How to Make Facebook Ads Work as an Amazon Seller
Updated on: March 15, 2022
It is impossible to teach Facebook ad mastery in a blog post, but I will do my best to cover the fundamentals so you have a realistic understanding of what works and what does not.
To make Facebook ads work for your business, you need to have a clear objective. Most Amazon sellers approach Facebook ads with a flawed strategy that is doomed to fail from inception. I am writing this article as someone who has personal experience ranking dozens of products with Facebook ads and spending over $1M (profitably) on Facebook ads from my own businesses.
Paid media is the most effective way to scale a brand quickly and predictably. If you run ads to your brand and have the correct structure to your ads & funnel you can create a million dollar product overnight. It is not easy to do this correctly, otherwise everyone would do it.
My goal with this post is help you find the strategy that works so you do not become just another “Amazon seller” who gives up on Facebook ads & running paid media to your brand.
There are many ways to diversify your ecommerce business. If your goal is to diversify your business and have a second or third viable source of sales, learning the fundamentals of advertising is a great path to take.
Even if you plan to outsource this, you need to understand how it works so you are not “taken for a ride” by a consultant who charges thousands per month in fees with a poor strategy.
Let’s get into the nitty-gritty.
There are two primary objectives we should have when running ads to our business if we sell on Amazon:
(1) acquire organic rankings for keywords on Amazon (easy); &
(2) acquire new customers profitably (hard-ish).
If your objective is to be profitable upfront with cold traffic (people who have never heard of you before) and you are planning to take the sale directly on Amazon, you are probably never going to be able to make that work. I know that’s probably not what you want to hear, but hang tight we will cover how you can do this.
Why do Sellers Consistently Fail to Drive Profitable Sales to Amazon?
(1) Amazon charges sellers referral fees up to 15% that dips into your critical profit margins that you need to make paid ads work. If you lose 15% of your margin right out of the gate, you are at a disadvantage when buying traffic on any ad platform. No one runs ads consistently to Amazon listings profitably.
(2) Amazon.com has all of your competitors on their website, so people will shop around and potentially buy your competitor’s products instead. This wastes your budget when you drive ads to Amazon.
(3) You have no control over the lifetime journey of the customer. If the customer buys from you and you want to sell them something else in the future, it is very difficult.
Contrast this to taking sales on your own ecommerce website where you can remarket to them easily with email, SMS, messenger, pixel retargeting, to name a few ways. This is very important because it impacts your ability to increase your customer lifetime value.
There are exceptions to the rule if you have an innovative product that catches virality and that virality decreases your cost to acquire customers substantially, but this is a very rare occurrence.
When to Drive Traffic Directly to Amazon with Ads
I only do this when my objective is to rank products or to get reviews more quickly so I can bring a new product to life more quickly on Amazon.
These campaigns are very easy to set up and achieve success (rank) with because it relies upon great deals that convert phenomenally well. When you offer great products at a great discount, the content of the ad is almost irrelevant to the effectiveness of the campaign.
The idea of boosting keyword ranking on Amazon is not a new concept to the Helium10 community.
To rank well on Amazon you need to consistently achieve sales through keywords. We can impact this by running Amazon Pay-Per-Click (“PPC”) ads, and we absolutely should do this.
If you are able to rank solely with PPC then you are fortunate. In competitive spaces, ranking with PPC alone is not really possible or feasible and ends up costing brands 10x what they would pay to achieve rank with a simple ranking campaign.
If you are finding that your ranks are not increasing, try running a full-priced rebate launch campaign.
My preferred method is to structure the campaign looks like this:
(1) 80% off brand rebate Amazon gift card advertised on Facebook;
(2) Customer clicks ad, goes to Facebook messenger;
(3) Facebook messenger tells the customer how to buy the item;
(4) Customer buys at full price on Amazon, you send the rebate back to them via messenger and email.
Of course I use BoostRooster to do this because the entire process is automated and it works well. Full disclosure, I am an owner of that software. I am not going to go over this entire process today.
What I will cover is how to make your Facebook ads consistently work over the long term so you can acquire customers profitably.
Get Your KPIs in Order
If you do not know what your target metrics are for your campaign, you will not know whether your campaign is failing or succeeding.
Here are the key performance indicators (KPIs, AKA the metrics that matter to your business) that you need to understand if you drive paid media profitably to your company.
You cannot succeed with Facebook ads or any type of ads if you do not understand this part. It is boring but I need to cover it.
- Average Order Value (AOV): How much does someone spend on an average order with your company? This is a simple math equation. Add up all of the revenue your company has and divide that by the total number of orders (AOV = [$1000 revenue/10 Orders] = $100.
We want to increase this so we can spend more to acquire new customers.
- Profit Margin: What percentage of your revenue is profit? Net profit margin, meaning the percentage remaining after all spend is what really matters. Let’s compare a 40% profit margin to a 30% profit margin. If a $100 sale results in $40 of profit vs. $30, we have more room to spend money to acquire customers–$10 extra to be precise.
We want more profit margin so we can pay more to acquire customers.
- Conversion Rate: What percentage of your impressions result in a sale? This is important because we want our impressions to result in more sales. If each impression results in more sales, on average, we can acquire customers for less cost.
On our ecommerce websites, we want to achieve at least a 3% conversion rate, but successful stores usually get over 6% on cold traffic. Amazon conversion rates that you might see of 30%, 40%, or even 50%+ are not realistic on your website!
- Customer Lifetime Value (CLTV): The more someone spends over the lifetime of that customer, the more we can spend to acquire that customer. If you can get a customer to buy on ten separate occasions from you over a 5 year period and you understand this about your customer, you are willing to spend more to acquire that customer.
– Brand A sells one item to a customer and profits $40 from that customer.
– Brand B sells 5 items to a customer over a 5 year period and profits $200.
Brand B is able and willing to spend significantly more upfront to acquire the customer because they know what the long-term profit looks like.
We want to add products or recurring items to our brand so we can improve our CLTV and spend more to acquire customers.
These four factors above impact what your “breakeven cost per acquisition (CPA)” is. Understanding what your breakeven CPA is will inform your pain tolerance on paid ads.
When you run Facebook ads you can see how much you spent to get a sale if you are using tracking on your own e-commerce website. That part is fairly easy using Facebook’s ad platform reporting.
We want to know what our breakeven CPA is because this helps us know what the exact amount is that we are willing to spend to acquire a new customer.
When you are trying to grow a brand you need a target to shoot for.
Shooting blindly leads to big mistakes.
(Here’s what I use to keep track of my KPIs…)
Tips for Creating a Profitable Facebook Ad Campaign
I break my ad process into three key pillars.
Many people reading this right now do not yet have businesses that are set up for success with Facebook ads.
I have spoken to people who are selling very boring, generic products. I spoke with someone who was selling a plain black office chair that had no unique selling proposition. Boring as heck. Low profit margins. No branding. No other products to upsell or cross-sell.
…Why would someone ever click a Facebook ad and want to buy that when they could just go to Amazon and buy the cheapest item?
…How could they ever pay to acquire customers if they have low margins and low CLTV?
You need to absolutely understand this. Your product might not be a good fit for Facebook ads.
A plain black chair with no unique features will probably not trigger someone to take out their credit card and buy, and even if it does in some cases, it will not happen with enough frequency to be sustainable for your business.
You need a product that is a good fit for Facebook ads.
1. Jawzrsize. A new way to get rid of saggy double-chin skin under your face by biting a strange apparatus.
2) AthleticGreens. A unique combination of ingredients that is popular with influential people.
3) Purple Mattresses. A new type of mattress with appealing marketing.
4) DrSquatch. Soap with unique scents for men.
These items all have something about them that piques interest because they offer a new take on things that are already popular.
You need to figure out what your brand’s unique angle or your product’s appeal is. Price is not a unique angle unless you’re Amazon/Walmart. Figure that out before you drive ads.
With that said…
To drive ads to a product in a way that you are profitable is like catching lighting in a bottle. You need a product that people want.
Here’s how I have simplified it:
1. You Need One funnel.
A “funnel” is the journey a customer goes through before making a purchase.
Funnels do not need to be complicated. Here what my funnels look like (which I made by copying successful funnels).
It is a simple 2 to 3 page funnel with retargeting ads that get the customer to return.
I personally take my sales on Shopify and use Zipify Pages to test my funnels. Zipify is a company owned by Ezra Firestone who has been featured by Helium 10 on a podcast episode here.
Zipify pages has many templates you can replicate on their app.
Here’s what my funnel looks like.
(A) Customer sees video ad on Facebook
(B) Customer reads sales page that on my Zipify page that has high quality images, videos, customer benefit sales copy, and calls to action to get them to buy
(C) Customer either checks out or does not. If they check out, they get remarketed to for weeks through my email list.
(D) Customer who does not check out gets retargeted with more ads that try to get them to return to the funnel to complete their purchase.
When I create funnels I replicate what is already working instead of reinventing the wheel.
Create your funnel so you optimize your KPIs. By taking the sale on your website you do not have to pay Amazon referral fees and you have more control over AOV, CLTV, and conversion rate.
Whether you are able to make your ads profitable will most likely depend upon this first pillar. Focus on finding ways to increase cart values with upsells (getting people to buy more items in a single transaction), and think about other items you can sell the customer after they complete the transaction.
2. You need to get one successful creative asset.
I will not cover creative strategy here but my creative assets consist of influencer videos as well as more traditional marketing product demo videos and static images that a media production company sends to me each and every month.
3. You need to master one paid traffic source.
Facebook ads may or may not be right for you. Assuming you have all your foundational concepts covered, let’s go over how to structure your campaigns and some closing tips to make ads work for you. If you understand how to do this, you will be able to do this on any ad platform.
The secret of paid ads: the concepts I discussed before this part is really what matters most. The technical aspects of creative Facebook ads is the easy part.
I will now briefly cover how to set up and think about your campaigns the correct way.
Campaign Objectives 101: How to Choose an Objective
There are many theories & habits developed by ad buyers. I like to keep things as simple as possible so long as the method works. The strategy you use to create a campaign will depend on what your goal is.
Facebook allows you to pick from a range of campaign objective types.
I really only use three of these choices below: Conversions, Catalog Sales, and Messages.
Running Facebook Messenger Rebate Campaigns? Try “Messages.”
Earlier in this post I mentioned Facebook messenger rebate campaigns as a way to increase ranking. If that is your objective for your Facebook campaign, you will create a campaign that is optimized for Messages (we want more Messages).
Trying to Get Profitable Sales on Your Website? Try “Conversions.”
Conversions allows you to optimize for a desired event on your website. In the event you are reading this and pixels no longer exist (it is happening soon) because Facebook has phased them out, Conversions will likely be based on some integration with your eCommerce platform.
When I run Conversions campaigns I optimize the ads for the “Purchase” event on my website. This is where 90%+ of your spend will go.
Retargeting People who Visit Your Website? Use Catalog Sales.
Catalog Sales allows you to dynamically retarget people who visit your website.
What does this mean? Here’s an example.
If someone shops for purses on your website, you can retarget them and show them an ad that is customized to fit what they viewed.
Super powerful stuff!
This will not be your only retargeting campaign, but it is a very useful one to use.
Budget Your Spend to Find New People, Nurture Those People, and then Sell to Those People.
I bundle my audiences into three groups: cold audiences, warm audiences, and hot audiences. Let’s talk about what those are and how to use this grouping method to budget your campaigns.
The idea behind having three distinct audience “buckets” (filled with potential buyers) is to help you allocate enough budget to each bucket so people inside those buckets are seeing your advertisements enough to make a purchase (and make you money).
Group your target audience into three groups:
(1) Cold: This group has never heard of your brand before. If you allocated 100% of your budget here (big mistake) you would likely be missing out on a massive amount of sales. Some people require more time and need more information to make purchasing decisions.
Pro Tip: Try madgicx.com for some fancy audience creation automations.
Budgeting: Newer accounts spend up to 75% of your daily budget on cold audience targeting. As accounts age you will decrease this.
(2) Warm: This group has heard of you but has not gotten very close to making a purchase yet. We want to educate them more so they become hot leads.
(3) Hot: This group is just about to buy but did not yet (Example: they added an item to their cart yesterday). We want to inspire them to buy now.
Budgeting: Split the remaining 25% of your budget on warm and hot audiences for newer accounts. As accounts age you will increase this.
How to Test Creative Assets
The last thing I want to leave you with before we close out is to strongly encourage you to invest in acquiring creative assets for your brand.
Facebook’s Ad Library is a free educational resource that can help you learn how to advertise by studying what is working. Save the ads of companies that frequently target you, study their entire Ad Library with the Facebook tool and then replicate the structure of the videos and images that you see working.
When you see ads, view the ads as an advertiser rather than as a consumer.
Every review selfie, customer video, product demo video, influencer video is an asset that you can leverage for your brand.
The beauty about mastering paid advertising is you can use ads to amplify every strong brand asset that you have.
If you have a phenomenal influencer video that a YouTuber posted featuring your product you can use Facebook ads, or even YouTube or TikTok Ads to amplify that content to millions. Without ads, you are limited to the organic reach of these posts. The real power of advertising your brand is that you can create the narrative for your brand. The strongest images, videos, and testimonials can be used by you to push your message out to the type of person who is likely to purchase.
When you start running ads on Facebook you should have several different formats of creative assets:
(1) Videos under 1 minute long
(2) Videos under 15 seconds long
(3) Images with people using your product
(4) Product shots
(5) Shots with text explaining your product
This allows you to get placements on all the various spots Facebook allows. All of the placements have different requirements so you need many formats of your images and videos.
Producing a winning funnel takes a magic combination of creating a strong funnel, a strong creative asset, and a few winning audiences on Facebook.
It is not as simple as it may have been for you to find a winning product on Amazon, but it also unlocks an opportunity for you to build a business that you control.
By taking sales directly on your own website and owning the customer relationship you have the ability to build real loyalty and a brand that does not disappear with the next Amazon algorithm shift.