G
Guest12120
Guest
Few months ago, I talked to a potential consulting client who had a pretty unique football related product that sold for $25. He was convinced that a top FB Marketer can bring him sales at 5X Return On Ad Spend. He expected a cost per purchase to be on average $5.
I explained to him that results like this are almost impossible and I explained why. This was the last time I heard for him.
Apparently he didn't want the facts to stand in his way
So why is $5 CPP so hard (almost impossible) to achieve?
When you run ads on Facebook, or on any other advertising platform, there are certain benchmark you can use to see if you can afford to pay for traffic.
First, you look at the Cost Per Click. This is how much you will have to pay for one person to visit your store. If you optimize your ads for Purchase and your target audiences in the United States, a good benchmark is $1.00 per click.
If you pay $20 for 1,000 impressions (CPM) and 2% of people that see the ad click the link (CTR), you get $1 CPC.
Let's just assume, for this example, that this guy's product is so freakin' great that people just can't help but click the link to check it out and he would pay only $0.50 per click.
Then you need to look at your store, and estimate the conversion rate. Average CR is 1.4% (according to the survey of 1,127 stores done by Littledata.io). However, for a $25 impulse buy, cool product I would expect to have a CR of 4-5%.
So here is our example:
CPC - $0.50
CR - 5%
The CPP is $10.00!
So even if his ads are performing better than 95% ads out there and the store is in top 10% of all stores in terms of conversion rate, he would still have to pay at least $10 for each purchase. Getting a $5 CPP from cold traffic would be a miracle in this case.
Before I run paid traffic to the offer, I look at the numbers and see if I can be profitable with the $25 CPP ($1 CPC and 4% CR). If not, the offer needs to change.
It's of course possible to have a CPP lower than $25, but if you need much better ad and store performance than that to turn profit, you may want to rethink your offer.
This doesn't apply if you run a subscription based model or you can wait 60-90 days to turn profit (repeat buyers).
I decided to share this as many store owners I talk to have completely unrealistic expectations when it comes down to running paid traffic.
Let me know if you have any questions.
I explained to him that results like this are almost impossible and I explained why. This was the last time I heard for him.
Apparently he didn't want the facts to stand in his way
So why is $5 CPP so hard (almost impossible) to achieve?
When you run ads on Facebook, or on any other advertising platform, there are certain benchmark you can use to see if you can afford to pay for traffic.
First, you look at the Cost Per Click. This is how much you will have to pay for one person to visit your store. If you optimize your ads for Purchase and your target audiences in the United States, a good benchmark is $1.00 per click.
If you pay $20 for 1,000 impressions (CPM) and 2% of people that see the ad click the link (CTR), you get $1 CPC.Let's just assume, for this example, that this guy's product is so freakin' great that people just can't help but click the link to check it out and he would pay only $0.50 per click.
Then you need to look at your store, and estimate the conversion rate. Average CR is 1.4% (according to the survey of 1,127 stores done by Littledata.io). However, for a $25 impulse buy, cool product I would expect to have a CR of 4-5%.
So here is our example:
CPC - $0.50
CR - 5%
The CPP is $10.00!
So even if his ads are performing better than 95% ads out there and the store is in top 10% of all stores in terms of conversion rate, he would still have to pay at least $10 for each purchase. Getting a $5 CPP from cold traffic would be a miracle in this case.
Before I run paid traffic to the offer, I look at the numbers and see if I can be profitable with the $25 CPP ($1 CPC and 4% CR). If not, the offer needs to change.It's of course possible to have a CPP lower than $25, but if you need much better ad and store performance than that to turn profit, you may want to rethink your offer.
This doesn't apply if you run a subscription based model or you can wait 60-90 days to turn profit (repeat buyers).I decided to share this as many store owners I talk to have completely unrealistic expectations when it comes down to running paid traffic.
Let me know if you have any questions.
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