Most advertisers fail at scaling their Facebook and Instagram ad campaigns correctly before they even begin.
They run campaigns that get average results. And they don’t know why. It drives them crazy.
You might have noticed this yourself: when you work with low budgets you get great results. But when you reach around $10,000 – $30,000+ in monthly ad spend, your performance metrics suddenly stop being great.
With every budget increase, your cost per acquisition goes up, reach goes down and conversion rates decrease.
This is typically the point when a lot of advertisers and business owners decide that Facebook and Instagram ads don’t work for them.
SUCH a shame – because there are a few tweaks and tactics you can use to improve your campaigns.
You’re about to find out how to scale your Facebook ads in the most effective way without wasting any of your ad budget on inefficient campaigns.
How this guide will help you
The backbone of any successful Facebook advertiser is a thorough understanding of how Facebook’s algorithm works.
Knowing what different ads, targeting and budget settings will do to your ad delivery is invaluable to running profitable campaigns.
In the process of helping companies increase their ad budgets and cross the 6-figure mark, I saw the most common mistakes growing advertisers often make.
If you’ve been struggling to find the best scaling strategy, or you’re looking for the best growth tactics for your account, this guide is for you.
Its aim is to show you how to avoid many common pitfalls that business owners and advertisers make when trying to increase their ad spend on Facebook and Instagram. It’s packed with expert advice and actionable tips on how to keep your ads profitable as you grow your business.
What you’ll learn
- When it makes sense to start scaling your account
- Why so many businesses fail at it
- The difference between horizontal and vertical scaling
- 4 tactics to scale your ad budget successfully
- The most important metrics you need to pay attention to
Who this is for
While a lot of the information in this guide is universally applicable to ad accounts of all sizes, the tips and strategies shared here are geared towards businesses and advertisers who are already familiar with running ads on Facebook and Instagram.
You’ll be able to use this guide best if you plan to substantially increase your ad spend to grow your business within the next few months.
If you are just getting started with Facebook ads, you can take a look at these resources or feel free to get in touch with us to see if we can help.
Now that we’re on the same page, let’s dive in!
The Art and Science of Scaling
There’s more to scaling campaigns than simply increasing your ad spend.
When you start working with larger ad budgets, the real challenge lies in maintaining a healthy return on investment (ROI) as you grow.
To scale effectively on Facebook (or any other media buying platform), you need to understand the principles of the platform’s algorithm and how it reacts to the changes you make to your campaign budgets, targeting and ad creatives.
I’ve worked with advertisers who can produce excellent results on small ad accounts, but then fail to stay profitable when they grow and manage 5- or 6-figure budgets.
This mostly comes down to 2 mistakes:
- A lack of clear objectives and KPIs.
Advertisers who don’t start with target KPIs in mind cannot determine which campaigns are doing well and which ones aren’t. This means they cannot make informed decisions on where to invest more. They often end up spending a ton of money in the wrong places only to realize that large chunks of their ad budget have gone out the window on unprofitable ads.
- A lack of understanding on what needs to change.
Even when audience targeting, ads and KPIs are well-aligned, many advertisers don’t know how to manage their budgets in a way that makes Facebook’s algorithm work for them efficiently. This is mostly due to a lack of understanding of the algorithm itself.
As a result, it becomes difficult to maintain a healthy ROI as the ad account grows.
Before you start scaling on Facebook, you want to know
- how increases in your ad spend affect the way your ads are shown to your audience;
- the impact these budget changes can have on your ads’ profitability;
and most importantly
- how to anticipate decreases in ROI and keep them to a minimum.
This is why it’s so important to understand how the algorithm works to show users your ads.
What is the Facebook algorithm?
What you’re about to read is critical knowledge for scaling great ad campaigns.
It’s time to understand how the changes you make inside Ads Manager will pan out ‘in real life’ to make sure you pick the right scaling strategy.
Your goal as an advertiser is to make Facebook’s algorithm work to your advantage – and then scale effectively over time.
Facebook uses a proprietary algorithm to determine which ads to show to which person. On the one hand, they want to give their users the best possible experience on their platform by showing them only the content and ads that are most relevant to them.
On the other hand, it’s also in Facebook’s best interest to make sure that your ads are shown to the people who are most likely to engage with them and convert on your offer.
The term ‘Facebook algorithm’ is widely used in the online advertising industry. It sounds mythical, but what It refers to is simply the Facebook auction or ad delivery system.
The Facebook ad delivery system
Every time you launch an ad, you are entering it into the ad delivery system and asking Facebook to show your ad to its users in exchange for your bid.
There are several factors that determine how often your ad is going to be shown to users and at which cost, and that’s where things get a bit tricky.
The overall principle Facebook uses to determine which ads to show its users is value. Facebook assigns a value to every ad, which in turn determines how it will be shown to users on its various networks.
Even though the exact mechanism that Facebook uses to measure your ads’ total value is a safely-guarded secret, Facebook does communicate the following formula:
Your ad’s total value is made up of your bid, multiplied by the estimated action rate and added to user value. Let’s break this down to see what each of these things mean.
- Advertiser bid: This is the one factor that you have the most control over: the bid that you set in the auction. This is typically set to ‘lowest cost’ automatically, although there are cases in which you may want to set a bid yourself.
- Estimated action rate: The estimated action rate takes into account everything about your advertiser account on Facebook, as well as some of the behavioral characteristics of the user that is viewing your ad. It looks at the history of your page, ad account, campaigns and ad sets. It also considers recent activity on your ads, the social proof on them, and the amount of positive and negative feedback your ad has received. Facebook also analyzes every user’s personal characteristics, interests and past online behavior to predict how they will interact with your ad.
- User value: Ad quality and relevance. This is where Facebook evaluates the experience that the user has after they click on your post. If a user sees your ad on Facebook or Instagram and then has a negative experience on your landing page, they are likely to associate that negative experience not only to your brand, but to Facebook as well. This is why Facebook makes sure to analyze advertisers and reward those who provide a positive website experience after the click.
If you want to find out more about each of these factors, check out this article on how to make your Facebook ads successful in 2020.
How to leverage Facebook’s data for your success
So how does Facebook know how valuable your ad will be to the person viewing it?
The answer is data. Facebook has an enormous amount of data to work with.
In June 2019, the company reported having more than 2.4 billion monthly active users on Facebook and more than 1 billion monthly active users on Instagram.
They know their users’ activities, likes and interests. Apart from the posts and activity on Facebook and Instagram, they also have data on everyone’s browsing habits on other sites. They know which websites a user recently visited and what they’re actively researching. Millions of websites have the Facebook pixel installed on their webpages and are sending all of the usage and conversion data back to Facebook.
Since Facebook wants to maximize the value to its users and the value to its advertisers at the same time, we know that:
The more relevant your ads are to your target audience, the higher the likelihood that they will perform well for you.
So by spending more money on an ad set, you are giving Facebook more budget to work with to show your content to the people who will like it most.
When you increase your budget on a well-performing ad set, you’re essentially telling the algorithm to go out and show it to more people who are most likely to be interested in your offer.
Scaling and the Facebook algorithm (or: The Onion Principle)
To visualize this process better, I want to take our conversation to the kitchen for a moment.
Think of increasing your ad budget like peeling an onion: Let’s say you launch a new campaign with a budget of $100/day at the ad set level. Facebook’s algorithm will go and find the users that match your target audience and are most likely to convert on your offer at the lowest cost.
Now imagine that for your $100 daily budget, 10 people converted. Your cost per conversion is $10 in this ad set.
Facebook tells us that after collecting about 50 conversions or running for 3-5 days, the algorithm will have gathered enough data for optimization, and you should see your ad sets’ performance metrics stabilize.
The people that are inside your audience at this point share similar interests and/or browsing behaviors. They represent the core of your onion and they respond at a similar cost. Thanks to the data it was able to collect, Facebook can now go ahead and predictably find more people like your onion’s core audience to show your ads to.
When you increase the ad budget on this ad set, you’re giving the algorithm more money to find explore additional ‘layers’ and find more users similar to those who already reacted positively to your ad. This means that Facebook is casting a wider net and showing your ad to more people.
But the more people see your ad, the higher the chances that there are people who don’t respond or convert at the same rate as your core audience.
This means that when you increase your budget to $150/day, you might have to show your ads to more users until one of them converts. So your cost per conversion increases beyond $10 to $11, $12, $13 and so on.
As long as you’re happy with the cost per result on your ad set, you can continue to increase the budget. Once you have scaled spending to a point where the ad set is no longer profitable, you can start taking measures to improve your metrics and results, turn it off, or keep it running steadily at a budget that is still within your range of acceptable performance metrics.
The more conversion data our Facebook pixel collects on your target audience, the better it can optimize to find people with similar interests. This is why budget increases can work very well for ad accounts with a lot of historical conversion data and ‘seasoned’ pixels.
But enough talk of onions. We can all go back to our chairs now.
The Two Types of Scaling
There are two underlying strategies that most scaling tactics are based on. Each strategy comes with its own advantages and challenges you’ll want to look at before deciding on what to do next.
1) Vertical Scaling
Vertical scaling is the most straightforward growth strategy there is. When you scale vertically, you simply increase the budget on your existing campaigns and ad sets to reach more potential customers.
The biggest challenge in vertical scaling is to increase your ad budget in small increments, rather than doubling or tripling it too quickly. This is because Facebook’s algorithm needs to adjust to the budget changes you make.
We’ve just seen that with higher budgets and broader reach come higher costs. As your ad spend goes up, so does the average cost of advertising to the people in your audience.
When done correctly, your average cost per click, cost per view or cost per acquisition will increase slightly with each budget increase. But if you fail to make changes in a way that helps the Facebook algorithm optimize the delivery of your ads for you, you risk waking up to a big surprise the morning after making a budget change!
So how can you keep your costs in line while scaling up?
How to stay profitable with vertical scaling
Now that you’ve seen how Facebook’s algorithm works to find your ideal audience, you can probably see how big, sudden budget increases can destabilize the optimization process and increase costs.
Instead of aiming for double or triple the ad spend too quickly, you want to feed the algorithm just enough fuel for it to adjust and find similar converters at the lowest cost possible.
I recommend starting with incremental changes to your budget. This gives the algorithm the time to adjust to your changes and continue finding the best audience for your objective at the lowest cost, like it previously did. The goal is to avoid losing all of the work the algorithm has previously done to optimize delivery for you.
Before you start increasing budgets on your existing campaigns and audiences, ask yourself:
- How quickly do you need to scale?
Are you are running a launch or a seasonal campaign for a certain time period? Are you going to scale an evergreen campaign?
Depending on the amount of time you have available, you can decide on how high to set your budget and how many ad sets to include in your campaigns. If you are not working under any time constraints, a common best practice is to increase your ad set budget by max. 50% every 3 days.
- Have you run through your audience?
One of the most common problems with scaling on Facebook that advertisers often forget to pay attention to is audience overlap. Audience overlap is what happens when 2 or more of your ad sets share (part of) the same audience.
To prevent this from happening, make sure to exclude audiences from your ad set that are already being targeted by other ad sets. You’ll also want to use Facebook’s audience overlap tool which lets you select audiences you have created and check how much of one audience contains users that are also in another one of your audiences.
For step-by-step instructions on how to check for audience overlap, click here.
2) Horizontal scaling
Horizontal scaling tactics are more time consuming and require you to do more legwork, but they are often the most rewarding. The main objective here is to continuously expand to new audiences and test new ad creatives and offers. There are several ways to do this, and we’ll cover the four main growth tactics that you can apply to your ad account here.
1. Target Current Audiences with New Offers or Ads
Add new products or create new offers
If you’ve already found a winning audience that engages and converts well, the first thing you can do is to change the ads you’re showing them.
Even though Facebook grouped certain users in your audience together based on similar interests or behavior, everyone is not going to respond to your ads the same way.
As users, each one of us uses Facebook and Instagram differently and prefers different types of content. Some people like reading blog posts, while others prefer video. You want to make sure that you appeal to the different preferences that your audience may have and take everyone with you.
Consider changing out ad creatives and use new images or videos. Try using different ad formats and placements. We like to always test at least 3 different ad formats in each ad set. For example, an online retailer might choose to show a video, a carousel ad and a static image to the same audience and compare the results.
You can also see great success by switching out the type of offer on an existing product. Do you currently offer free shipping? Try swapping it out with a discount code instead to appeal to a different type of buyer.
Pro tip: You’ll know it’s time to change your ad copy and creatives if you see your frequency go up to 3-4. For some advertisers, this happens every week, others can wait 30 days before making a change. How often you need to make changes will depend on your budget, the size of your ad set and how quickly you run through your audience.
2. Target new audiences
Although Facebook has had to remove a lot of targeting options after the Cambridge Analytica scandal, the platform still makes it surprisingly easy to research your target market’s interests and behaviors. You can get into the minds of your buyer persona and find people similar to them in just a few clicks. Let’s look at the different ways you can reach out to new audiences with Facebook ads.
Target lookalike audiences based on different pixel events
If you have been using lookalike audiences based on your purchasers, try creating lookalike audiences from people who are still a step higher up the funnel. For example, you could create lookalike audiences of people who have added a product to their cart, visited your website, engaged with your Facebook posts or viewed your videos.
Important: If you’re using sequential audience targeting, don’t forget to exclude people who have already moved to the next step in your funnel from seeing your top-of-funnel ads again.
Target new locations or demographics
Depending on the type of product or service you sell, you may want to focus some of your ad budget on areas that have a higher household income; or target cities and states that have shown to have a higher conversion rate on your website.
If you run a local business with a physical store location, try expanding your reach to new areas around you and establishing a new radius of locations to advertise in.
Target new interests
Use Facebook’s Audience Insights tool to discover new interests that you did not previously include. Once you start researching the pages and similar interests it suggests, it’s a rabbit hole you can spend hours in.
For more ideas, browse platforms like reddit, Youtube and other places your audience likes to hang out on and see what they talk about. What interests do they have? Do you recognize any common patterns?
Create new audience combinations
For more advanced targeting, try combining interests with other interests, or with lookalike audiences. This method, also known as layering, can help you develop hyper-specific audiences and test if a certain segment responds better to your offer than others. Use Facebook Analytics and Google Analytics to analyze your current user demographic and see if you can layer them with any lookalike audiences or interests to find potentially high converting segments within your current market.
3. Add new products or services to your current ad sets
This tactic is simple, yet often overlooked. Once you have identified a winning audience, why not show them other products or services that you provide? A certain percentage of your target market is likely to respond either right away or in the future, when the interest does come up.
The obvious use case for this are retailers who cross- and upsell other products or bundles to their existing market. Vendors with limited product mixes can also advertise affiliate products to grow their revenue.
But SaaS companies can also benefit from this tactic. Think of businesses that continuously add new features to their software. You may have marketed your core feature set to your audience a while ago, but a recently added feature could be the necessary trigger for someone who is already familiar with your brand to finally sign up.
Important: When you’re busy creating your audiences, don’t forget to check for audience overlap!
4. Expand to other advertising platforms
Most brands start advertising on either Facebook or Google Ads. While Google’s main strength is that you can pick up users at a stage where they are already actively searching for a solution, Facebook lets you create a detailed persona of your target audience based on their interests and behavior.
The good news for advertisers is that the number of places you can reach your audience is growing. Here are some ideas to help you scale your advertising efforts across channels.
Google’s acquisition of YouTube and the subsequent launch of video ads have opened a whole new range of possibilities to advertisers on the Google Ads platform.
YouTube has over 1.9 billion logged in monthly users. If you’re already producing video content for social media, YouTube ads are an excellent way to expand your reach. With a few changes, you can repurpose your video content to show on YouTube and start building a comprehensive advertising strategy across multiple channels.
One of the newcomers in paid social advertising is Pinterest. Although still in its early stages, Pinterest is especially useful if you’re looking to target women aged 25-54. For companies who sell lifestyle products, Pinterest advertising is a great way to build a visual storefront of your brand online and drive traffic to your website at the same time.
Why you should consider cross-channel advertising
There are disadvantages to spreading yourself too thin and trying to conquer every digital marketing channel out there.
But one of the biggest benefits I always tell all of our clients about cross-channel advertising is that you can truly tap into the power of remarketing.
According to a 2010 Neilson survey, the average Internet user visits 89 websites per month. They don’t only use Facebook or Instagram. They don’t just stick to YouTube.
Your customers are on different platforms at different times every day. So if you want your brand to stay top-of-mind, you need to set up remarketing across all of the websites and platforms your customers visit.
For example, you can attract cold audiences on Facebook and then retarget them on Google’s display network, so they see your ad the next time they read a blog article somewhere.
Or you can drive keyword-based traffic to your website through Google search, and then remind your visitors to complete their purchase with dynamic product ads on Facebook and Instagram.
The possibilities are virtually endless, and the results speak for themselves:
By tracking critical events of website visitors and running cross-channel remarketing campaigns, we were able to increase return on ad spend for one of our agency clients by up to 21x.
Pick the right metrics to measure performance
Now that you’re starting to scale up, you need to decide which key performance indicators (KPIs) you will use to determine whether your campaigns are doing well or not.
Your KPIs will help you monitor the profitability of your ads and decide on a course of action, depending on the results you see after you start scaling.
So what should your success metrics be? Here’s a brief overview of the most important things to keep track of.
ROI / Return on ad spend
The main goal with any campaign strategy is to get out more money than you put in. That is why for most businesses, the biggest indicator of advertising performance is their return on ad spend or ROI.
Your Return on Ad Spend measures gross revenue generated for every dollar spent on advertising.
Your ROI is your return on investment and measures the profit generated by ads relative to the cost of those ads.
The ROI may take other cost and profit factors into account, while the ROAS focuses strictly on the direct returns from your ad spend.
Some of our clients use more advanced methods of tracking profitability. They might accept to break even or even make a loss on an initial sale, because they know that they will make a profit on follow-up sales.
Instead of tracking the return on ad spend on individual campaigns, they look at their companies’ overall profit margin after cost.
Depending on what you’re going for, you need to decide which of these you want to focus on and what your target ROI/ROAS is to keep running your campaigns profitably.
Cost per acquisition or cost per action (CPA)
Another important metric to track is the cost of acquiring a new customer or lead. As you scale your ad account, this will probably increase, so it is important to define a maximum or target CPA to measure your advertising success over time.
Setting a good target CPA can be tricky. A best practice is to combine your account’s historical results and look for industry benchmarks to base yourself on. It’s important to set a goal that is both realistic and attainable.
Remember: You can always adjust it later and set a new target once you have achieved your first goal.
For example, if you’re currently running campaigns at a cost per purchase of $25, it doesn’t make sense to set your next campaign’s target CPA at $15 (assuming that your campaigns are already well-managed and the CPA is optimized).
Depending on your campaign’s objective, you might also want to look at other metrics such as your cost per click (CPC) or cost per 1,000 views (CPM).
For a detailed guide on which metrics are the most important for each type of campaign, click here.
Putting it all into practice
No matter which metrics you use to track your campaign performance when you scale your Facebook and Instagram ads, be sure to choose objectives that are realistic and attainable.
Remember: Your top-of-the-funnel advertising shouldn’t be the only lever you pull to improve your sales performance.
To fully leverage the benefits of scaling and counteract the higher advertising costs, you need to make sure that you generate profit beyond the initial sale.
Do you have an effective post-purchase strategy in place to produce repeat business from existing customers? Do you run cross-channel remarketing ads to capture prospects that drop off?
Marketing to cold audiences should only be the first step to building a relationship with your customers.
As you increase budgets, your cost per result will automatically increase, but you can control the higher costs if you know how to scale correctly and stay profitable.