How to Fix Unprofitable Ads by Debugging Funnels Like a Developer
As someone who works with both marketers and developers, I’ve noticed a stark difference in their mentalities.
Frequently, marketers will say “my ads aren’t working,” without much thought put into why. Perhaps it’s the conversion funnel. Perhaps it’s the messaging in their ads. Marketers usually aren’t sure, and they’ll aimlessly throw darts at the wall until something sticks.
When Facebook Ad Performance Hits the Fan: A Visual Tool
“Ads were working SO well, and then all of a sudden everything seemed to stop. What did I do wrong?”
That’s something I hear quite a lot from new bushy-tailed, bright-eyed Facebook marketers, still bitter about the fact they were well on their way to $100k/day in ad spend with a 2.0x RoAS.
Qualities of a Strong D2C Company, Quality #1: COGS
After working with 50+ D2C companies on acquisition, it’s clear that the strongest ones have a few common characteristics about them.
Over the next series of posts, I’m going to go over the characteristics of each one and introduce a model around them. Actually, they’re more akin to dimensions than characteristics, because there are tension between many of the qualities that make for a strong D2C company.
For example, AOV and CAC (as a percentage of overall LTV) are two different qualities that determine the strength of a D2C’s company’s long term viability. However, there are tensions between the two; as price increases, so does the overall population of customers willing to pay that price. The smaller the population, the higher the marginal cost for each additional customer, and therefore the higher the CAC.
CAC (Customer Acquisition Cost) vs. RoAS (Return on Ad Spend)
When it comes to acquiring customers, there are two metrics that people turn to in order to judge performance: CAC (sometimes also referred to as CPA) and RoAS (return on ad spend).
People tend to care much more about one than the other. Anecdotally, it seems that this preference is based purely on the marketer’s experience: marketers who worked in the trenches of affiliate digital products tend to prefer CAC, while newer marketers that got their start with Facebook ads tend to prefer RoAS.
I’m going to go through each one’s strengths and weaknesses so that you can determine which you should be leaning on.