Welcome to Facebook, an Ecommerce Heaven

by Ryan Miller
on December 6, 2015

TL;DR

Facebook isn’t often thought of as a tool for ecommerce marketing in particular — but there’s good reason to see it as more efficient AND more cost-effective than both shopping engines and pay-per-click marketing.

Maintaining — let alone marketing — an ecommerce store has always been a challenge. You incur significant overhead costs simply to operate on a day-to-day basis. Then, when you’re looking to expand, you find out that a decent marketing campaign is going to be a) fairly difficult and time consuming, not to mention b) expensive.

It’s expensive because it’s so difficult and time-consuming. Consumers are a fickle bunch, but you’ll never witness more caprice than in an online shopper. If your site’s not responsive, good luck earning their purchase. If it’s not secure, good luck earning their purchase. If there’s a CTA button they don’t like, good luck earning their purchase. If a product is priced a single cent more than they’re willing to pay… well, luck can’t help you.

You see, unlike in the brick and mortar world, consumers can bounce off your site and go to another one within mere seconds if they see something they don’t like. They can always easily find someone else who has what you’re selling — and who knows…maybe the price will be a little bit cheaper.

So, to recap: you’re going to market your ecommerce store and you hear that it’ll cost you $10k per month to reach customers who are about as reliable as the Florida weather forecast? You just spent all that money on an SSL certificate and a snazzy MySQL server!

Of course, ecommerce marketing isn’t an insurmountable challenge. It’s just that: a challenge. There are effective ways to market an ecommerce store that virtually guarantee a hefty ROI. Most marketers or consultants will probably reach into the same old bag of tricks to tell you how it’s done: retargeting here, Google shopping there, e-blasting everywhere… it works, and it’s all been done before.

But if you’re not also going heavy on Facebook, alarm bells should definitely go off. Sure, when you think “ecommerce,” Facebook probably isn’t the first thing that comes to mind. But all signs are now pointing to one indisputable fact, which I intend to demonstrate here: Facebook is quickly becoming an ecommerce marketing paradise.

If you already consider yourself a Facebook advertising ninja, there’s no need to scoff at the banality of the next two sections. Click here to skip ahead & see what we have to say about one of Facebook’s newer features: dynamic product ads.

Facebook Advertising

First things first: when it comes to B2C markets, the power of Facebook advertising cannot be denied. Most ecommerce store owners/operators (at least the ones I’ve known) are familiar with it, but they almost always hedge their bets on other competitive demand-side platforms such as Google Adwords.

In one sense, comparing Adwords to Facebook Ads is an apples vs. oranges type of situation. Facebook is much more malleable and has a horizon that far surpasses website promotion (which is essentially Adwords’ primary function). It can promote posts, Facebook pages, apps, and local events.

But when it comes to promoting websites, the primary difference is the targeting options. As far as targeting goes, Adwords is primarily concerned with keywords. When a consumer searches for something on Google, advertisers bid on that keyword. The highest bidder gets the highest position in the search results for that keyword, and the advertiser pays that price whenever someone clicks on their ad.

Structure of a PPC bid

Facebook advertising, by contrast, is much more granular. Advertisers don’t bid on keywords, but rather on people. Or, to put it more accurately, they bid on certain characteristics that people have either demonstrated or displayed on their social profiles.

How Facebook Advertising WorksIf consumers A and B show an interest in X and a behavior of Y, advertisers pay to display their ads to those consumers. Together with demographic and location targeting (the latter of which Adwords also offers, just for the record), this makes for a pretty delimited audience.

Let’s say, for example, you sell custom made-to-order pop culture-themed graphic t-shirts. The target demographic is mostly men and women between the ages of 16 and 30, and, because for the time being you can only accept US dollars, you only want to target people living in the United States. For a single Kanye West Men’s Large T-Shirt, here’s how you could set up your ad set on Facebook:

  • Locations ⇒ United States → People who live in this location
  • Age ⇒ 16-30
  • Gender ⇒ Men
  • Interests ⇒ Kanye West
  • Behaviors ⇒ Purchase behavior → Purchase habits → Online buyers
  • Behaviors ⇒ Purchase behavior → Purchase types → Men’s apparel

According to Facebook, there are about 520,000 male Facebook users living in the United States who have an expressed interest in Kanye West and whose behaviors also suggest they shop online for men’s apparel.* That’s your target audience for this specific product, and it is precisely Facebook’s uniquely granular targeting options that allows you to reach them.

* In this example, I am using Facebook’s Power Editor rather than the more commonly used Ads Manager. The reason for this is that the Power Editor provides more than one boolean operator for targeting. People I’ve targeted here must be Kanye West fans AND online buyers AND buyers of men’s apparel. In the Ads Manger, the audience would have to be Kanye West Fans OR online buyers OR buyers of men’s apparel.

So what does this have to do with ecommerce, exactly? Facebook ads weren’t made specifically with online stores in mind, but they are nevertheless well-suited for them. The way that Facebook handles audience targeting implies at least 2 things as far as ecommerce is concerned:

  1. Qualified Click-Throughs – For many ecommmerce stores, PPC click-throughs are barely qualified at all. Clicks from shopping campaigns (whether run through Adwords or other shopping engines) are definitely more qualified, but again, you’re mostly relying on keywords to draw your conclusions. If someone searches for a Dell 27″ LED HD monitor, they’re probably ready to buy. But in and of itself, this keyword doesn’t tell you whether consumers can afford your product, whether they’re likely to take advantage of coupons or sales, or whether they even have an explicitly stated interest in what your selling (which would suggest an opportunity for customer loyalty and repeat purchases in the future).
  2. Cost-Effectiveness – Again, most forms of pay-per-click can be cost-effective when they’re managed, budgeted, and targeted accordingly. At the same time, one might argue that, at face value, Facebook ads are less expensive by sole virtue of their specificity. The reason for this is purely economical: price correlates with competition, and if you’re targeting correctly, your competition will be slim. Add to this the compound effect of referrals vis-a-vis likes, comments, and shares of your ad, and it’s not hard to see why one Moz case study reported a $0.38 cost per click on Facebook compared to a $1.49 cost per click on Google Adwords.

Facebook Retargeting (Custom Audiences)

The qualified, cost-effective clicks you’ll get from a Facebook advertising campaign strategically optimized Facebook advertising campaign take care of traffic — but what about converting that traffic?

Like I said in the beginning, ecommerce shoppers are notoriously fickle. Even though you’ll get more qualified traffic — and even though the law of large numbers is on your side because cheaper clicks = higher volume — conversions are still likely to be a problem.

Statistically, a whopping 72% of online shoppers abandon their carts before entering those sought-after credit card numbers. Worse yet, only about 8% ever return to complete their purchase, meaning the conversion rate on an average ecommerce site is about 5.76%.

The classic remedy that marketers turn to in situations like these is retargeting, a form of online media buying that specifically targets visitors to your website. The average retargeting ad will boost those checkout conversions by over 3x, from 8% to as much as 26%. And here again, you will see that Facebook’s native retargeting platform can be aptly suited toward ecommerce sites in particular.

Historically, Facebook’s retargeting interface has been known as “custom audiences,” which enables you to create an ad audience from one of three sources:

  • Website traffic (i.e. site retargeting)
  • App downloads/traffic (i.e. app retargeting)
  • Email lists (such as those exported from a CRM)

A custom audience for website traffic is essentially retargeting, and a rose by any other name would certainly smell as sweet. Like other demand-side ad buying platforms, custom audiences allow you to segment according to which pages have been viewed and which actions (e.g. conversions) have been taken. You copy a snippet of Javascript (called a “pixel”), configure it accordingly, and paste it into your website’s source code.

So, then, what makes a custom audience so much better for ecommerce than, say, remarketing through Google Adsense? Here are a number of key points:

  • Earlier this year, Facebook announced that it would be merging all audience pixels, instituting a “one pixel to rule them all” policy. This is important because retargeting pixels inject external scripts that must be loaded from Facebook’s content delivery network. Anyone that knows anything about Javascript knows that external scripts tend to make websites run sluggishly (which kills conversions), but a single pixel will run 3x faster. Plus, advertisers can now track up to 9 parameters, including pages viewed, conversions, adding products to carts, etc.
  • Compartmentalizing your audience as such also allows you to more easily target repeat customers. So, your audience doesn’t have to be limited to abandoned carts. Numerous ad sets, such as special holiday promotions, might actually be more appropriate for an audience that has already converted.
  • As with advertising on Facebook in general, retargeting via custom audiences tends to be cheaper than its counterparts on other media.
  • Finally, it goes without saying that these audiences are at a deeper stage within your store’s sales funnel. They’ve already expressed an interest in your store and what it’s selling. All they need is a light push in order to convert, and a finely tuned custom audience can accomplish exactly that.
Facebook Provides an Advertising Option for Every Stage of the Sales Funnel
Facebook Provides an Advertising Option for Every Stage of the Sales Funnel

So… Facebook ads and custom audiences. Pretty neat stuff, huh? Maybe you’ve already been apprised of these features, and if you have, kudos to you. But let’s take a look at some of the other activities that Facebook has engaged in within the past year — all of which are specifically geared toward branding Facebook as the promised land for ecommerce marketers.

Dynamic Product Ads

In theory, retargeting means nothing more than advertising to someone who’s visited your website within the recent past (usually about 30 days). However, the best of the best take it a bit further and retarget based on the specific content that has been viewed. For instance, if you shop for DVDs on Amazon, you’re not going to see some generic Amazon banner when you’re browsing the web an hour later. You’re going to see an ad for those specific DVDs.

This is how retargeting should be done, but it takes more work than most people are willing to put in (each page has to have at least one unique retargeting pixel). So they’ll create a few cute lines of copy, slap some branding on the creative and call it a day.

Proper retargeting is almost a full-time job in and of itself, but in February of this year Facebook launched a new advertising option that was specifically developed with ecommerce in mind. They’re called dynamic product ads, and they do the heavy lifting for you.

In a sense, dynamic product ads have been a long time coming. The summer of 2014, Facebook introduced a carousel option in some of its ad sets. With these, advertisers could combine up to 5 images and links in a single creative. What’s more is that Facebook even optimizes those images to first display the one that has garnered the most clicks/likes/whatever the goal of the campaign is.

Dynamic product ads replicate this concept, but they are different in one crucial respect: the carousel format displays pre-set, static content, but dynamic product ads are (obviously) dynamic. I.e. they dynamically generate carousels of the products that site visitors have viewed, like so:

Facebook Dynamic Product Ads
Via

Note that DPAs don’t necessarily have to be carousels, but they often should be. Unless you’re planning on restricting your audience’s pageviews to a measly 1 per session, you should be retargeting every product they’ve seen.

Getting these ads set up shouldn’t be too difficult for anyone familiar with both a) Facebook advertising and b) creating product feeds (such as PriceGrabber, Google Shopping, or Shopzilla). You’ll need to have a Business Manager account (as opposed to the regular Ads Manager), and since they’re run through the Power Editor, you will need to be familiar with that interface, as well.

As with other shopping engines, the first thing you do is create and upload a product feed, which you can almost entirely copy and paste from existing ones. Facebook requires most of the same fields as Google Merchant Center, and you can easily delete the ones it doesn’t. Create the feed in either a tabular (TSV or CSV) or web syndication standard (XML or Atom) format, submit it to Facebook for approval, and then get your Javascript in order to start running your ads.

Like all other advertising through Facebook, DPAs use the universal Facebook pixel to track audiences, conversions and other events. Developers utilizing the pixel for dynamic products will also need to know a bit of server-side development, as product attributes are bound to vary based on what is being viewed. For example, here’s how it might be done using PHP variables:

Facebook Pixel With PHP variables

This script fires the “ViewContent” event, which is one of the 3 events that DPA pixels require. The other two (AddToCart and Purchase) can fire this way or via the onClick event handler, depending on how the given ecommerce is configured.

The last thing to do before going full speed ahead with dynamic ads is configuring your ad set. Once again, this requires some moderate knowledge with both front-end and server-side web development. It’s a good idea to compartmentalize your ad sets by sales, popular items, and other product-specific attributes. And, of course, every ad set will need dynamic creatives — you don’t want to be promoting every with the same coupon code, the same image, and the same stale copy.

The Future of Facebook + Ecommerce: Native Facebook Shopping

All of this — advertising, retargeting, and dynamic product ads — revolves around driving people to your ecommerce store. And where is that store located? Your website, of course. Where else would it be?

Until recently, your own domain was the only place you could drive traffic to without paying a fee for access to some third party API. For instance, Shopify has long integrated ecommerce product feeds with Facebook, allowing shoppers to buy products right from a store’s Facebook page.

The fee for this kind of arrangement has been $9/month (plus a 0.5-2% transaction fee for any payment gateways other than Shopify, such as Authorize.net). This is far from steep, but its cost-effectiveness does assume that you have already invested in more than a modicum of marketing and customer acquisition on Facebook.

For those ecommerce stores that haven’t dug very deeply into Facebook, there’s now a solution. A few months ago, Facebook announced (albeit somewhat silently) the introduction of a “Shop” tab on Facebook business pages. This tab is a section on Facebook pages, just like the “About” and “Photos” tab. More significant, it is a native Facebook feature, meaning there is no external API or integration to go through in order to set it up.

The new shop tab is at least a year in the making, as it was announced in early November of 2014 that Facebook would be collaborating with tech startup Stripe on a project designed to make Facebook more ecommerce-friendly. Stripe now handles all payments for the shop tab (for a flat fee of $0.30 + 2.9% of the transaction total, nonetheless), and deposits the revenue in the bank account you’ve specified after setting up your account.

Facebook shopping without a POS such as Shopify is barely 2 months old and still under plenty of testing, so it’s safe to assume there’s more to come. As of right now, one downside is that the system lacks much of any automation. Merchants are forced to upload products, print packing slips and change order statuses one-by-one, which is obviously a ridiculous task if your store handles hundreds of purchases each day.

Nevertheless, it will be interesting to see what the future holds for shopping through Facebook. As it stands now, one of the key benefits is simply having access to all your analytics on Facebook. For all intents and purposes, products are just another kind of post, so page managers are able to see all the engagement stats, as well as view their products’ performance. Much like posts, stores can “boost” products and garner likes on them, etc.

For now, the question remains: can you scale your marketing efforts to make Facebook shopping a smart investment? It might be a no-brainer for a fashion retailer with margins higher than 300%, but it probably isn’t for a consumer electronics startup that’s still struggling to scale its labor force.

One thing certainly is for sure, though: Facebook has been quite explicit about its desire to brand itself as not just an ecommerce solution, but as the ecommerce solution. So, you can bet that Zuckerberg & Co. have more in store (pun intended) for us than an inconvenient POS that’s still in the beta stage of development.

Still, there’s no reason not to be enthralled by the current set of unique solutions that are fully functional. Thousands of ecommerce stores have seen their revenues mushroom simply by targeting the right people, setting up a custom audience, and optimizing their product feed.

So, I ask you: if you’re struggling to market, convert and retain customers, ask yourself why. There’s no reason to spend another minute in ecommerce hell — especially when heaven is just an ad set away.

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