This DTC brand was struggling to scale their Facebook ads. It was their primary source of new acquisition and performance declined to 1 ROAS in the last month before we took over. Check out the case study to see how we turned it around and produced €503K at 2.35 ROAS 5 months after
STOX Energy is a direct to consumer sock brand based in Amsterdam, Netherlands. They sell compression socks for runners, tennis players, hikers and for medical use. They had a strong foundation (product-market fit, great brand and offer) but they couldn’t scale their Facebook and Instagram ads whilst keeping their ROAS above target – hence why they reached out to us.
1 MONTH BEFORE US:
5 MONTHS AFTER US:
Step 1: Analyze
The first step to diagnosing their poor ROAS was to take a look at their ad account and Google Analytics. During the analyze phase, we uncovered the following bottlenecks that were causing low ROAS and stopping the account from scaling:
1) Too much focus on split-testing things that didn’t matter. (e.g PUR vs ATC vs LPV or testing lots of different bids).
2) Hardly any focus on creative – which matters a lot. (they had 4 creatives on prospecting running for 6 months).
3) Nothing was done to combat creative fatigue.
4) ROAS tanking after 3-4 days of launching prospecting ads.
5) Overspend on unprofitable ads. Some ads were spending for two weeks at 0.13 ROAS. Overall, ad spend was wasted on ads below target ROAS.
6) Too many campaigns – no clear structure account structure or strategy, and the budget was spread too thin. Retargeting was incorrectly setup. They were using the same creative and angle in each retargeting ad.
7) No campaigns cross-selling existing customers.
A lot of the mistakes they were making were because there was too much focus on the tactics only, and little focus on the fundamentals.
Step 2: Strategize
Here are the following changes we made in the account that helped scale them whilst keeping results profitable and consistent:
Firstly, we kept all ad sets optimized for purchase only. We’ve found from our accounts that the purchase event optimization on conversion campaigns yields the best results. Then, we focused extensively on creative and creative testing. We started with 6 new creatives + using previous controls. We shut off poor ones and duplicated the ones performing well in our creative testing into our main scaling campaigns, and then cycle them around when they fatigue. We found the lifestyle + product videos work the best with short benefit points on each clip – so we continued to create more of these.
To keep our prospecting campaigns consistent, we put exclusions on the prospecting level + used fewer ad sets and campaigns and more budget per ad set. By excluding site visitors from our prospecting campaigns, we’re able to have our prospecting ads deliver to actual cold audiences and not skew the results. We typically will exclude website visitors and our lifetime customer list. That way we know we are only prospecting to people who are most likely to have not bought from us recently and are unaware of the brand.
Finally, we set clear KPIs with the client for each collection and stage of the customer journey. We used our product KPI calculator to work out margins (based on COGS, MSRP, payment processing fees, reduced VAT, our agency fees, etc.) and then our blended ROAS calculator to work out ROAS targets for prospecting and remarketing. For example, we worked out that after all costs, we needed above 1.68 ROAS on running socks in the Netherlands. As long as we maintained a 3 ROAS on retargeting, we could scale at 1.6 ROAS on a full 28-day click 1-day view to maintain the target ROAS of 2 account-wide. STOX has a variety of collections shipping to a variety of different countries. Therefore each collection has different margins and it’s important to invest the time setting ROAS targets for each collection and campaign.
Here are some examples of creatives for STOX’ different collections that helped us to scale.
Step 3: Optimize & Scale
One of the ways we optimized the account and improved ROAS was through the use of rules. Their in-house marketer was unaware of automated rules and had previously overspent on ads below target ROAS – we were able to cut this out completely and thus reduce wasted on unprofitable ads and improve the account ROAS. Automated rules allow you to optimize ads 24/7 and focus on what moves the needle in scaling Facebook ads: improving creative, offer, CRO and AOV.
Another method to help improve optimization was to translate the copy in English, Dutch, and German using Dynamic Language Optimization. That way we could ensure our creative and ad copy was in the native language in all countries we scaled to.
The way we scaled the account was mainly through horizontal scaling. Since the countries we mainly sell in are small Western European countries, we focused on refining the creative and messaging for each collection and then moved to optimize the campaigns for other collections. For example, once we optimized and scaled the running socks campaigns to above target ROAS, we focused on optimizing the tennis socks collection, and then hockey socks, etc.
This allowed us to scale the daily budget whilst also helping to expand STOX’s product line so they were no longer dependent on only their best sellers to stay afloat.
Overall, our 3 step eCommerce scaling process helped turn around STOX’s primary source of new customers from losing money and at a weak cash flow position to doubling the account ROAS, increasing spend, restoring healthy cash flow and increasing STOXs’ overall revenue and bottom line.
The time and bandwidth freed up from their internal team have allowed them to channel that focus into working on the backend, improving customer LTV, sourcing new creatives and working on creating new products and offers.
Want to achieve similar results for your brand? We can walk through part of the analyze step with you through a free account audit. Through a video conference call, we can go over your account and identify the bottlenecks stopping your brand from scaling to your target revenue and ROAS.
Want to take advantage of this? Feel free to book your free Facebook ads audit call below at a time that works best for you.