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FB ads with AOV of £10 – viable?
Hey all I’m new to the game so seeking your expert input. I am building my Shopify store, and the AOV will be £10.
By my calculations:
-I will break even with a 2x ROAS (£5 cost per purchase conversion)
-And gain a sustainable profit at 3x ROAS (£3.33 cost per purchase conversion)
-Anything under a 2x ROAS will result in a loss.My question is, with this AOV and target conversion cost – is this possible or a viable goal? Is it doable?
FYI- it will be a snack food & drink store aimed at women.
Looking to hear your thoughts on this.
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4 Replies
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Theoretically doable sure.
Difficulty will come with a lack of experience if you’re not used to using FB ads (amongst other things like audience knowledge, site conversion rate, quality of product etc).
Chances are, if you’re new to the game, you won’t be able to achieve this and it would be more cost beneficial for you to employ a professional who has a better chance of getting these numbers straight away.
What are you thinking of spending per day on ads?
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Obviously driving CPA as low as possible is critical in this instance, however do you know the lifetime value of a customer? Do you frequently eblast deals and promotions to past customers? You mentioned snack food and drinks. Any way to get them to commit to a subscription to automatically build in lifetime value/recurring revenue, and expand campaign profitability?
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One of the ways of profiting despite a low AOV is to strive for repeat business and / or upsell. You know, like give that 3GBP as a discount for a repeat buy, as an example
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I think you should focus on your price strategy and increase AOV.
Also, it’s not a good idea to offer discounts since you’re selling a very low ticket product. First, you’ll lose your margin (you almost have none). Second, customer perceived value will drop.
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