TCM #007: How to Use Facebook Cost Caps: Profitably.
Read time: 5 minutes
Morning 👋 – Tom here.
Happy Saturday to 863 motivated ecommerce entrepreneurs.
Below is your one short tip on marketing and revenue growth for your ecommerce business – today we're talking Facebook Ads.
I truly hope this is helpful in some small way.
Enjoy, and have a fantastic weekend.
There is so. much. BS. out there about how to run your Facebook Ads in 2023.
Sweet lord.
I still don't believe I'm an expert – far from it – but here's exactly how I'm leveraging Facebook Cost Caps right now based on trial and error and talking to more media buyers than I can shake a stick at. 🥖
Cost Caps
Firstly – what in the bedazzle is a Cost Cap?
Cost Caps (CC) tell Facebook the max amount you're willing to spend to acquire a customer – your target Cost Per Acquisition (CPA).
That's as complicated as we need to get. I promise. Don't let some agency bro confuse you.
Okay, why are Cost Caps so great, Tom?
You and I, we're a tad in the dark about what really works as a Facebook Ad, even if we think we're experts.
But that's cool – because our goal is profitability and letting the machines (with over a billion data points) remove the guesswork.
Our overconfidence sometimes leads to meh results on Facebook. But that's precisely why we use Cost Caps.
It helps us kick personal bias to the curb and helps to prevent us from losing a single penny.
Let's say you've got 100 bits of content (maybe from Influencer Seeding, did I hear you say?).
Whatever they look like – whether we think they look "good" or "bad" in our biased opinion – we're gonna use them all to achieve at or below our target CPA.
Now, it's up to you to decide how profitable you want to be.
I'd recommended that you start by setting the cost cap 20% below your target, and slowly – literally once per week – increasing that target if you're not getting the volume you're looking for.
If you are, stick.
If not, twist. ♠️
What should my campaign structure look like?
We're gonna use Dynamic Creative Testing Campaigns (DCTs).
DCT campaigns and Cost Caps are like PB&J – together, they should help prevent you from burning money on Facebook. 🥜🍓
Here's the deal: for every 4 creatives, we'll make 1 DCT.
So, 100 creatives = 25 DCTs.
(Still with me?) 😅
Then, we'll let Facebook works its magic and figure out the top performers, allocating your budget accordingly.
We, as mere humans, are getting out of the way of the Facebook decision process. Facebook, with its billions of data points, is going to make the decisions for us.
In each DCT, you'll smoosh those 4 creatives into 1 ad set and 1 ad.
The more streamlined your campaigns, the quicker you'll breeze through the learning phase and jump into optimization.
Each of your 25 campaigns will have a Cost Cap set at a CPA that keeps your brand profitable, based on the ad dollars spent.
This way, losing money via FB? It should be in the rearview.
(I know that's a fair chunk I'm throwing at you and a lot of acronyms. Don't let that overwhelm you. This can quickly become second nature, I promise.) 👈
Should I test ALL of my creatives?
Yes.
In a word.
It's a smart move to test all your creatives, not just the ones you think will slay. With Cost Caps in place, you only spend when you're earning profitably.
Your ultimate goal? Have so much content that you're practically drowning in it. This lets you whip up more DCTs and go all-out with testing.
More DCTs = more spend at your desired CPA. It's a win-win!
For the first time ever, you can stop obsessing over ROAS or CPA. It should be all taken care of. Just focus on the spend, and that's why the Cost Cap strategy is so dang important.
Now, for the grand finale. Every day, bump up your budget by up to 19%. Whenever a DCT gets more spend, stick a "WINNING" label on it, so you know which ones to scale.
(19% I've found stops FB from resetting the "learning phase".)
Replace "Losing" DCT campaigns with content from your "Winning" Campaigns, and mix in fresh stuff from your ongoing creative efforts.
Keep scaling the winners, ditch the losers, and crank out as many DCTs as humanly possible.
Using spend as the key metric instead of ROAS or CPA might be a bit unconventional (definitely not Facebook Ad School material), but with the Cost Cap strategy, you're basically playing not to lose.
And that's an enormous change, especially when you're splurging 6-figures or more per month.
Summary
And there you have it! A surefire way to up your Facebook Ad game and avoid losing money.
Test it, and genuinely let me know how you get on.
🎯 Just remember:
- Cost Caps
- Dynamic Creative Testing Campaigns (4 creatives per campaign)
- Focus on spend
- Keep scaling and testing
- Let Facebook make unbiased decisions
If you need more help or have questions, don't hesitate to reach out or book a call.
My inbox is a little chaotic, given there are now 800+ people on this list, but I'll always try to get back where I can, and/or use the responses to drive future newsletters.
Good luck, and may the Facebook gods be ever in your favour! 🌟
One last note: Once you find your Cost Campaign "winners" and you *maybe* want more volume – load those post ID's into an Advantage Shopping Plus Campaign (ASC+). That's a little more advanced and a topic for another day, but it can add even more fuel to the fire.
Go well, and have a fantastic weekend!
I appreciate you being here. 🤙
Tom
P.S. Ready for more? Here's how I can help you level up your ecommerce game! 🌟
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