How we test dropshipping products using Facebook ads!

Time needed: 7 days

Here is a very detailed step by step guide on how we ran our Facebook product testing ad campaign and made our first dropshipping sale.

1. Know the general rule;

   don’t get attached to any particular product when testing. If a product is not working (or reach its budget breaking point which you set for that product), feel comfortable to move on from that product and test other products.

2. Get your ad creatives ready;

   Pick a product listed on your website. Create an engaging image and video ad about it! You can create the ads yourself, if you are a good content creator or get a freelancer to do that for you on fiver.com. If you’re tight on budget you can use a competitor’s ads (but it’s unethical to do so without their permission).

3. Set the rule;

   the idea here is to define your budget breaking point and spread your budget across your product testing campaign and if the budget gets exhausted and you didn’t get any sale, then stop testing that product and move over testing a different product.
   
   We set our own rules to a maximum $250 and 10 days to test each product because thats how much we can afford to bear based on our budget, our own intuition and considering our product and profit mark up, we felt that if we had to spend more than $250 to make a sale then its not worth it.
   
   As a rule, we say that the maximum number of days we can run ads to test each product is 10 days. At $25 daily. This makes the budget breaking point to be $250. It also means that after 10 days of running Facebook ads or $250 spent and we do not get any sale. We shall move over to test the next product.
   
   We spread the $25 daily budget across 5 adsets with each adset having a $5 daily ad spend. This means we spent $25 daily.
   
   We understand that it takes some time for Facebook algorithm to gather some data and improve the ads performance, that’s why we allow for 10 days to test a product before moving to the next!
   
   Please note that you can create your own rules. You can decide to have a budget breaking point of $300 for testing each product and say the maximum number days you’d allow your Facebook ads to test a product is 12 days.
   
   It’s important to set your rules from the start because we’ve seen new dropshippers spend 1000’s of dollars testing one product that just just wouldn’t work.
   
   You need to know where to draw the line! If you have to spend 1000’s of dollars to make a single sale, would you be profitable selling that product?
4. Targeting;

   first and foremost, this depends on your target country. We recommend choosing one country to start dropshipping. You can always scale later and offer shipping to multiple countries but when you are just starting out, focus on one country!
   
   This will help you concentrate on giving the best possible service to that target market. For example; you’d be able to concentrate on learning about the country’s taxes, the audience behavior and you’d able to use a local supplier based in the country and offer fast shipping to your customers.
   
   Your Facebook campaign should target the country you’ve chosen to focus on! Try to set your Facebook campaign to have a large audience seize of 1 million to 5 million.
   
   Each of our adset had 2 ads; a video and image ad respectively. Each ad had one interest based targeting. For example; if the product is a “Chair”. One ad can target the word “Table” another ad could target the word “furniture” etc. The idea is that each ad should have an interest based targeting of a word closely related to the product you want to test.
   
   You can also target based on demographics. i.e age and gender. This will depend on the product you want to test. If you think its a product that will perform well for a certain gender or a certain age group, then feel free to split test your ads based on that gender or age group. This means you can set one ad to target females and another ad to target males. One ad to target younger people and another ad to target older people etc.

5. Optimizing ads;

   We let the Facebook campaign run for 4 days. After which, we analyze how the ads are performing.
   
   You can check how your ads are performing on your Facebook business manager or download the Facebook business suite mobile app, where you can view your ads analytics reports in a user friendly interface.
   
   This is the tricky part, different niches have different metrics which is considered ideal in that niche. For example some niche may usually see Click Through Rate (CTR) of 2% – 5% whereas another niche may have a CTR of 1%-2% as normal.
   
   More so, metrics does not equate to revenue! Lets illustrate this;
   
   You can have a high CTR of 10% and a conversation rate of 2% and be fine. In this case, 10% of people click through your ads and visited your website but of the 10% that visited your website only 2% of them ended up buying from your store.
   
   You can have a low CTR of 1% and a Conversation rate of 20% and still be fine because that means 1% of people that see your ads, click through your link and visited your website and of the 1% that click through your link, 20% of them ended up buying from your store!
   
   So, in terms of revenue we can’t say that a campaign isn’t generating revenue on the basis of the ad metrics alone.
   
   There are a lot of variables to consider outside the ad metrics, like the profit markup of the product. For example; if “Campaign A” have a conversion rate of 2% for a product with $100 profit markup, then its more profitable than “campaign B” where “campaign B” have a conversation rate of 20% for a product with a profit markup of $5.
   
   This is assuming that both campaigns got an equal number of impression. Impression means the number of times the ads was viewed.
   
   So if both campaigns have an impression of 100. Then for “Campaign A”, 2% of the 100 impressions bought the product with a $100 profit markup.
   
   Lets do the maths 2% of 100 impressions = 2/100 x 100 impressions = 2. This means that 2 viewers purchased the product.
   
   The product has a $100 profit markup. So to know how much profit “Campaign A” made, lets times that 2 viewers by the $100 profit mark up. Thats 2 x 100 = $200. Meaning “campaign A” made $200 profit.
   
   Lets find out how profitable “Campaign B” was! We say 20% of the 100 impressions bought a product with a $5 mark up.
   
   Thats 20/100 x 100 impressions = 20. This means 20 viewers purchased the “Campaign B” product.
   
   The product has a $5 profit markup. So to know how profitable “Campaign B” is, we times the 20 viewers by the $5 profit mark up. 20 x 5 = 100. This mean “Campaign B” made $100 profit.
   
   We can see that even though “Campaign A” had a low conversion rate of 2%, it was still more profitable than “Campaign B” which had a high conversion rate of 20%.
   
   The point here is we can’t tell a campaign’s profitability on the basis of the ads metrics alone. So, a campaign isn’t necessary unprofitable because it has a low CTR or a High CTR.
   
   Ads metrics is not to indicate a campaign’s profitability but instead, it is to give you clues as to wether your campaign is performing at its optimal and if not, which areas you should optimize!
   
   like we said before, different niche have different metric scores which is considered normal. While some niche usually gets a CTR of 3% – 5%, another niche may see a CTR of 1% – 2% as normal.
   
   So after 4 days of letting the ads run, if your metrics is falling below whats ideal in your industry. You can optimize your ads for a better performance.
   
   Think about it, assuming you aren’t making any sales at a CTR of 1%, what if you work on increasing that CTR to 2%? More people will visit your website and you might make sales right? And what if you are already making sales with a CTR of 1% and you increase that to 2%? You might make more sales, right? Wouldn’t that feel good?
   
   How do you know what ad metrics is ideal in your niche?
   
   Its a bit difficult to know whats ad metrics is ideal in your industry unless you have other dropshipper friends who are in your niche and can tell you what metrics scores their ads often get or you have personally operated stores in different niches and have a good idea of what’s largely obtainable in those niche.
   
   If you have no clues, then here is a general idea to keep in mind. For most niches, the following metric score are considerably good;
   
   (1) A Cost per Click (CPC) of $1 -$2
   
   (2) A cost per thousand impressions of $15-$25
   
   (3) A Click through rate of at least 2%
   
   if your ads are not performing at its optimal. You can optimize it for a better performance.
   
   how do you know which areas of your ad to optimize?
   
   Here are some general pointers to guide your optimization efforts;
   
   (1) If you have low CTR; tweak your ad creatives and ad copy. Ad creatives is the ad content, wether its video or image. Ad copy is the text caption of the ad.
   
   (2) If you have high CPM/CPC; CPM stands for “Cost per thousand impressions” and represents how much Facebook charges you once your ads is viewed one thousand times. CPC represents “Cost per Click” and represents how much Facebook charges you for each click on the link promoted on your ad.
   
   High CPM/CPC can be due to the audience, for example; when you target audience in the big 5 i.e USA, Canada, UK, New Zealand and Australia, the CPM/CPC are usually much higher compared to when you target audience in Asia or African countries.
   
   More so, a high CPM/CPC can be due to a high competition of advertisers bidding to sell a similar product to the same audience.
   
   It could also be due to a peak period. For example Q4 period (September- December) usually see a high advertising rate due to Black Friday, Cyber Monday, thanksgiving and Christmas holidays. Therefor CPM/CPC usually increases during the Q4 period.
   
   A high CPM/CPC can also be because your ad creative is not engaging. If Facebook shows your ad to 1000 viewers and they engage with your ad by liking, commenting and watching through the ad video. It sends Facebook algorithms the impression that people like your ad and over time your CPM /CPC will decrease but if people aren’t engaging with your ad, your CPM/CPC increases over time.
   
   You can try to split test between audience to see which audience gives you a lower CPM/CPC. For example; if you are dropshipping in the US, you can set one adset to target New York and another adset to target Florida.
   
   You don’t always have to stress over getting a lower CPM/CPC, the general idea is to do your maths, giving your profit markup for the product your trying to sell and the conversion rate for your targeted audience, would you still be profitable at your CPM/CPC rate?
   
   If not, kill the campaign and test another product or split test your audience targeting to see which audience gives you low CPC/CPM.
   
   If you don’t have any conversation rates to do your maths, then look out for pointers, like do you have any ATC’s (add to cart)? And if you do have ATC’s then that a good indication to keep the campaign running.
   
   (3) If you have low ATC; ATC stands for “add to carts”. Remember we were optimizing after day 4 of running the campaign. We set our rule to maximum 10 days with a $250 budget breaking point for testing each product. So, after day 4, we haven’t spent half of that budget or gone half of the maximum number of days.
   
   
   We didn’t get any ATC’s or conversion during the first 4 days and that wasn’t an indication for us to stop running the ads. We understand that it takes a little while for Facebook algorithm to gather data and better serve our ads.
   
   We only look ATC’s if we are having a high CPM/CPC. In that case, if the profit markup for the product is high and we already having ATC by day 4 then its a good indication to keep our campaign running.
   
   On the other hand, if our CPM/CPC is high but the profit markup for the product is low and we aren’t getting any ATC’s by day 4 then we can either kill the campaign and test another product or split test our audience targeting to see which audience gives a low CPC/CPM.
   
   Lets elaborate this a little bit because we want you to understand it! For example; if your cost per thousand impressions (CPM) or Cost per click (CPC) is high, lets assume your CPC is $100 and your profit margin is low. so, lets assume that you have a profit of $10 on each product.
   
   “Is it worth it to you to pay $100 every time someone clicks on the promoted link to your website with the possibility that they’d buy a product for which you make a $10 profit?”
   
   To us it isn’t worth it unless of course we’ve implemented a strategy that compels our website visitors to buy many unit of the product.
   
   (4) If you have low conversion rate; remember that we set our rule to a maximum of 10 days with $25 daily ads budget and a maximum of $250 for testing each product.
   
   At day 4, we haven’t gone half of the maximum number of days or exhausted half of the total testing budget per product. So a low conversion rate is not an indication to stop the campaign on day 4.
   
   Although if we have ATC but no conversion rate then we need to optimize the check out flow.
   
   You need to ensure that there is nothing in the check out flow thats discouraging your audience from completing their purchase. Here are some pointers;
   
   (a) Ensure that navigation through the check out pages is working as should and they are not stuck trying to navigate the pages. You can try to initiate check yourself and see if everything works fine.
   
   (b) Ensure that there are no costly hidden fees that the buyers sees for the first time at check out. Like high shipping and tax fees. You can try to include the tax and shipping fees to the product price and state on the product page that “the price is inclusive of shipping and tax”
   
   (c) Check that you have multiple payment options on your website. i.e card payment, bank transfer, Paypal etc. So that if your visitor is unable to complete their purchase via one payment method, they could complete try out the other Payment method.
   
   (d) You can include live chat on your website, so if your visitor have any pre purchase enquiries, they could easily contact you. We love tidio live chat, it has integration with Shopify, Woocommerce, Ecwid etc You could also use Sonetel to get a virtual phone number in many countries, so your customers can call you like a local business.
   
   (e) You can set up retargeting emails and SMS campaign for abounded cart. This means that you collect the email addresses and phone numbers of the people who added product to cart but didn’t complete their purchase, then send them an email or text message with a discount coupon and a link to compete the purchase. Email and SMS retargeting can be done automatically. We recommend using omnisend. It has integration with ecommerce websites built on Shopify, Woocommerce etc
   
   Regardless of wether or not we have any ATC, we can still optimize our website for conversion.
   
   It’s important to ensure that your website does not look like a scrappy dropshipping store selling junk items. We mean this literally.
   
   Ask yourself; if you were the target audience, will you trust the site enough to buy anything from it? If the answer is “No” then you really need to work on your site design and appearance.

6. killing and scaling ads;

   After optimizing our ads, we let it run until our budget breaking point is reached!
   
   In this case, since we set our budget breaking point for testing each product at a maximum of 10 days at $25 daily testing ad spend. Thats a total testing budget of $250 for each product.
   
   Once that budget is exhausted, if we have made at least one sale, we scale our Facebook ad on the other hand, if we haven’t made any sale. We dump that product and move on to testing another product.
   
   Just incase you are wondering, we made our first sale on the 8th day!