Paid advertising experiments — Spera Foods Growth Study Week 2
This post is part of a larger case study. We are documenting our efforts to create a stable and scalable growth engine for Spera Foods. To learn more about the case study, please read this introductory post.
We are in Week 2 of building our growth engine for Spera Foods. Last week we revamped the website to prepare for our efforts this week. (You can read about the website revamp here). Now that we have a functional website, we need to start making some sales! Our approach this week is pretty simple: drive traffic and observe. In this post, you will see the specific tactics we implemented for driving traffic, the tools we used to observe the success/failure of those tactics, and our results.
The approach
Since we want to see results in an accelerated timeline, we will utilize paid advertising on social media. Paid advertising is a great way to drive traffic for a new site/company that lacks a major following (if you can afford to pay for it, of course). While paid advertising will likely always be some part of our marketing strategy, I do not anticipate relying solely on it. In the future, I hope that we utilize paid advertising in complement to co-marketing, partnerships, referrals and other channels.
We will not spend a lot of money on paid advertising until we know that it works and our messaging is on point. Our profit margins on our product are pretty tight so we do not have a lot of room to make mistakes. We need to keep our cost per acquisition — a sale of granola in this case — under $2. That is certainly doable with paid advertising, but will be tough to hit in the early days when we are still building awareness.
Before we can make our first ad, we need to make sure our tracking tools are setup correctly. Like the growth hackers’ motto states, “If you can’t measure it, don’t do it.” This week we are focusing on Facebook/Instagram so we need to setup our Facebook advertising account and Facebook Pixels. We also need to setup Google Analytics because that will ultimately become our central data tracking platform.
Setup Facebook advertising accounts and the Facebook pixel
Facebook makes the majority of its revenue off of its advertisers so it is not surprising that they make it really easy for you to create an Advertiser account. There are a couple different ways you can do it, but we setup Facebook Business Manager because it is better suited for a multi person team to manage the company’s Facebook page and implement advertising. If you want to create a Facebook Business Manager for your team, start by signing up here. After creating our Facebook Business Manager, we created an advertising account for Spera Foods. Again, not hard to do and here’s how.
Finally, we need to create a Facebook Pixel that we will add to our site. The Facebook Pixel communicates analytics between your site and Facebook. This allows Facebook to better understand what happens after a Facebook user leaves Facebook and starts interacting with other sites. While you can still gain plenty of insight without a Facebook Pixel, you will need it in place to harness the full capabilities
of Facebook advertising. Plus, it only takes a few minutes to do. Follow the steps in Facebook’s guide to creating a Facebook pixel. This process is mostly done inside Facebook’s platform.
Since our site is hosted on Squarespace, adding the pixel to our site is pretty easy. Both Facebook and Squarespace have instructional guides to walk you through the process. At the time of writing this article, the process on Squarespace is as simple as navigating to Settings -> Advanced -> Code Injection and pasting our Facebook tracking code generated in previous steps.
Setup Google Analytics
Squarespace has a built in Google Analytics integration. All we had to do was copy and paste our Google Analytics tracking ID into our Squarespace settings. Squarespace has a straight forward guide if you need it and Google has plenty of resources to get you setup with Google Analytics.
Drive traffic to establish a baseline
Looking at the built in Squarespace analytics, the site had less than 100 visits last month. That does not surprise me because no effort was made to drive online sales during that time. Those visits are likely people who discovered Spera Foods at the farmers market and visited the site to learn more. I am assuming this because the majority of the traffic came directly to the site or through Google. Only a handful of visits were from social media referrals where most of the digital marketing efforts have been made.
We need to drive more traffic to the site. There are many obvious reasons why we need to drive more traffic, but the most immediate need is to establish a baseline. We need a larger sample size to answer critical questions like “what is our current cost per acquisition?” We also need to better understand our customer demographics. Will the farmers market demographic translate over to online sales? Will the messaging that works for them, work for our online demographic? We do not know yet and we need to figure that out quickly.
As a bonus, maybe we will get some quick and easy sales.
Start with social media
Facebook and Instagram is our most engaged audience at the moment. That will be our easiest place to start driving traffic from. Our Facebook and Instagram audience is mostly comprised of strong believers in Spera Foods that have been around since the early days. The audience size is not huge, but it is steadily growing at 15 likes/month on the Facebook page with only casual posting by Spera Foods.
Boosting posts
Let’s see what happens when we post a bit more and boost the posts to our entire following. By default, Facebook does not show your posts to everyone in your audience. If you want everyone to see a specific post in a reasonable timeframe, you need to “boost” it by paying. We will boost 2 very different posts and measure the results.
Post 1:
Post 1 is more of a “lifestyle” post showing Spera Foods product in a real world setting. The post is relatable and written in first person perspective. It is a message directly from the founder to the audience.
Post 2:
Post 2 is head-turning and designed to drive sales. It shows each of the 3 flavors in a carousel posting format. We want people to scroll through, see the product line and then click through to buy some.
Split test advertising with custom audiences
In addition to boosting these two posts, we are also running Post 2 in split test ad. The purpose of the split test ad is to identify potential target demographics and increase awareness outside of our existing audience. We created two different audiences.
The first is a “friends of our fans” audience that requires the Facebook user has a friend that is following our page. This custom audience has a potential reach of 120,000 people.
The second custom audience is targeting people within 10 miles of the farmers markets that we attend, that have a set of interests that align with a healthy eating lifestyle. This custom audience has a potential reach of 34,000 people.
Both of these custom audiences are small, but that is fine for now. We are only putting $50 max into an individual advertisement until we know our messaging is on point and have some demographics information. Once we have that information, we will increase our target audience size and increase our budget.
Offer discounts
Now that we are driving traffic to the site, we want to give them some sort of incentive to buy now. Adding a discount code is one way to achieve that. We are already offering a discount for farmer’s market reorders. Creating a second discount code for digital marketing will help us segment the sales between the two channels easily.
Results
The results are in. We did not do exceptionally well, but there are definitely some good takeaways. During the week the paid advertising was running, we received 2 orders. The Facebook Pixel did not pick up the orders so either they did not buy directly through the ad (maybe they hopped over to google or a friend saw the ad and then told them where to go) or the pixel is not setup correctly. I am assuming the former is true, but I will keep an eye on it.
We spent $105.72 on our ads. $50 of that was specifically targeted to produce sales, while the remainder was more focused on building awareness. Our sales-focused ads did not perform well. Engagement was low and conversions were low.
Our awareness-focused boosted posts did much better, but still not great. Our costs ranged between $0.16 per engagement and $0.89 for link clicks. Considering that our profit margin is around $2, we need to drive this cost down. We want our total cost per acquisition (sale) to be below $1, and we probably won’t achieve that if we are paying $0.89 per click. We will study the demographic information and other performance indicators to look for ways to bring our costs down in future advertisements.
We earned $43.20 on 2 orders. That’s not great, but the good news is each order was for multiple products. We would rather they buy multiple products at one time and it gives us more flexibility in the future. It appears the BOGO coupon was successful in incentivizing the buyers.
We also had 8 abandoned carts so we need to look into why that is happening. Our initial guess is some sticker shock on shipping costs, but we will have to investigate.
The frustrating byproduct of paid advertising is that your website traffic returns to its previous level once you stop paying for ads. You can see our downward trending traffic below. One way to keep your traffic up is to have great content to keep them coming back. Unfortunately, we do not have that content at the moment and will not put effort into content creation for another couple weeks.
The good news is that our engagement with our existing audience and new audience is way up. The number of comments/shares/likes are up consistently on all of our posts. Each post seems to bring in one or two new people to our audience. There is so much more we could be doing with our posts to bring in more people, but that is a battle for another day!
We can objectively see how posts and boosted posts are affecting our page likes through Facebook Business Manager. While these numbers are still very small and within “margin of error” territory, it is still comforting to see positive results directly from increased effort. We have witnessed increased engagement subjectively, too. Hannah received comments from many people at the farmer’s markets saying they loved her posts this week. Spera Foods is starting to be on peoples’ minds and that is half the battle!
What’s next?
Follow me on Medium or follow me on LinkedIn to receive weekly updates. Stay tuned for the next post where we will walk through the success and failures of the next week’s efforts which should include more advertising optimization and the beginning of our influencer marketing efforts.
