STOX Energy is a direct to consumer compression sock brand based in Amsterdam, Netherlands. They sell compression socks for runners, tennis players, hikers and for medical use. Despite already having a strong product and offer, they struggled to scale their Facebook and Instagram ads while keeping their return on ad spend (ROAS) above target.
Facebook and Instagram ads were their main source of acquiring new customers 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 generated €503K at 2.35 ROAS 5 months after.
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 a low ROAS and stopping the account from scaling:
1) Too much focus on split-testing things that didn’t matter.
For example, there were a lot of different manual bidding tests being ran, and tests to figure out which different optimization events (like optimizing for purchases, or add to carts, or landing page views) brought in the best results.
2) Hardly any focus on creative
The creative is the most important part of the ad. Yet for the last 6 months, only 4 creatives were being ran to acquire new running socks customers
3) Nothing was done to combat creative fatigue.
4) ROAS sharply decreasing after 3-4 days of launching prospecting ads. (ads that target new potential customers)
5) Overspend on unprofitable ads.
Some ads were even spending for two weeks at 0.13 ROAS. Ad spend was wasted on ads below target ROAS.
6) Too many campaigns
There was no clear account structure or strategy, and the budget was spread too thin across the campaigns.
Retargeting was incorrectly setup. They were previously using the same creative and angle in each retargeting ad. This meant that their website visitors were being served the same message in an attempt to win them back, despite that different customers will have different objections as to why they didn’t buy.
7) No campaigns cross-selling existing customers.
The easiest customer to sell to is the one that’s bought before!
Overall, a lot of the mistakes they were previously making were because there was too much focus on the tactics only, and little focus on the fundamentals.
Step 2: Strategize
Now that we uncovered the initial bottlenecks – how did we fix them and turn the performance around?
Here are the following changes we made in the account that helped scale STOX whilst keeping the 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 the poor ones and duplicated the ones performing well in our creative testing into our main scaling campaigns. From here, we then cycled them around when they started to fatigue. We found that lifestyle and 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. We 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 serving ads to audiences who’ve not bought from us recently and are unaware of the brand.
Finally, we set clear KPIs and targets with the client for each collection and stage of the customer journey.
We used our product KPI calculator to work out margins. These are based on:
– COGS per unit
– Shipping cost per country
– Payment processing fees
– Reduced rate VAT
– Our agency fees
Then, we used 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 to be profitable.
As long as we maintained a 3 ROAS on retargeting, we could scale at 1.6 ROAS on prospecting (measured from a 28-day click 1-day view window) to maintain the target account-wide ROAS of 2. You can see how we calculated this here:
STOX has a variety of collections shipping to a variety of different countries. Therefore each collection had different margins, so it was important to invest the time setting ROAS targets for each collection and campaign.
As part of the initial strategize phase, this involved creative production. Here we used some of STOX’s existing ads but also created our own from various videos and images.
Here are some examples of creatives from STOX’ different collections that helped us to scale their revenue.
Step 3: Optimize & Scale
We were recently able to scale the account up to €50K/mo in spend at just under 3 ROAS.
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 thus 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 which helped improve performance 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 the 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 main traffic 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 STOX’s 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 ROAS and revenue.
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.