively so like it's kind of profitable like it is profitable and they're operating at quite uh large scale so if the percentage of profit is relatively low but um it's it's a reasonably large number as it isn't it as it was in this case um then that can still be something that's worthwhile but uh but yeah I definitely felt like we could do better here Target Ras was a Forex and the business uh that's literally the number they gave to us when we started working with them and their logic was look if we can hit a 4X row ass that makes us that will mean we can scale our campaigns that will mean that we can operate at a larger volume that'll make the business more valuable businesses e-commerce businesses like this often their endgame is an exit they're looking to sell the business so they scale is really important um to that and also they knew that if they could hit the forx r RS and then they could scale um their sales they would then be able to reduce their costs their marginal costs in terms of their cost of good sold because they'd be able to uh Buy in larger quantities they' be able to get better deals with manufacturers because of the the increase volume and therefore that that gross profit margin U would improve okay so they've done a decent job their met ads 2. 2x kind of shows that and just sort of looking at them anecdotally when we're going through we're like these are okay um but I did feel that not only did they need to be improved cuz sometimes you look at ads and you think well these are okay but they could be better but you're using the right strategy I felt we needed a different uh creative strategy in particular so what they had been doing to date is they tested a whole bunch of stuff but most of the ads that were performing best were pretty simple image ads very much focused around the product the sort of thing that you might you see a lot of ads like that right and you see a lot of ads like that within um this space so we thought we could do better so here's the the new creative strategy um that uh that we recommended was to hire Niche specific influencers to create video ads okay now what I'm saying here is not just simple as hire influencers because what a lot of people do is they hire influencers to promote their products sometimes Services um to their own audiences in the influencers audience so you hire an infl wi say you pay them a couple thousand they use your products it's fantastic and they post that to Their audience right but the problem is because they're doing that organically within 24 48 hours no one's ever going to see that post again because that's the nature of these things um so you might get a nice bump in sales for those 2448 hours but you don't get any longevity out of it you don't really get to benefit from that influencers influence over the Long Haul so I was like no no we're not hiring influencers just post on their socials what we want to do is hire an influencer to create the exact same typ typ of video that we think of that typical influencer style Product Promotion video but instead of them just posting on their socials I want us to be able to use that in our ad campaigns and therefore we can massively extend the time period over which we can benefit from that influence a creative asset because we have control of it we can use it we can run it as an ad for as long as it continues to produce results the type of stuff very simple product recommendation Style video ads I'm sure you've seen the sort of thing that I'm talking about they're all over the place um it doesn't need to be different from that standpoint to traditional influencer uh marketing but combining it with the ads and us having control that's the the difference that I think a lot of people miss out and it's probably something that I thought of because I have an ads background right so I'm always going to think of like we can use this as a creative asset in ad campaigns now the reason why I really wanted to do this is because and this applies to all influencer marketing across uh all Industries is that the reason why you work with an influencer is to borrow their trust they have spent a lot of time a lot of effort building trust with an audience so their recommendation carries weight like if you think about you're watching my videos there's a good chance that if you're watching this you might have watched some of my previous videos if you have watched a number of my videos over a period of time you've probably gotten to the point where you know you've implemented something I've recommended it's worked you therefore are more likely to trust my recommendation so if I then go say oh by the way I'd recommend you use this software it'll help improve your Facebook ads there's a good chance you might at least try it out that's what you're doing with influencer that's why it works in the first place and I think this was especially important for this given the market Dynamic and that's why I spent a bit of time a minute ago talking about the time frames how people don't buy anything in this space and then they buy a whole ton of bunch of stuff in this space probably more than they need um I've got a small child so I know exactly what this process is like um and then you don't really buy anything again maybe until you have another child so you don't have necessarily the time to build that relationship between your potential customers and your own brand cuz it's just a shorten time window whereas you can borrow someone else's trust who's done it who they're going to recognize and you get to benefit from that without having to go through all that time and effort yourself and especially important in this market so I'm obviously making the case here for hiring these specific influencers and I really like doing that we're going to break this down of exactly what the deal look like and the results that we got and all that sort of stuff in a second but I do need to say that it is quite hit and miss you can absolutely hire influences and they just for whatever reason don't land at all but but you can hire some that could completely change your business so if you do embark on this journey and go down this influencer road um and the first one you try just doesn't land at all I don't think that's a reason to not try again I think that's just a you didn't quite find the right person for your particular business which happens um so anyway so this was what we wanted to do this was sort of new creative strategy uh but the business owners the owners of this business they wanted to start small they were like okay they were a bit reluctant let's start with the small influence so find one that we can pay $3,000 to $5,000 to it and do this um but I felt really strongly that that was not the road to go down and so here's kind of how I pitched it with this business I was like look you're spending $200 plus, a month on ad let's just take a week's ad budget and use that as our influencer fee and by doing so work with a much more recognizable name a much larger um influencer and I sort of set the bar as like I want someone that the major majority of your target audience is going to immediately recognize and that's quite a high bar but this business is spending $200,000 plus doar a month so that's a $50,000 budget to just create a few simple posts like this you can work with really really big names if you've got that sort of budget for that sort of uh deliverable it's quite an easy deliverable um so that's that that was the pitch and I think that that helped it get across you're like okay yeah it's only a week zad spend I'm like if this just improves results by 5% it's going to pay for itself 10% it's going to pay for itself over time um so that kind of got them around anyway so I said like here's what we need to do let's just create an list of the influencers that you know would meet that criteria of the majority of your audience would recognize them and you can absolutely do that if you set that bar that high there's not going to be many and then we simply reach out to them and we will keep going until someone says yes this is not a sophisticated strategy we're just reaching out primarily through Instagram DMS um often with people you're going to hit Gatekeepers people just going to get ignored so you might have to just try and reach out in every different method you can if you reach out in all different ways um in a relatively short time period normally people are going to um take note of that and I'll explain a little bit more about Reach Out strategy in a second um because I've got some thoughts on that and people do this wrong all the time and I get lots of people approaching me so I see this people doing it wrong all the time anyway so we've got someone to say yes U I can't say who unfortunately but influencer deal structure that's what it looked like so the agreed cost was $45,000 so I mean you know it's it's quite a lot of money and I appreciate most people watching this video will not be in a position to to spend that and that's okay um most people in in watching this video won't have that sort of budget that's okay you can do this at lower scales um by just giving you the example here so $445,000 and the deliverable was three product recommendation style ads we give theer $45,000 and we want three video ads back um each one was going to be focused on a different product three of the best sellers it's what I recommend and the way we structured it was we wanted two ads filmed in the influencer's typical recording location so for example this right right this is my typical recording location and people who watch my videos this is what they're familiar with um and then one of them we wanted to do actually using one of the products which just wouldn't work in their typical recording location they had to be somewhere else actually using it um so that was for a bit of variation there oh and in in the one in their typical recording location they had the products being being held up again I'm sure you see that sort of thing when you're spending time on socials so I do want to break a bit of a limiting belief around this and you can hire much larger influencers than you think um the influenc worked with here is like a big name the the vast I can't say but the vast majority of people watching this would know who this person is um so anyway so creating these ads probably took the influencer two hours or less I mean how long does it take to record there are three really short videos right it's not this is not a lot of time so I think that when you're operating with when you're hiring an influencer and you spend that much more to get that much of a bigger name that is well worth it because it's it's not a big time commitment and you can here we worked with a real sort of A-list influencer but you can find people that have really good siiz audiences very valuable audiences for $5,000 and again the deliverable is not very difficult so you can work with much larger influence you think and they can make a big difference to your business this is an example of as I said really going big um on who we're working with okay one of the things I like about approaching it this way and I think we've we've seen this before working with influenc because we've implemented this strategy a number of times is that you're not asking the influencer to use up their Goodwill because I think more than the time that it takes an influencer to create the uh deliverable in this case the video ads what they are also concerned about is like they're like I can't pitch too much stuff to my audience and they get offers all the time I can't pitch too much stuff to my audience that's using up Goodwill but because we're going to run this as ads we don't need them to do that like don't post it on socials you don't need to it's fine we're going to run this as um I do think that really helps with the pitch if you want to use the strategy now I think this influencer did actually post once on their socials anyway it might have been through a story on Instagram um about about one of the products um but that wasn't like in the agreement they just sort of did that anyway and just sort of hopefully breaking limiting beliefs here a lot of people with large audiences have audience value that far exceeds their wealth so let's take this industry as an example um we've got an influencer that is known within that sort of space within the sort of family children space right and there are some big big names in in that space But it's quite difficult for them to monetize that audience like it basically comes from product recommendations that's that's just about it whereas there are other Industries where like I'm an influencer within the Facebook ad space we can sell High ticket service it's much easier for someone like me to monetize my audience is someone like that so depending on what industry you're operating in you might find someone that's got tons of audience value would be incredibly valuable to your business but they're not making as much as you think they are from it um and that creates a great opportunity for you because you don't have to pay them TS okay so like I said I get for my Facebook ads audience I get at least one a day often multiple a day constant people wanting me to promote their software their new AI tool their whatever right and I ignore the vast majority of them the vast majority are poor reach outs their reach outs like hey we've launched this new thing we're looking to collaborate let's set up a zoom call it's just like it's like that pitch just sounds like effort and like I don't even know if your thing's any good it's rubbish so if someone comes to me with that pitch the only ones that I pay attention to are the ones that are from like big names that I would recognize right like I just um did an agreement with HubSpot for example like when they come through and they say we want to do something it's like okay yeah I'll talk to you guys but if if I haven't heard of your brand name which is 95% plus of the people that reach out to me to get me to promote stuff um I just ignore it and you probably see that because if you watch my videos you see that I don't do many um sponsorships at all because I only want it to be the best quality stuff but there's there is a world in which I would work with Brands and businesses and promote products and services where I don't already recognize the name of the business but here's what they need to do they need to get in touch and they say we're willing to pay you this fee we're willing to pay you $5,000 to promote um our software um on one of your videos with a 20 30C ad read here's what we want you to say about it oh and here's a link to um a free demo account so you can check it out and give it a go and make sure it's good for your audience if someone gets in touch with me like that it's like that's really easy for me to go and check it out see if it's any good is the fee worth it so you you described the fee you described the deliverable and you've described and you've given me like the information I need to actually assess whether it's good or not because obviously I'm not going to promote anything that I don't think is good um to my audience that's what you need to do don't message influencers being like Oh I just want to collaborate and maybe give you a bit of affiliate commission and you have to trust that my tracking software is working and I don't um try and cheat you out of the uh commissions that you're due and these things influencers are thinking right that's that's that's not going to work you want to say I'm going to pay you this for this here's the thing to check it out are you interested make it really simple okay anyway so a little bit on the side if you want to use the strategy the results what did this actually do this strategy for this business so let's start with hook rate so you know I me mentioned before that the ads they were running previously were mostly image ads they had tested some video ads um and hook rate I'm comparing video to video hook rate by the way is the total number of 3 second video views on an ad divided by the number of Impressions and what that does is it shows you how good a job is this ad doing at hooking people in at the beginning so getting them to engage with the ad and watch it and that's actually the most important part of any video ad is those first few seconds because if that doesn't do a good enough job of getting someone to watch well then they don't consume the rest of the content and they don't hear about the call to action and they definitely don't buy or become a lead whereas if you can get that to work out really well they're far more likely to do those other actions so hook rate is something we monitor closely and that's when we're when we're one of the best things about working with an influencer is your hook rate often goes up a lot anyway so the hook rate previously on the video ads that had been run was 11. 7% which is actually decent anything over 10% is okay um but that was the new hook rate just under 35% says more than a 3X hook rate that is huge that basically only happens if you've got something that's just incredibly different and visually interesting and engaging or you're working with someone that most of the target market recognize and trust and want to check out and that's what we're able to uh to do there uh so hook rate huge Improvement by using the video ads that these influencer recorded this influenc recorded um okay what impact did that have on the return on adspend so if you remember previously return adspend was 3.
2x which was kind of profitable the return on ad spend massively increased 5. 9x and this is basically well these are the same products we're advertising it's the same offer it's the same benefits being talked about as as related to these products why people should buy them the big difference here is that because the influencer is featured so prominently in these video ads so many more people are watching the content and that's why I started with hook rate they are engaging with it in the first place now so many people with the previous videos might have been interested in the products offered but they just never bothered to watch cuz it just didn't interest them that much whereas because the influences in there they're like oh okay yeah what's this oh and they watch it okay I'll check it out and that's fed through now the Improvement in Hook rate is never quite going to match you know the Improvement rice is never quite going to match the Improvement in Hook rate like we're not going to end up you know more than 3x in return on ad spend here um but that's a huge Improvement 3. 2x to 5.
9 basically just by switching out the creative nothing else has changed here just switching out the creative um and obviously this is way over the target row ass of Forex which is absolutely fantastic okay so ad spend became a lot more efficient spending an amount that's generating much more return hence the return that spend and the cost of hiring the influencer took literally two weeks to pay itself off because if you think about we've gone from a 3. 2 XR ass to a 5. 9 X row ass we've only T we've taken less than a week's ad spend so $45,000 out of 210,000 a month so less than a week's ad spend and if the ads are can't do the exact Mass but 60% more efficient like that takes almost no time to pay for itself even if you hire an influencer and your ads are 10% more efficient like as then they get 10% better row ass if you've only spent a week's ad spend on that that will pay for itself in 10 weeks and then from then on it's even better and of course like I said these ads can be run for months maybe even years especially with an audience like this where the market automatically refreshes because it's very specific to time of life um which is fantastic so the massive increase in R ad spent obviously significantly improved Revenue as well so let's run through that so previous Revenue you remember was $800,000 per month Revenue increased to 1.
4 million per month so almost um a doubling which is absolutely fantastic the ad spend in that time previously was spending 7,000 a day 210 uh roughly per month the new ad spend stayed exactly the same which you might think hang on they hit the target why aren't they scaling they would have scaled wanted to scale um but the issue was production you know we're already selling almost twice as much product uh e-commerce business there's only so much stock they have um and we wanted to scale the campaign but like hang on we've almost double sales if we then go and double ad spend and we end up with a three fourx sales we won't be able to uh fulfill on that on that demand and therefore we have to turn the ad campaigns off so in those scenarios where you know something like that's going to happen and this happens all the time with scaling with product based businesses even with Service as well because you know you're going to hit capacity it's better to not scale and then have to to turn the campaigns off when youve just run out of stock it's better to try and keep things consistent so um that's what we did but obviously scaling can happen so just to quickly recap here um the change that was made and actually what it cost so we spent $45,000 on an influencer to make out of this business and just quickly by the way when you spend $445,000 like that on an influencer or even a much smaller amount you don't then have to pay for a videographer you don't then have to pay for a photographer you don't have to pay for a video editor because all of that's included within the deal like the influencer obviously has the capabilities to do that because otherwise they wouldn't be creating content online in an influencer so particularly if you're working with smaller influencers and you're like oh it's like $55,000 to work with this influencers it's like yeah but were you going to spend $2,000 on getting that creative made anyway deduct that from the cost because they're going to handle that as well so just a quick aside anyway she spent $45,000 on an influencer to make video ads for this business promoting the products and that increased Revenue by $600,000 per month which is $7.
