Pay For Performance E-Commerce Marketing with Facebook Paid Ads and SEO
Hello everybody. Welcome to Surge. This week we will talk about eCommerce performance marketing. Our clients, as well as prospects, have asked often about this.
You don’t really want to pay for marketing. If your budget ranges from $5,000 to $10,000 a month, that adds up and can eat into growing profits. Ideally, you want marketing to become a smaller cost that leads to exponential business scaling.
eCommerce Pay-for-Performance Marketing: a Digital Agency’s Perspective
eCommerce owners and managers look at different options because scaling in eCommerce is very difficult. Whatever money you make, you have to put it back into inventory and the budgets could be sometimes limited when it comes to marketing and new client acquisition. Usually, an owner or manager schedules an appointment and asks, “I have this hot product. Can you guys do marketing for me on a pay-for-performance model?”
When we hear this, what do our marketers say in response?
“We need to analyze the product. Do the products represent the brand or the manufacturer?” The answer is important. We look at the data to make sure that this product or brand makes sense for a paid-for performance model.
We also need to look at their margins and sales. It needs to make sense for us in terms of risk. We’re the ones who are putting in our own money to try to get them more sales. So if we don’t believe in the product or the brand, it’s not going to work out.
Consider the product or inventory. It determines our strategy. Is this a trending product? Is it hot? Where’s it being sold? Is it being sold by other companies?
Ideally, we would want exclusive rights to selling that product. We don’t want other companies or other agencies selling that product as well.
Can I approach an agency for pay-for-performance eCommerce marketing?
Yes, but you have to be an established brand. If you are not an established brand, you have to have a commercial miracle or a really hot product. Both would be ideal.
If you don’t have either, we won’t be able to help you because nowadays eCommerce is very competitive. All the small and medium-sized businesses are competing with giants like Walmart, Amazon, Jet, Wayfair, House and you just don’t have enough. If you don’t have the budget, you won’t be able to make a dent.
The only way we can put the budget is if our ad spend is covered by the percentage we receive from that sale. That’s why you have to be the brand and have a hot product.
Cost-Effective Pay-for-Performance Pricing Models and Examples
On top of those two, we have a couple of different models. In one, you pay for the ad spend as the business owner and we won’t get paid for our services until we actually generate sales. We have another model where we will actually cover the ad spend for a percentage.
That percentage will be higher and we won’t get paid for our services until you make a sale. It doesn’t matter if you do it with Optimum7, another agency, or a performance marketing company. We’re going to ask for a high commission on the product sales and won’t be liable for returns.
It is possible for you to do a pay for performance marketing on eCommerce products and sales, Bear in mind, however, that in the long-term you’re actually going to be paying us a lot more money if you have a hot product and if you are the brand than if you paid for these services out of pocket. A lot of people don’t understand that. Now it has to make sense from a business standpoint for both sides.
Best eCommerce Industries for Pay-for-Performance Digital Marketing
Which industries have successful pay-for-performance marketing? What criteria do we use to evaluate a particular field?
Frankly, we can have success in any industry, but we really look at average order value and customer lifetime value. The data will justify our initial ad spend with a viable return on the backend.
Are these high ticket items? Will the investment generate recurring business? Is this maybe a subscription product? Does the product have a certain lifespan? Answer all these questions.
Consider this scenario. If I’m selling a $100 product and I make $50 on that product as the business owner, I can afford to give $20 to an agency like Optimum7. I’m going to make $30 instead of $50, and that is still attractive.
It’s a good deal for Optimum7 because the firm will get 20% of the sale price. It’s a hot product, I am the brand or I manufacture this. I control the supply of this product and never run out.
On top of all of that, if I have a reoccurring possibility, it becomes more attractive to us. A bottle of perfume, for example, will run out and the customer will need to reorder it. At Optimum7, we’re making $20 from every sale, and the latter needs to cost less than $20 to make any money.
Ideally I want my CPA, which is my cost per acquisition or cost per sale to be $10. That means that I can spend $10 to make $20 which is a good deal for me as Optimum7 as the pay-for-performance marketing agency.
In contrast, consider if you have a product and your average order volume is less than $50. Unless it’s an incredibly hot product, we’re not going to involve ourselves with that. The average CPC is $4 on Google. Average CPC is $1 on Facebook.
To get 100 clicks on Facebook, that cost me $100 and for my CPA to be lower than a $10 commission. I’m not going to make money because then I need to have 10% conversions on $100 with $1 CPC to be able to even break even. That’s why high ticket items are important for us as well as the returning business from these clients.
Performance Based SEO, Facebook Ads, and Paid Search Ads for eCommerce
How about paid ads?
We’re talking about Facebook or AdWords. Maybe some retargeting to the bottom of the funnel. We bring in new people from the top of the funnel and then we filter them to bottom of the funnel When we open that up, the orders arrive in bulk.
How about SEO? Can an agency do pure pay-for-performance on content marketing or an SEO?
It’s very difficult to track these metrics when it comes to SEO, in terms of the setup for proper tracking. Tag every single URL from every single piece of content that you create as opposed to the site’s existing material. You need to track every single effort, whether you push the backlink or a new piece of content. You need to put your little mark on anything that you do from an SEO standpoint, so that way you can justify that sale, transaction and subsequent attribution.
At Optimum7, we don’t do pure pay-for-performance SEO, but we have deals with certain brands. These brands are usually doing over $5 million annually. While we have pay for performance deals, we’ll charge a lower base and then we’ll base the pay for performance for SEO or for content marketing based on increasing organic traffic, increase in ranks and a couple of other metrics with conversions because we actually pay attention to conversions as well.
The majority of SEO pay for performance models I’ve seen have been on a ranking basis. They never even scrape the surface of a conversion standpoint just because of the difficulties of tracking. So a lot of times you’ll see, I guarantee X amount of keywords on page one for this amount and then X amount on page two for this amount and so on and so forth. So that’s one way of doing it, but that will never translate into dollars.
I could rank you for 1,000 terms on page one of Google, but if they are not buy-terms, it doesn’t mean anything. Nobody can really guarantee rankings. What we do is we guarantee increase in business, traffic, and conversions. From an eCommerce standpoint, it’s hard to double your traffic, but it’s a lot more efficient and actually easier to try to double your conversion rates because there’s a lot of lowest hanging fruit there.
Lead Generation and Pay-Per-Lead Marketing
Are there any other mediums that you would look at from a pay for performance standpoint?
Lead generation is another option. For us, pay-per-lead is great. For the business owner, however, does that make sense for them because they now need to analyze these leads.
Owners need to ask the right questions. “Are these leads qualified? What are their conversion rates?”
If they’re not qualified leads and they’re not converting, and it could not be our fault. Owners won’t continue with those services nevertheless. They want to see results.
Pay-per-lead makes sense, but it depends on your entire operation. If you’re not able to close the sales or if you don’t have a good sales team to actually turn those leads into a sale, it doesn’t matter if we give leads to you at $2 a pop. You’re not going to make any money.
Does Pay for Performance Marketing Make Sense for Your eCommerce Business?
Let’s go back to eCommerce pay-for-performance marketing. At Optimum7 we do this with certain brands. Your numbers will help predict the return on investment.
Sales and revenue are key. If you’re doing less than two million USD in annual revenue, it’s not that attractive to us. If you’re doing two to five million, it becomes a lot more attractive. If you’re doing five to ten million, you’re a brand superstar.
If you’re doing more than $10 million and not really paying attention to remarketing or retargeting or especially retargeting bottom of the funnel, that’s very attractive to us. We know that we can get more sales for you there. Again, you have to be the brand or host a hot product. Ideally, we want to see search volume for your brand out there because we can turn that search volume into conversions for you.
That’s it for eCommerce pay for performance marketing. If you have any questions, reach out to us. We’ll talk to you guys next week.
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