Getting Better Returns on Online Ads Spendings for Shopify Stores [Scale-up Shopify Part 6]

The secret sauce is the Target Audience Selection

Blog Series Overview

Shopify is one of the largest, if not the largest, e-commerce platforms in the world. At the time of writing this article, there are more than 1.5 million Shopify merchants and 3.75 million Shopify websites. This number is growing exponentially every year. However, almost 50% of these stores are small in terms of size and revenue. While setting up a Shopify store is quite easy and takes just minutes, it is not quite as easy to grow & scale to a larger company. There are certain obstacles and non-technical hardships along the way that no one talks about. We aim to help these smaller-sized companies become more successful in Shopify. We are launching a new series of informative blogs. This is part 2 of the series, you can reach the other articles directly from below:

The 7 Golden Steps to Scale & Grow your Shopify Store:

The links will be updated once new blogs are published.

Qualification & Justification

Firstly, an introduction is in order. Why would you take our points of view as a credible source of information? Well, I have been working as a data scientist in SaaS (Software as a Service) company, named Enhencer, for more than 4 years. Our goal as a company is to help e-commerce companies to dig out valuable visitors as their target audience from their website traffic and improve their returns on marketing campaigns. As an individual and as the company we have worked with many Shopify store owners ranging from small to large. We have encountered and solved many problems faced by these companies and helped many companies go from small-sized to larger sizes. As a result, we have seen a fair share of different scenarios that can emerge under different conditions.

Aim of this Article

In parts 4 & 5, we delved into how to create remarketing campaigns and various tips and tricks surrounding remarketing in Facebook Ads. This blog will help you get the most return for your remarketing campaigns in Facebook Ads for your Shopify store. If you haven't read the previous articles, then please do so, as we will this blog will build on top of those ideas.

Understand the Terminologies

First, we have to address what is qualified as the better returns, what metrics we can consider, and how to improve them. Here are the campaign matrices you should get familiar with:

Results (Conversions): Number of campaign objectives conversions. In remarketing, this should be the number of website purchases generated from the campaign. Naturally, a higher number of results indicates better results.

Reach: Total number of people reached by the campaign. This depends on the campaign budget. If your budget is low, then the campaign will not be able to reach a higher number of people.

Impressions: This refers to how many times, on average, the ad was shown to the same person. For instance, if the reach is 5000 and impressions are 10000, that means, on average, the ad was shown to the same person twice. You want the ad to be shown to the same person a few times so that the chance of conversion increases, but do not overdo it. You might say, well then, let's increase the budget. I am going to stop you right there. You do not want a very high number of impressions as this can irritate your audience. The budget comes into a big consideration here. If your budget is too low, then the campaign might not reach the whole audience. But if your budget is too high, then Facebook will be able to reach a higher number of people; however, since it has a spare budget on hand, it will keep showing the ad to the same person over and over, increasing the impressions number and eating up the budget no matter the poor conversion performance. Additionally, this can irritate the audience.

Cost Per Purchase: Average ad spending to generate one purchase. Naturally, a lower cost per purchase is more profitable and preferable.

Cost per Click (CPC): Average ad spending per click. Lower CPC is better.

Click Through Rate (CTR): The percentage of times people saw your ad and performed a click. The higher the CTR, the better it is.

Amount Spent: The estimated total amount of money you've spent on your campaign and ad set during its schedule.

Return on Ads Spendings (ROAS): ROAS is the measurement of how much you are getting in return for your spending on advertisements. In other words, total conversion value/total campaign cost. Higher ROAS is always preferable.

It is much harder to increase the ROAS value, far more than the other matrices mentioned above, like conversion rate, audience reach matrices, etc. You have to face both sides of the coin. Increase the conversion and, at the same time, decrease the spending on advertisement campaigns. This is the definition of the marketing department's dream achievement.

We will refer back to these terminologies a lot during the rest of the article.

Why Target Audience Selection is the Key?

What is the definition of a good performance for remarketing campaign? Well, there is no absolute answer to that. Just because the conversion is high does not mean the return on ad spending is high as well. In other words, you want the campaign to generate more sales but at a lower cost. The campaign conversion should be high, cost per purchase should be low. As a result, Return on Ads Spending (ROAS) will be higher.

To make that happen, you have to target the right audience for your campaign so that the people you are reaching are right for your products. As a result, the campaign will be able to convince them to purchase without showing the ad again and again (lower impressions). As a result, with a smaller budget, you will be able to reach not a larger audience, but the right audience, your cost for the campaign will decrease, the cost per purchase of the campaign will decrease, the click-through rate will increase, and so will the conversion rate. When all of these come together, your return on ad spending will improve significantly. Mind you. This is something even the expert performance marketer can not achieve that often. There is no one right way of achieving this. The key factor to improving your ROAS is to target the right audience for your campaigns.

How NOT to Select the Right Target Audience?

Since we are on the topic of target audience selection, we have to address the types of most common remarketing audiences. For e-commerce & Shopify stores, the remarketing audiences are the ones who have engaged/interacted on the website with the brand and its product.

There are many campaign settings, but most are trivial options. Therefore I will only go over the ones that you should be aware of.

  • Website Visitors: Who have visited your Shopify store/e-commerce website. Any e-commerce/Shopify store with decent traffic has a high website visitor number. Generally, what happens is it's very hard to reach all your website visitors, and even if you can, it will require an extensive budget. Since some visitors are not relevant to your brand or products, it's not worth spending the budget to show them the ads. Therefore, targeting all your website visitor is not worth it, is not viable in some cases, and usually generate a very low conversion rate.
  • Product Viewers: Not all website visitors end up viewing a product on the website. Some might leave the homepage without viewing any product. Therefore, Product viewers are the visitors who have interacted with any product from the website. Even if they do view the product, a small fraction of them ends up purchasing something. Since the Product Viewer audience size is smaller than all your website visitors, sometimes this is more preferable. One, they are somewhat interested in your products; hence they viewed it. Two, you won't need a monstrous budget to reach them. But, Still, they are not your right target audience and will generate a low conversion rate.
  • Add-to-Cart: Just like product viewers, only a certain few will end up adding something to the cart. Since their number is very small, Facebook ads might not have enough to optimize the campaign and might get stuck in the learning-limited phase. Additionally, if the budget is kept high, then due to the smaller audience size, Facebook will keep showing the ad to the same person over and over until the budget is used up.

These are the most common remarketing audiences used by the e-commerce industry. Remember, just because someone visited your site does not mean that person is your right audience, they might have come by accident, or they did not find your product to their taste. In any case, just because that person is a website visitor does not mean you should retarget them. In fact, this might irritate a portion of the audience. You will be wasting your budget on the wrong audience.

Bigger companies with larger teams and higher budgets can obtain more relevant audiences with higher conversions. However, not everyone can afford such resources, especially the small to midsized Shopify Store Merchants. I will introduce you to a simpler and much cheaper option.

How to Select the Right Target Audience?

Let me paint a picture for you. Every visitor has some behavior associated with the website visit. Some might look at certain types of products, certain number of products from certain categories, some might come back to the website after certain time intervals, some might look at the comments, etc. Some of them will make a purchase, and some will not. In other words, some behavior leads to a website purchase, and some do not.

What if you could target the website visitors who are more relevant to your brand & products? As a result, target the visitors who are more likely to purchase something from the website. That would be great.

Let me introduce Enhencer to you. Enhencer is an online platform that helps e-commerce/Shopify companies improve their ad campaign conversion rate and ROAS values. Enhencer does this by automatically collecting and analyzing your website visitor data. Using sophisticated AI-Algorithms, Enhencer segments the visitor based on their behavior and likelihood of purchasing something from the website. In other words, based on the website visitors' behavior, Enhencer provides the most relevant and optimized target audience for all your marketing campaigns.

Take a look at the picture below.

Imagine a Shopify store that sells shoes on its website. This is an example of the kind of segments Enhencer finds for you. If you look closely, Enhencer transparently provides the behavior that leads to a sale on the website. It also says that these visitors have 45 times higher conversion on the website. Well, this is just an example. You will be seeing the segments with behaviors from your site.

In such a scenario, wouldn't you agree that retargeting them for the remarketing will generate more conversion that all your website visitors? Yes, you will be reaching a smaller audience, but these are the audience that interacts with your products; these are the audience that ends up purchasing something. Enhencer audience is larger than add-to-cart but smaller than product viewers with high conversion rates. Since you will be reaching a smaller audience who is more relevant, your campaign cost will decrease, and at the same time, your conversion will increase. As a result, your Return on Ads Spending (ROAS) will improve a lot.

Enhencer is available on the Shopify Marketplace well. All you need to do is signup. Afterward:

  • Enhencer will automatically integrate itself with your store
  • Enhencer will automatically collect your website visitors' data
  • Enhencer will automatically analyze the behavioral aspects of the visitors
  • Enhencer will automatically provide you with the best audience for remarketing

In case you are wondering, Enhencer uses AI algorithms to understand the visitors' behavior and predict which visitors might buy something. As a result, you get a precise audience based on their behavior on your website, and you are not only limited by add-to-cart, product viewer, or all website visitor type audiences.

Conclusions

Target audience selection is a tricky thing to get right. A lot of campaign performance depends on it. If you can do it right, you will see higher and higher campaign returns. The next blog article will explore the strategies that help a Shopify store to grow larger. Tune in next week.

Author photo
Written By M Ahmed Tayib