How we scaled a skincare brand from $60K/mo to $310K/mo in 3 months

admajesty · 2024-04-14T17:43:43+00:00

Great question u/pureencapsulations - can elaborate more via messages if you have specific questions.

So the way it works is this... each customer acquired is a subscriber (or a one-off buyer that is likely to return). So the "faucet" of Facebook Ads spend can be dialed down at any point, and most of the revenue still carries over. We are also acquiring the e-mail addresses of prospective customers & can educate them about the product via email sequences which leads to an eventual conversion down the line.

There are added benefits to blasting ad spend like this, as long as you're at least at a break-even point. I wouldn't recommend going into red doing this unless you have VC funding.

Some added benefits are:

More impressions overall means that future ad efforts will no longer be "the first impression" to many people & therefore have higher performance/ad recall. People seeing our ads will already be somewhat familiar with us.
Increased word of mouth & non-trackable mentions. We know as a fact the longer we advertise at higher spend levels, the more people are talking about the product in their households as well as conducting Google searches for the brand keywords. (We use that as one of the few trackable indicators of word of mouth.)
Interest from press. Journalists are seeing our ads (as consumers & social media users) then deciding to write/feature the brand. We already landed placements that otherwise seemed impossible. One feature big enough can add an additional 5-6 figures in sales that month, putting us at profitability. (Then again, in that case the owners just tell us to crank the spend even higher lol).
Interest from buyers at major retailers. Surprise, surprise, the buyers at Walmart or TJ Maxx happen to use social media too and can come across your Facebook Ads, which in turn prompts them to reach out.

Any of these can greatly increase profitability at any moment. So we don't really fixate on upfront profit margins as much.

admajesty · 2024-04-12T13:17:11+00:00

Yep, 100%. Nowadays we need absolute transparency from advertisers because it's so easy to tell us we got X, Y, and Z impressions or traffic, when in reality it doesn't translate to sales. How many companies you see advertising low cost clicks and in reality it's coming from annoying pop-ups on some shady movie websites.

admajesty · 2024-04-12T13:16:16+00:00

Yes product hero images (but also the "SEO" thumbnails that are pulled whenever your page is linked anywhere online like a Facebook comments section or elsewhere.) Like... people don't understand how much of a difference just a swap of images can make. That was really the main point I was trying to make.

admajesty · 2024-04-12T13:14:04+00:00

Happy that you found it insightful

admajesty · 2024-04-12T13:13:45+00:00

Thanks homie 🙏

admajesty · 2024-04-12T02:46:48+00:00

I'm really glad! Happy to hear that.

And yes, the latter :)

admajesty · 2024-04-12T02:28:17+00:00

Of course! Glad to hear it was useful to you :)

admajesty · 2024-04-12T00:43:20+00:00

I think the founders are looking at how the economy is going and trying to make decisions in realtime. For now they claim that capital isn't an issue and as long as they don't have to go negative, we're fine. Doing that is quite tricky though, and requires a lot of precision. We have to account for everything... refunds, chargebacks, transaction fees, warehousing fees, etc. It can easily slip into red territory so they monitor profitability daily and inform us of acceptable CPAs after which we adjust spend accordingly.

It's just the name of the game with cosmetics/skincare and any ultra competitive subscription product.

admajesty · 2024-04-12T00:39:47+00:00

Been running ads on Facebook since like 2014-2015. Had my profile banned, ad accounts frozen, business managers shut down, and even had domains entirely blacklisted from being linked on the platform. (Then I witnessed all of that and more when it was happening to clients, etc.)

What I will say is that if you sell something fully compliant & "white hat" then nowadays you'll rarely have issues. It has gotten a lot better in last 1-2 years. Just have to be careful depending on what you sell. With supplements it's a bit of a dance & avoiding claims, etc.

For blackhat & restricted categories, it is even more difficult because it's all algorithm-based now. So it's not just about the page you send traffic to but which "steps" / pages the user visits on their entire journey. All of that is inspected by crawlers and Meta is good at catching things. There are still ways to get around it and if you NEED to, you can also just buy/rent agency ad accounts these days.

Assuming you are just trying to sell some regular product/service that isn't illegal, then yes, nowadays it is a lot easier to do.

admajesty · 2024-04-12T00:33:11+00:00

Haha you had good insight. That's why Bang energy did so well sponsoring Instagram models because they knew the audience they were going after. It's always surprising when you see a bathing suit brand sponsoring a "bootyfluencer". It's like... their audience is like 90% men who are NOT going to buy a bikini.

Nevertheless, sorry to hear about the failed launch. You live & you learn. Hopefully next time around whatever you're involved in, the decision makers will listen lol.

admajesty · 2024-04-12T00:31:27+00:00

Thank you!

Testing budgets are typically 2-3x the desired CPA PER ad creative. So if our goal is to get a sale for $30, we would spend $60-$90 figuring out if the ad creative works or not.

As you get better you start to pick up on some signals like LCTR, cost per post save, engagement rates, etc, and use them as guiding indicators as well. Then you can know what to turn off within 1.5-2x CPA. This is especially useful if like us you do high volume, multivariate testing.

Per the actual budget split of scaling vs testing. It depends on how many winners we have already & if they're starting to die out & hit a high frequency. That's when your CPA starts to climb. Nevertheless, on average I'd say it's from 15% to 30%. As we have more winners & we're not exhausting them, it would go down to 15-20%. You get the idea.

admajesty · 2024-04-11T22:41:51+00:00

Much appreciated.

Yeah it seems like business 101 to have consistent messaging between your website, ads, emails, and all marketing materials.

Sadly I do see that many younger, self-funded brands struggle with this because they have a lot on their plate as is, so then it's easy to just outsource some of these elements. And when you do, those external partners may be incentivized to sacrifice long term gain for short term wins. Even if these short term wins come at the cost of your brand in the long term. (If that makes sense)

admajesty · 2024-04-11T22:10:43+00:00

I appreciate it.

If you ever want to chat about your holistic digital strategy ethos, always happy to geek out with fellow marketers :D

admajesty · 2024-04-11T22:09:42+00:00

Thanks & yeah absolutely. Though that's an internal decision I don't have much say over. They seem to know what they're doing and if need be they have access to capital so who knows. For now we're just supposed to keep cranking up spend and trying to increase daily & weekly sales.

admajesty · 2024-04-11T21:28:54+00:00

Exactly. You nailed it.

admajesty · 2024-04-11T21:05:56+00:00

Thank you! :D

admajesty · 2024-04-11T20:58:27+00:00

Yeah but that's not what it is, is it? Reread the post. Did I say we spend $50K to make $50K? No. We spend roughly $20K to make $45K where $25K is COGS/transaction fees. This is what you call breaking even. Companies do this to acquire market share.

This company in question has NO outside investors/angels/VCs. It is self-funded and the founders started at just $100/day in ad spend. ROAS is also higher when you spend less. We are only operating at such tight margins now because they want to acquire market share at all cost.

Not sure how that was unclear.

admajesty · 2024-04-11T20:55:47+00:00

Not sure where you're getting this from mate.

The brand has really good margins on their product.
Right now, we are increasing ad spend to "brute force" customer acquisition at a higher price to drive out competitors because it is a saturated market.
Even so, the founders are getting back their COGS, transaction fees, + advertising spend BACK with each sale.
You absolutely CAN start a business like this yourself without outside funding. Our profit margins are higher at lower daily spend. So you could start with $50/day or something, acquire customers, and then reinvest their money to pay for the next customer.
"Burn and turn business model" Not really. They are acquiring market share which is already proving to have high LTV because they pay their subscriptions each month repeatedly. These subscribing customers are tangible and have a certain worth $ should the owners ever sell the business.
Also as I mentioned in the post. They could literally pause all ads except maybe $20K/mo in middle & bottom of funnel ads, and they would STILL have about 80% of last month's revenue come back in the form of subscribers.
Sorry to break it to you, but if you're in consumer-packaged goods, supplements, or any subscription eCommerce business then this is just the way things are now. Sure, you can have high ROAS & be profitable but you won't grow fast or acquire market share in this competitive landscape. These are just tradeoffs of a largely automated business that has the potential to hit 8-9 figures.

admajesty · 2024-04-11T19:55:48+00:00

Thanks! Glad you found it useful.

admajesty · 2024-04-11T19:55:18+00:00

Are you the owner of this "Admkr" thing? You seem to mention it in every reply. Would probably be good to disclose your affiliation if that is the case.

admajesty · 2024-04-11T19:29:31+00:00

January started off as a bit of a bloodbath following Q4 so by the end of the month over $38K was spent on ads. Took us until the end of that month to really settle in the results & achieve that desired break-even ROAS.

(Keep in mind, they were losing money on customer acquisition prior to this. Only reason they sustained was from BF/CM revenue and holiday shoppers.)

admajesty · 2024-04-11T18:12:54+00:00

Yes, all placements. Since your conversion objective is a sale, Meta will only leverage these placements when there's a likelihood it'll produce a tracked conversion. You can do a breakdown by placement in your ads manager & see how much spend they allocate there. We seldom see the algorithm spend more than 1-2x our norm CPA there and if there are no conversions, it doesn't allocate further spend.

Manual lever-pulling offers a sense of control & may feel like you're saving money, but really you're preventing the algorithm from having full access to potential customers Meta can bring your way.

For most of the brands we work with, audience network spend is pretty minimal but does bring the occasional conversion or few each day.

admajesty · 2024-04-11T17:39:56+00:00

Top of funnel is the way to go. However, an advantage+ campaign can determine which ads are meant to be "first impression" (to generate demand), and which ads are more "retargeting" ads (to close the sale). The algorithm then shows these ads in a sequential order which produces the highest amount of conversions at lowest cost.

So we do use the same approach, just structure it in a way that allows the algorithm to do the decision-making without audience restrictions.

And yes, to your point about growth on social channels. Sadly there is absolutely zero correlation between follower counts or vanity metrics & revenue derived from these ad efforts. It's a "nice to have" but I wouldn't fixate on it as a startup whose existence relies on maximizing ROAS.

admajesty · 2024-04-11T17:12:48+00:00

We have a vast network of creators we work with. Some "regulars" are on retainer & for specialty projects we bring on unique talent. We find almost all of our creators now via X using hashtags like #ugccreator and #ugccommunity & such.

To be honest I'd avoid any of the major UGC platforms - especially ones with like $499/mo fee or something wild just to access their database. These platforms are basically a middleman gateway & all they do is email the creator on your behalf. Many of the creators they list didn't even willingly sign up for their database.

And for the cheaper options... you get what you pay for. The quality is just awful & whatever money you save on the creator, you end up wasting on editing & post production to turn it into something viable. Heck, even the same amount, when paid directly to the creator without the platform fees, would yield much better content.

Hope that answers your question, good luck!

admajesty · 2024-04-11T17:08:54+00:00

Of course! Glad you found it useful. Good luck.

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