Scaling up - everything you need to know about increasing e-commerce ad spend profitably - Upbeat Agency

Scaling up – everything you need to know about increasing e-commerce ad spend profitably

Scaling up – everything you need to know about increasing e-commerce ad spend profitably

Great news – your e-commerce business is off to a flying start!

It’s early days, but you’re growing a loyal customer base and seeing consistent sales.

Time for a well-deserved pat on the back. 

But you can’t help wondering – what comes next for your business? How do you take your revenue to the next level?

Well, this is the perfect time to scale.

Scaling up is a process that capitalises on your positive momentum and aims to supercharge your growth. It’s all about strategies that rapidly deliver increasing volumes of customers and conversions. 

We’re going to explain everything you need to know about scaling up, so you can feel fully prepared to embrace the next stage of your e-commerce journey. 

First things first – is my business ready to scale up?

So – you love the idea of scaling up your offering. But how do you know if you’re ready?

There are a few indicators that your business is in a good position to scale up:

  • You’ve identified and captured an audience that connects with your brand messaging
  • You’re seeing profitable levels of sales and customer value
  • You’re seeing consistent and positive performance 

However, although your products might be a hit with your audience, there are still some key preparations required before scaling can begin. 

How should I prepare for scaling?

When your business scales up, you’ll be seeing rapidly increasing volumes of sales.

This is obviously great stuff. But you need to be able to handle these volumes – which means you need to prepare.

Don’t worry. We’ve got you covered.

We’ve created a handy checklist of everything that needs to be in place before you kick off the process.  

As a business, you’ll need the following:

  • Channels of communication that work effectively
  • Fully configured reporting
  • Definitive figures about exactly what your breakeven numbers are, taking into account LTV and all expenses
  • Enough funds to spend at least 50 * CPA / week
  • Sufficient cash flow
  • A stable credit line, a bank account, or multiple cards (in case one form of payment is ever declined)
  • Maximum profit margin for the product from your suppliers
  • Enough picking and packing capacity to fulfil orders with no delays
  • Staff and FAQ templates in place to respond to the dozens of comments, emails and messages you’ll receive every day
  • Visibility of your stock figures and minimal lead time for restock
  • An abundance of quality ads to prevent creative fatigue
  • Improvements to your funnel AOV (upsell/downsell/cross-sell)
  • Accurate Facebook pixel tracking and clear conversion events
  • At least 2 active ad accounts, focused on separate products and funnel stages
  • The nerve to stay the course when costs fluctuate during testing
  • Products listed on Amazon & eBay – if possible

It’s extremely important that you tick all of these boxes before you begin scaling.

(If we could make the word ‘extremely’ any bolder, we would.)

If you’re missing any of these fundamentals, you may be driving increasing demand without being able to deliver – and this is a sticky situation.

How to scale up successfully 

There are three key components to any successful scaling exercise.

Firstly, you need to understand some clear strategic principles. These are the building blocks to your business growth.

Secondly, it’s important to know the media buying tactics that will expand your reach, increase your conversions and fuel your growth.

Last (but certainly not least) is creative strategy. To increase scale successfully, you’ll need to understand how to test, rotate and optimise different assets.

Let’s run through these components in a bit more detail.

#1 – Solid strategic principles

The term ‘scaling up’ can sound a little vague, so here’s exactly what the strategy involves.

We take your best performing ads and duplicate these into higher budget adsets. This gives them a chance to show what they can really do for your business. 

Putting a higher budget behind these adsets allows platforms to optimise them effectively in a short space of time.

We ultimately want to see these adsets achieve 50 of your objective conversions (purchases, leads, etc) in under a week. Once this is achieved, optimisations can take place – and from here, a stable and profitable CPA can be maintained. 

How do you measure success?

Acronym alert! A metric known as MER is key when it comes to measuring early success.

This stands for the Media Efficiency Ratio.

This is the clearest and most realistic way to measure the impact of scaling on your business. It divides your total sales by your media cost, providing you with a snapshot of how your campaign is performing.

MER helps to avoid some of the first-party tracking issues related to iOS updates – it also focuses on pure efficiency, as opposed to metrics like clicks. 

It’s very important to monitor performance during early scaling. If CPAs aren’t reducing or a positive MER isn’t maintained with higher spends, then the budget should be pulled back. 

Fishing analogy, anyone? 

Who doesn’t love a good fishing analogy when it comes to performance marketing?

Think of your campaigns like boats during this early scaling period. You’re casting lines (adsets) with different fishing hooks (ads) to test them out. 

In the initial stages, you need to throw out a lot of different hooks to establish which ones bring in the most fish. Pretty quickly, you’ll know which hooks can get the job done.

#2 – Meticulous media tactics 

Ad platforms use pixel fires to place audiences into different buckets.

These pixel fires determine how ‘in demand’ a user is for different advertisers, and how likely they are to respond to your ads.

When you’re spending smaller budgets, the platform will direct your ads to those users most likely to click and convert. 

When you begin to scale up your budgets, you’ll also be expanding your audience reach, meaning you might reach more ‘in demand’ users. As you broaden your targeting beyond the hottest prospects, you may begin to see a rise in CPAs.

However, this rapid increase in spend also allows for the speedy collection of data. This allows for quick and effective optimisations. 

Once the 50x objective target is reached the learning phase can end as you’ll have access to sufficient targeting data. You’ll then have a much clearer understanding of the best performing ads, the most receptive audiences, and the most efficient channels. 

All of this data provides you with the insights needed to increase spend and scale effectively.

#3 – Creative considerations 

As you can imagine, ramping up your daily spends means that creative fatigue can kick in pretty quickly.

To combat this, it’s vital that you have a diverse range of quality assets ready to go. Standard assets, UGC, ‘How To’ videos – the more the merrier. 

You should also refresh both creative visuals and copy to allow for more thorough testing. 

It’s all about staying agile with your creative messaging, and ensuring that you have enough assets in the bank to avoid burning out. The more assets there are available for testing, the more insightful the tests will be.

How do you know when scaling is successful? 

Simple – your channel budgets should always be allocated based on backend revenue.

If your spend in any given channel is scaling up successfully, your revenue should be going in the same direction.

CPAs can help to indicate efficiency, but MER really is the gold standard for scaling. 

That’s scaling up in a nutshell! 

There are a few moving parts involved, but ultimately it’s all about testing and optimising to rapidly drive scale. Got it?

The real key to success is preparation. You need the fundamentals ticked off before you can even start thinking about scaling. Make sure you’ve got these nailed down, and you’ll be ready to boost your growth into the stratosphere.

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