For context, we are now spending just under $600,000 per month on Meta and it will all be through this single CBO campaign now.

Previous Ad Account Structure

If you have read any of my previous posts on here, then you will know that I used to be a big proponent of running a separate ABO testing campaign and a separate scaling campaign. I had run that structure for maybe 2 years until now. It was working well and honestly never stopped working - performance was not the #1 reason why I changed into the new account structure.

In our ABO testing campaign, I would test each new creative concept in it’s own ad set as well as scale up “mega” ad sets that had 20-40 ads in them. It worked fine and it allowed us to very rapidly find new creative winners.

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For context, we are now spending just under $600,000 per month on Meta and it will all be through this single CBO campaign now.

Previous Ad Account Structure

If you have read any of my previous posts on here, then you will know that I used to be a big proponent of running a separate ABO testing campaign and a separate scaling campaign. I had run that structure for maybe 2 years until now. It was working well and honestly never stopped working - performance was not the #1 reason why I changed into the new account structure.

In our ABO testing campaign, I would test each new creative concept in it’s own ad set as well as scale up “mega” ad sets that had 20-40 ads in them. It worked fine and it allowed us to very rapidly find new creative winners.

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For reference, we are spending in the range of $400-600K/month on Meta. We are in the CPG consumable category. We are a single SKU and relatively single offer advertiser (for now) - so take these things below with a grain of salt as our account is significantly more simple to manage and grow than your average ad account. That is on purpose, though.

So here are 3 tactics/strategies that are working and scaling well for us on Meta in the last few months:

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That is what drives 90% of your success in ecommerce and if you skip any parts of those areas, you’ll eventually lose.

If you don’t have all 3 of those and haven’t iterated them many times, then fix that first before you think about reading this.

But once you do, and you choose your category wisely, then you can pretty easily build a $10-20M/year business with very minimal overhead/opex. I am going to breakdown how we do things over here at a high level.

We have three full-time employees as well as a couple of agencies helping us grow. We have two co-founders and one head of all things creative/content.

We do about $5M/year in revenue per employee and my goal is to get it to $10M/year or close. I believe you can do that especially with the right systems and leveraging all of these insane productivity and AI tools coming out.

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For reference, we are spending anywhere from $300k/month to $550k/month. In January we will spend around $450-500k.

If you read the initial post, you’ll realize that not a ton has changed but there are a few key elements that are working well for us that are worth sharing.

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But if you do have wiggle room on the amount of dollars you can make today in exchange for more dollars tomorrow, then this could be for you. Especially if you are in some sort of consumable category like beauty, food, health etc.

We had been spending just around $400,000 per month on Meta for the last 6 months - some months we were able to spend more, some less. But on average, $400,000 per month.

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Meta is a volume channel, not an efficiency channel, and that won’t ever change.

But, I am going to update my thinking a bit here on AOVs. When I first put out my initial ideas on AOVs, I didn’t intend it to be a blanket statement, meaning that if you run lower AOV offers on your Meta channel, then you automatically become a low AOV brand/business. I actually mean the exact opposite and I am going to explain.

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No, this isn’t a period where it’s “diversify off of Meta as soon as you can” and i really dont think we are going get to that point for a long time. There is a ton changing on the platform, though, and I feel like now is a major pivot point.

If you are struggling right now like we are, i believe things are going to turn soon. we are struggling big time, our spend is down 30%, CAC up 10% and CPMs are just ripping up and to the right, up around 50%. We are spending around $500,000 per month.

I think about these periods as being either “market” problems, “us” problems or both. Market problems are problems with the market, consumers, meta itself, macro, etc. Us problems are related to our brand and marketing, have we not had a winning ad in a while? Do we need a new persona? Has anything major changed on our side? etc.

In this case, it’s pretty obvious based on our observations that both are at play here. There are a lot of market/Meta things changing right now, and we also had such a good August and beginning of September that we let off the gas input wise…so we largely sleeping in the bed that we made.

But, it’s not all doom and gloom on Meta, there are some new things working and some helpful observations we’ve made recently. Here they are:

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There was apparently some big Meta update rolling out that is intended to reduce self-competition in the auction. Rok Hladnik posted the email the Meta Rep here, stating how they expected it to reduce spend but overall help CPA and ROAS as the update got pushed. We will see if the update works as intended over these next few weeks…

Needless to say, we certainly felt the reduced spend aspect of it. Look at our chart below for daily spend, we really started to feel it towards the end of the month. Pair this update with typical end-of-quarter budget dumps, and it was a tough last 10 days for us.

CAC wasn’t impacted nearly as much as our spend. Looking at this spend chart, you’d think we’d be posting a -10% month - but luckily it was only -2% for us (we had forecasted to try to hit +3%.

But ultimately, we survived, still found some wins and learned a bunch through some things that didn’t work. Here are a few things that worked and few things that didn’t work:

Win #1: Introducing a New Complementary Offer

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There was apparently some big Meta update rolling out that is intended to reduce self-competition in the auction. Rok Hladnik posted the email the Meta Rep here, stating how they expected it to reduce spend but overall help CPA and ROAS as the update got pushed. We will see if the update works as intended over these next few weeks…

Needless to say, we certainly felt the reduced spend aspect of it. Look at our chart below for daily spend, we really started to feel it towards the end of the month. Pair this update with typical end-of-quarter budget dumps, and it was a tough last 10 days for us.

CAC wasn’t impacted nearly as much as our spend. Looking at this spend chart, you’d think we’d be posting a -10% month - but luckily it was only -2% for us (we had forecasted to try to hit +3%.

But ultimately, we survived, still found some wins and learned a bunch through some things that didn’t work. Here are a few things that worked and few things that didn’t work:

Win #1: Introducing a New Complementary Offer

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Essentially what we wanted to do was find a way to increase our internal creative volume for static ads without having to hire a static designer or really add any more opex. Previously, a lot of the agencies we were working with made statics that cleaned up our bottom of the funnel.

I hated paying a % of ad spend those.

So, we made this workflow in a tool called Gumloop that automatically generates us 25-30 static ads per day based on real customer reviews. We just picked the 25-30 per day range for what we need, you can easily scale it up or scale it down.

And before I breakdown the workflow, I will just say that we are actually running the output ads with success. It’s not eyewash and “AI automation” for automation sake. About 75% of the ads are good enough for us to run…and they perform.

Granted, they are generally lower funnel static ads and clean up our low hanging fruit, but still, they cost us $0 to produce and are fully automated. Here is how we set up the automation:

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Our situation was that we were stuck in the mud at $400K/month in Meta spend and ~$700-850K/month in revenue. We had that glass ceiling above us and just couldn’t figure out how to break through it. Every time we tried to scale beyond, CAC was just become way to high and we’d have to pull back.

So we came to the realization that we had priced out the next tranche of our TAM. If we wanted to acquire that next set of 100,000 (or whatever) customers, something big would have to change, and this time we felt it was price. Maybe for you it’s not price and it’s something else like a new product, new flavor, new customer persona, etc…

But for us, it most certainly was price. We came to this conclusion two ways:

1. Subjectively. We knew we were running way to high of margins than we should have been. Talking 93% plus - to us, this obviously created either a sense of unfairness in the customer mind or the feeling that our product is too expensive to try.

   1. We make all of our money on LTV. We want customer volume so we can reap the rewards 3-6 months down the line, not massive first order profit margin. So we needed to get customers to think “it’s worth a try” and not “it’s expensive”.

2. Post purchase surveys, very simple question. we ask if there was anything that almost stopped you from ordering today. Important point, but many miss it, that this data is from people who have transacted with you already.

   1. Our number one response was price, coming in at just over 70%. which was insane to us when we dug in!

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It’s something we have started to think about as more and more folks enter our category. We are lucky that we started out 5-6 years ago. I think it is much harder to start today than it was back around 2019, obviously, and that is good.

There are a ton of reasons why, but one of them is just how hard it is to win on digital ad platforms like Meta. It takes a ton of money to win and breakthrough the unprofitability hump (whether that’s $200k/mo, $500k/mo, $1m/mo depends on the brand/product). And unless you have some revolutionarily CPG, it’s nearly impossible to raise any money without real traction.

That’s why we consider our CAC a MOAT.

Could a competitor today launch a somewhat similar product, website and brand? Sure, that can happen to literally every ecommerce brand on earth.

But can a competitor today afford to acquire customers at our CAC and have the supporting retention systems, LTVs, etc? No shot. Unless they have a way to be severely unprofitable for a long time.

Absorb Max CAC, Don’t Optimize For Min CAC

We’ve recently realized that we want to orient our ecommerce business around being able to afford the highest CAC possible and still be profitable when we deem necessary. We don’t want to just continuously optimize for the lowest CAC, that’s a losers game now. We want to optimize things to be able to take down a 30%, 40%, even 100% higher CAC then we are getting today.

We’ve started to shift more of our time into focusing on LTV, that’s the real gem. It is largely product of course, but there are other big levers too like building brand, community, retention systems, optimizing your subscription program etc..

If we acquire all of our customers on X product, what is Y product that we could launch that is relevant for them all? Or, how could we make their experience with X product 5x better so they buy it a lot more?

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I’ll break down the exact campaigns we use, how they are structured and our daily activity in them. Then, I’ll discuss how we manage the ad account as a whole on a daily and weekly basis as well as general pros and cons we’ve discovered with our current account structure.

I’ve done a few of these in the past, so I’m going to try my best to hit on things that are frequently asked and talk about things that we’ve changed our mind on in the last few months.

Our Meta Account Structure

We currently have three campaigns live in our Meta account, one of which we recently decided to add:

• ASC Cost Cap Campaign

• ABO Testing Cost Cap Campaign

• Accelerated Bid Cap Campaign (new)

All three campaigns serve a different purpose to our business and we treat them different. You’ll notice that we run all of our campaigns on some sort of a manual bid - cost cap or bid cap. Across all of my account breakdowns, you’ll see this as a consistent theme for us; we are big believers in the manual bid tool.

On a high level, I’m currently really happy with our account structure. We are finding new creative winners in our ABO testing, allowing them to “warm up” in a dedicated environment that is still on a manual bid, and we are getting new creative winning WoW in our ASC scale campaign. This to me is a healthy ad account ecosystem.

Our accelerated bid cap campaign is a new one we’ve recently added that our Meta rep is helping us out with this quarter. They are apparently really hot on the strategy over there and it is performing really well for us. How the accelerated bid strategy works will be a separate post, but I’ll discuss how we have the campaign built out here.

ASC Scale Campaign (Cost Cap)

This campaign is our evergreen scale campaign. It is massively important to our ecommerce business. It usually gets around 60-75% of our ad spend budget each day.

The campaign is built as an old-school ASC campaign - think the original ASC campaign that launched where you could only have 1 ad set and up to 100 or so ads in there. This is it. We’ve had this campaign rocking for years and we love it. Really sad that they are apparently phasing them out and eventually will force us onto Advantage+, which is really just CBO.

Anyway - this campaign for us has about 70-80 of our best ads at any given point. We try to rotate new creative weekly or bi-weekly into it to keep it fresh (depends on creative testing). But it is incredibly simple - it is 1 ad set for all of the ads, broad targeting and excludes all existing customers (as well as Klaviyo email subscribers).

The top 10-12 ads will absorb about 60% of the budget it spends each day. I am sure you are wondering whether the top 1-2 ads gets all of that - they do not. We are really consistent with getting new creative winners in there that helps us avoid this. We try to keep it maximally competitive at all times, and our gauge of understanding this is spend distribution.

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But if you do have wiggle room on the amount of dollars you can make today in exchange for more dollars tomorrow, then this could be for you. Especially if you are in some sort of consumable category like beauty, food, health etc.

We had been spending just around $400,000 per month on Meta for the last 6 months - some months we were able to spend more, some less. But on average, $400,000 per month.

We had become drunk off of the “Raise Your AOV Juice” to win on Meta. We drank way too much of it. We were convinced that we could eventually spend even more and acquire more customers if we just got them to pay us more on their first order.

And man…looking back…how wrong were we. No one tells you that your CAC will generally follow your AOV up and to the right. That is exactly what happened to us, the more we pushed AOV, the higher our CAC went.

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This is going to be a shorter post.

Something we have been thinking about a lot over here is how discipline is one of the top ingredients when baking a successful cost cap campaign.

Other ingredients include setting the right bids, knowing how to structure your campaign and obviously good creatives, offers, landers etc. But these do not matter nor will th…

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