How To Fix The Most Common Bid Cap & Cost Cap Mistake I See transcript

If you are running highest volume ads of any kind or if you're running bid caps or cost caps of any kind in your ad account, there's a problem I see with ad accounts that have those structures in them all the time. It's a really consistent problem and it costs media buyers and brands and advertisers a whole bunch of money. I'm going to show it to you in this episode. I'm going to detail for you what the problem is, how to solve it.

It's going to be a little bit in the details of media buying, but I'm going to show you how to solve it and then I'm going to actually show you a real ad account anonymized [music] but where this exact problem came up and show you how we are working on fixing it for the client so you can see exactly how we do [music] this in a real ad account. I think this is going to be really helpful to you if you're a serious media buyer or if your brand is spending serious money on meta ads.

Let's get into it. I'm going to get really into the details today and there's going to be a couple screen share moments. I'll explain everything as I go and where if you don't have the screen share, I think you'll be okay. But um but what I want to talk about is basically the notion that your manual bids, your bid caps, your cost caps really won't work very well if you are not really attentive to the details of what's happening in your ad account.

I'm going to show you an actual example from a real ad account uh with, you know, a bunch of blurred or anonymized information, but but hopefully that will make this point relatively clear. So, the core challenge that I want to get to here is to help you think first about what a bid cap or cost cap actually is, okay? And what it is is it is a control and in this case it's not super concerning whether you use bid caps or cost caps.

If you know me, you know, I prefer bid caps, but it doesn't really matter. So, in fact, I'll just say bid caps the rest of the time for the sake of simplicity, but it really applies to cost caps just as much, okay? What a bid cap is a control on the amount of money that you can spend relative to the optimization event that you're pursuing in meta ads, right? So, if you're telling meta to optimize for purchase and you're telling meta to do that by getting the highest volume of purchases, okay, which is one of the two options.

If you If you optimize for purchase, you can tell Meta I want the highest volume of purchases or the highest value or or actually you can also optimize for incremental purchases. In either a highest volume or an incremental purchase optimization, you can control the spend with a bid cap or a cost cap and basically tell Meta, "Do not spend unless your forecast says you will get the conversions in this ad set at the price that I've selected for this bid cap or below it, okay?

In the case of cost cap, at the average price that you did." So, it's very simple. It's a governor on your spend that does that. And critically, for for this, a bid cap is a highest volume optimization. So, this does not apply to highest value bidding where you use a target ROAS. Everything I say in this episode is not going to be related to that, okay? But in a highest volume optimization, you set a control at the level of a CPA target, okay?

So, you say, "I want a $50 CPA or $50 CAC" or whatever, right? And you can There's There's all kinds of considerations here about how you set the cost cap or the bid cap relative to that $50 target, but all other things being equal, you're telling Meta this is the target at which I want to acquire customers, and so I'm going to go and do that. And here is the mistake that happens over and over and over again and it creates real problems for brands who don't think carefully about this and where account structure matters.

And I'm just going to tell you before I tell you the mistake that this is one of those things where I think the devil really is in the details and there is a real difference between very good media buying, elite media buying, and poorer quality media buying, even people who have the right idea for both, okay? Um you just have to be tied into the economics of your brand and you have to be tied into the details of the platform if you're going to do a great job with media buying.

So, here is where that detail happens, okay? It's very simple. Cost caps and bid caps have no consideration for the average order value and therefore, because of that, when you set your cost cap or your bid cap, you you uh you don't actually know what what average order value you're going to get and therefore conversions have really different values to you, okay? And I'm going to talk about how this plays out in the ad account in a second and I'm actually show you an example.

But first, I don't kind of want to show you what I mean. I'm going to do this visually a little bit with some help from your friend and mine, Claude, here. And and so we'll get a little screen share. If you If you don't have a screen share, it's okay. But you're going to get the point really clearly. Okay, so just imagine you have two products, okay? Product A has a $50 AOV and product B has a $100 AOV, all right? And those two products are are both there and you set your target CPA and however you ladder your bid cap or cost cap to that number at $50, okay?

If you do that, then product A is going to get you a one ROAS because you have a $50 CPA target and a $50 AOV. Whereas product B is going to get you a two ROAS if you have a $100 AOV on that product because $100 divided by a $50 CPA is a two to one ROAS. But of course, if you're actually optimizing your bid cap or if if you're running a bid cap or cost cap, the bid cap or the cost cap does not care about the AOV. It does not reference it at all.

And so, if you put multiple products in the same ad set with the same cap, but those products have different SKU Excuse me, have different AOVs, okay? Then you or different offers or whatever, then then you are going to get really different performance. And the way this tends to work out in actual practice is that Meta will will spend disproportionately on the lower AOV SKUs because it's just much easier to convert a customer to a one ROAS than it is a two ROAS.

And so, all of your money will go there. And in this case, it's sort of obvious, right? If you're If you've got a $50 cap and a and a $50 um AOV versus a $100 AOV, but this actually matters down to the level of what happens if you have an $80 AOV versus a $100 AOV. Well, if you do a $50 cap on both, you still have a really big difference between a 1.6 ROAS on an $80 AOV in product A or a two-to-one ROAS in the case of product B in here, right?

Uh those are 1.6 and two are really, really different outcomes, both probably at the level of volume you're going to get for each and at the marginal contribution of each. And so, if both of those products are in your same ad set, then it's a problem. And again, you do that same game up to $90, it's still 1.8 versus a two, and that's still a really, really big difference. Uh again, at the level of both volume or efficiency, and really those two are are are essentially two ways of saying the same thing.

And so, you have to be really attentive to this. And when you have a situation like I'm describing here, where it is a $90 versus a $100 AOV, it's actually really hard to see those differences um it you know, at the level of individual products if you have multiple products in an ad set without doing a lot of digging around in Meta. You have to you have to sort of go and check a bunch of things out here. A lot of people barely even have AOV in their column sets etc.

And so, I hope you see the problem, right? That that this is the difference sometimes between profitability or not, between your volume going to the right place or not. And listen, I have clients who have a whole bunch of SKUs, and because they have a whole bunch of SKUs, they are uh trying to make sure they generally control the volume to each. I had one account I took over recently where they had a SKU that produced like a uh AOV, another SKU that produced like a $400 AOV, and their old media buyers were not paying attention to this.

They ran them both together in the same highest volume campaign. And by the way, this is true whether you're using a manual bid or not, okay? If you throw those both in the same highest volume campaign, what's going to happen is that disproportionately your spend's going to go towards the $250 AOV SKU. When that happened for the when when we took over the account for this client, immediately, one of the first things we did is we separated out the SKUs uh uh those top two SKUs and then they were the top two two SKUs in a different ad sets put a manual bid on each so that way we could actually put them in the same campaign that way in the same CBO campaign put a manual bid on each and that way they have meta has more room to spend on one than the other even though they're in the same campaign.

Okay, put a manual bid on each and that allowed allowed meta to go spend on each and as it has turned out that has generated a bunch more sales on the $400 product than what they expected. So the client has been very surprised at how much the how much spend has accrued and how much how much inventory they have moved of the higher of the higher AOV SKU because in the past they were just not attentive to this enough in a way that they were actually seeing this and so it looked like it was a slower moving SKU.

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It is a win-win my team is very happy to be working for me. I'm paying them extremely well by local standards in the Philippines and yet I still save money and can exist at a high margin in my business. If you're not considering offshoring, if you're not considering looking at this, I don't know why you're not doing it. Go to morestaffing.co/af. I've been working them with them for years. You should do it, too. morestaffing.co/af.

They'll even give you a 1-year guarantee on anybody you hire. So, if that person doesn't work out in your company, they will help you replace that person at no extra charge. So, morestaffing.co/af. Go check it out today. The problem is, it's actually not that simple in most cases, okay? If what ends up happening, you know, the implications here, right, is that a cap set too low ends up starving the higher AOV products that you'd actually want to spend on.

A cap set too high drives down the ROAS of an ad set that because it overspends on low AOV products. And both of those are really big problems. So, one of them is sort of an opportunity cost problem. The other one is sort of a negative ROAS problem, but they both can matter a lot. And so, the foundational principle in all this, just to be clear, is judge the cap against, or really any highest volume bidding, the the CPA target against the AOV to cap ratio.

It's really just the ROAS, okay? You have to judge it against the AOV, not the raw not just like a raw cap number, not just a raw CPA number. In fact, it sometimes bothers me when I talk to people who say something to the effect of like, well, this is our CPA target, or this is our CAC target, or whatever. And I kind of want to say, well, on what products? Like, in most most brands have multiple offers, multiple products.

And if you just have one CAC target, like, it just doesn't actually make that much sense a lot of times, okay? Um and so, what are the implications for how you actually work this out in an ad set? Um the first implication of this, okay, is that the uh it is is one of ad set construction. Uh and so, uh and so, this is something that I talk with my team about all the time. At AJF Growth, I care a lot that my growth channels are in these details, and paying attention to them.

One of the reasons, actually, that I believe that it matters for um our team to only serve three clients at a time, uh and in terms of like full growth clients, is not only for like the creative considerations and for the sort of broader business considerations and the ways that we can help across the board, but it's also because I want them to have the time and the wherewithal and the inclination to go into a media to an ad account and really care about these details and and dig into them, okay?

And to understand how these are related and then to be able to draw all kinds of implications, which I'll get to in a second. So, we we want to be able to dig in closely because this kind of work does take time. And I I think it's probably still very hard to get AI to do all of this for you. I mean, maybe you could, but it feels like it'll be really hard to me to get it to do this well, okay? So, um so So, we care about this a lot, okay?

Um so, the first implication of this is ad set construction, all right? Um and and so, uh the the simple way to say this is that an ad set must be AOV coherent, okay? An AOV coherent ad set for a cap to work at all. If you have a whole bunch of SKUs, really for any highest volume bidding to work. Um again, this applies across the board to highest volume bidding. If you are optimizing for the lowest CAC, then then all of the ad sets, all of the ads in that campaign, or if you're running manual bids in the ad set, really have to have coherent ads.

If you have a $25 AOV product to a dollar AOV product in the same ad set as a $100 AOV product, you're going to have problems here. It's just going to create a challenge, okay? So, you you really want an AOV coherent um co- coherent ad set for your cap to work. But secondly, when the cap um and then the implication is if if a cap uh has is being applied to an ad set that has a whole bunch of different AOVs in it, you need to restructure it.

Um and there's a couple of simple ways to restructure this. The best and easiest thing to do here, to do that restructuring of the ad set and and to think about the construction here, is is to make it so that each ad set only has one product or offer. That's sort of the ideal setup in a lot of ways, okay? So, you just you just make it so that no ad set has multiple products in it. There's a couple of advantages to that.

One of them is that it allows you to to much more easily manage different um like inventory velocity on different SKUs. So, so just inventory challenges are a real thing in most businesses, right? So, um so if you need to like turn off ads for a certain product or slow them down and adjust targets or something like that, it's just really nice to be able to do that all in one ad set. But, even more than that, it also means that you tend to get uniform AOVs across the ad set.

And so, putting all those products in one ad set works well. But, there's a problem with this, too, which is that you probably also know that Meta needs as much signal as possible if your ads are going to be as effective as possible in an ad set. And therefore, if you take all of your products and put them into a whole bunch of different ad sets, then you're going to spread out your conversions across all of them. Meta wants 50 to 100 conversions per week per ad set.

It wants a lot of consolidation to perform the best. Um I haven't found it actually needs exactly that to really work perfectly, but or or to work as well as possible, but still, I mean, Meta very clearly has said over and over and over again get more ads or get more conversions in less ad sets. Conversions are currency for its machine learning. That's how you That's how you get the best performance possible. And so, you want to have as few as possible.

So, if you start separating out all your products into a whole bunch of different ad sets, well, there's a trade-off there, right? Because now you're getting less signal. And so, the other possibility here is to have multiple products with sim- producing similar AOVs. A- As far as a media buying solution to this goes, to have multiple products with similar AOVs um in the in the same ad set, right? So, this is what we'll do a lot of times.

We have a jewelry brand right now, right? And that jewelry brand doesn't have exactly uniform AOVs, but the products are relatively similarly priced. And so, we can take product A, product B, product C and assume that if they're in the within a few dollars of each other in the AOVs they produce, then we're okay. All right? So, and you put those all together and you end up in an okay spot. There's a lot of trade-offs here, like I said.

Um if one and one sort of simple thing to do here is you may have an ease of decision-making here if you have some really consistent spenders and you can isolate those and put them into their own ad set and keep things spending as long as doing that's not going to remove too many conversions and too much spend from one ad set to another. But but there's there's some touch and feel there, okay? So, those are the two basic solutions though, right?

It's that you put all the you you only compare or you only put the same offer or the same products into one ad set or in the second ad set uh you compare like sort of like AOV, similar AOV products into one ad set. But there's actually another way to do this beyond the beyond the ad set, okay? Um, and beyond sort of media buying construction. And this is where I think, again, great media buying, great growth strategy actually does ladder into the rest of the business, okay?

There is a way to think about this where you go out to the level of pricing and offer construction that I think can be more helpful than just than just this media buying approach, okay? So, one of the things that will sometimes happen, right? Is that imagine that product A is producing $70 AOV and product Well, let's say product A is producing a $60 AOV, product B is producing an $80 AOV. Enough difference there to where, again, like a $50 or a $60 CAC is going to uh or maybe a $40 CAC, whatever, is going to produce really pretty different ROASes and pretty different economic profiles in those products and you want to find some way to solve that problem.

Well, one thing you can do is you can restructure your ad accounts, right? To solve this and sort of split everything out and run everything separate. But there's actually another solution, which is to get outside of the ad account and to go think about a whole bunch of other things on the website. So, for example, are you sure you can't raise the price on that $50 product to $60 or a $60 product to $70 or a $70 product to $80?

Are you sure? Are you sure you can't do that? A lot of times, this is one of the best use cases for a price change or a price test or something like it to see if you can make this happen because because if let's if you have a bunch of ad dollars flowing to a product that's got a $60 AOV, you may be able to push that AOV, you know, raise the price by 10 10 push the AOV up, and then it may it may slow down your performance on on your ad spend, but maybe not so much that it's going to really like uh you know, nuke the account or anything like that, and actually allow you to create more margin on that.

And of course, you now also can go up and in CAC a little bit because uh you've just created more margin room. By adding $10 to the price, you've added, I don't know, 10% or whatever to the to the margin profile of the product, okay? And that's great. That's a really big win. So now you can actually afford more afford more spend on that customers. So you can go adjust the price. Another thing you can do is go change the merchandising of your products.

Like, if you're sending traffic to a collection page or to a homepage, and a lot of you are, and you're getting, you know, again, a $60 AOV, think about how you're organizing the products relative to the ad. This is especially true on collection pages. If you're sending product to a collection page and you've got a an ad spending a lot of money, it's possible that just by rearranging some products on the page, you can actually drive the AOV up a little bit.

Another thing you can consider is like in-cart upsells, specifically tied to that particular product that is driving that particular AOV. Maybe it's a $60 right now, but I don't know, maybe there's a specific in-cart upsell you can put into place where there's a discount, 20% off if you add product B, just to this specific product and try to push that up because you can see that you're getting spend to this product, but you want to get more value out of it and get more ROAS out of it.

And and again, the sort of second-order consequence here is that you'd be able to get more spend into less ad sets and make your ad account work better, which I think is a really worthwhile consideration, okay? Again, down in the details of of how this all can work, okay? Um another thing you can do is change the sitewide offer, right? Like, go change your free shipping threshold. If you've got a $75 free shipping threshold and you've got a product producing a $60 average order value, well, AOV is tricky.

Sometimes you need to look at the modal order value if you're talking about shipping shipping thresholds, but maybe you can push that shipping threshold up to or down to 70 bucks and get people to to come up a little bit. Or if there's like a free gift with purchase, then you could think about where you set that threshold for, you know, if it's over $60 you get a free gift with purchase, well, think about maybe changing it to $70 or whatever.

But you see what I'm saying? Like, play with a bunch of the different structure of the offer of your ads and see where those tradeoffs are. You might actually find that there's room to raise price, get more margin, and actually sort of feed your best-performing ads. Now, I wouldn't do this on my like this kind of thing on my number, you know, four spending ad set in the ad account that's making up 10% of my spend. I don't know, I might go make some small changes there or whatever it is.

But, when you've got like higher spending ads and higher spending ads and you're trying to sort of work all this stuff out, these kinds of changes can make a really big difference to the economic profile of your products and all the rest. And by the way, this is where I should say, make the caveat that I'm talking about all of this in terms of AOV on the assumption that the that the margin profile of each of these products is roughly similar.

If that's not true, then a lot of this kind of goes out the window. Really, the principle in play here is actually not about AOV at all. It's about margin profile and, you know, return on invested capital, okay? But, just for the sake of simplicity, I'm talking about it in terms of AOV cuz it makes all the math easier. But, but I I am aware that you should be thinking about this at the level of margin, not at the level of AOV ultimately, okay?

And look, if you have two different AOVs, but but the margin works out to be the CAC can be at the same place for them, then great, okay? That's fine, too. But, but you get the idea, okay? You should be uh conscious of the return that you're actually getting. If you are the kind of operator who likes this episode of this podcast, you are the kind of person who cares seriously about getting the details of your economics right in your brand.

You care where your money goes and how it's producing a return. That means you are the kind of operator who is well-suited to be using IntelliGems to run your testing on your [music] site. Price testing, offer testing, uh in-cart upsells, in-checkout upsells, post-purchase upsells, all of it testable, all of it measurable down to the level of not just your conversion rate, but actually down to the level of your profit because IntelliGems ties into your COGS data and spits out the answer that the results of every test at the level of profit.

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Use the code Ferris20, f a r i s 20, to get 20% off your first 3 months. intellijems.io, link's in the show notes. Go check it out. But yes, uh this is this is what I'm suggesting that you do is think not only at the ad set structure level, that's sort of step one and the easiest thing to do, but beyond that, think about the offer level, think about the product level. I just know many of you are picking out your prices out of thin air in your products, and you actually have room to go adjust these things and think about it and and see how that works and see how your CAC changes relative to all of that and see if you can affect your your your spending and your performance, which has a second-order consequences of then also allowing you to combine more stuff in less ad sets, make your ad account more stable, and that's a really big win, right?

That's not a secondary consideration in a e-comm business driven by Meta ads. Like that's where most of your money's going. Make sure it works as well as possible, okay? All right. In the midst of this, there are some there are some things you got to watch out for, okay? Beware of rash AOV judgments, okay? Num- So, I'm going to give you four things to watch out for as you go and think about these things, okay? Number one, margin consideration.

I just mentioned it, but if you have different margin profiles in these products, almost everything I said goes out the window there, and you have to analyze this separately, okay? So, definitely consider the margin profile. The same is true of LTV profile on all of this. If you really want to be smart about this, you need to think about margin and LTV for all of this. Uh so, if you're combining different products in the same ad sets, they they really should have similar return profiles in terms of Ultimately again, what you care about is the return on invested capital, okay?

It's about capital allocation, okay? Number two, sample size consideration. Really easy to make a mistake here. If you get 10 purchases and the AOV is $80 on those purchases, when historically your AOV on that same product has been $50, don't go blowing up your ad sets because of those 10 purchases. Weird stuff happens in small samples. I hesitate to give a number here, but I I thought like I need to probably have a number for my team to analyze this on.

I'm going to say you probably want at least 30 purchases to feel reasonably confident that the AOV you're getting is at a sample size where it's like semi-reliable. 30 purchases is actually not enough, but it should give you some level of confidence um without tying your hands too much. And and you know, you really want to see 50 to 100 or something before before you're really feeling like, "Okay, this is this is the AOV we're probably generally going to produce." One of the problems here, by the way, is that um outlier AOV purchases happen in smaller amounts, but they impact the AOV a lot, right?

If you have one $1,000 purchase in the midst of a bunch of other $100 purchases, well, that $1,000 purchase is real and probably replicable, at least to some degree, but how do you factor that in? So, you have to just kind of watch out for those sorts of things as well. Beware of small samples, beware of AOV weirdness, don't overreact. In fact, in a general sense, I would say use your judgment here in a way that makes sense.

If you've got two products and they're both priced at $50 on your website, and for whatever reason product A is producing a $100 AOV for the last week, and product B is producing $50 AOV for the last week, uh I wouldn't overreact to product A's number. Make make it prove it out, right? Because look, they're the price the same. Is there some reason everybody's buying two of product A? I don't know, okay? All right. Number three, you need to consider the analysis period of your AOV.

Uh is another thing that's really tricky. If you're in the middle of a promo, then suddenly your AOV is going to change a lot because you're you're discounting or you're doing a gift with purchase or or whatever it is. If you're post-promo, if you just changed the sitewide offer on your website, you got to be attentive to all those things. So, So, if your promo ended two days ago, don't go looking at what the AOV was three days ago when you do your AOV analysis analysis, uh because it's no longer relevant because you were charging a different price then, okay?

So, there's that, too. And number four, you have to be aware of meta's incrementality in all of this and make your adjustments, specifically when you're setting your caps for all of this. Okay, so, for example, you know, the best studies that I've seen of this repeatedly from both House and Common Thread Collective have suggested that in at least in the old days when 7-day click meant all kinds of different clicks. This is all sort of pre-March 2026 when Meta changed its definition of a click.

So, grain of salt here. But, but in those days, right, that basically 28-day click revenue in Meta was on average the true incremental return of your ads, okay? Essentially, 7-day click times 110 or 115% particularly if you were targeting 7-day click optimization. So, the the point is whether or not that's exactly right for you, you should have some sense of the incrementality of Meta relative to what it says in the platform.

Now, I think Meta is basically right here, and I think 7-day click one-day engaged view is basically right on the incrementality factor that it is giving you. But, you do need to have a consideration there for for how you're thinking about a CAC target relative to all of those and adjusting your cost caps and your bid caps and and all the rest, okay? Sometimes Meta is more incremental than it says, sometimes Meta is less incremental than it says, sometimes you just haven't had all of the delayed purchases that come from your ad actually accrue yet, right?

You've had 3 days on an ad and people are going to buy for the next 25 days afterwards or whatever it is, and you should be aware of that and adjust your targets accordingly, okay? So, that's all of the basic considerations. Now, I'll tell you, it I had at the Meta Performance Marketing Summit, they said and I'm not wrapping up yet. I'm going to show you an example in a second of all of this stuff in practice so you can see kind of how this works out, okay?

I do want to say before I get there, Meta Performance Marketing Summit this year they said that they were going to be creating a a product where you could where maybe all of this will go out the window and episode will get dated really fast because you'll be able to have some kind of ROAS adjustment to your cap or to or to your CPA target, okay? So, you could you could sort of tell Meta, we want the lowest cost conversion possible as long as it's at a two ROAS or whatever it is.

I don't know exactly what the tool will look like. They announced it though, so hopefully that will happen soon. It would really make things easier cuz this is a just a constant pain when you're buying highest volume bidding on Meta. It's really annoying, frankly, and it's and it's a challenge to stay on top of. It's very error-prone in a whole bunch of different ways. This is how we have thought about it in this episode.

Okay, let me get into a screen share where I'm going to show you all of this stuff in action. So, this is all going to be anonymized. All you're really going to see is that different products are producing different AOVs here. And I'm going to show this to you um specifically for a series of ad sets that are that are going to that are that have different products in them. And you're just going to believe me on some of this cuz I can't show you that the product.

So, all right. So, I'm going to show you this over a 2-day period. And I'm going to show you that on a 2-day period because that is when a sale ended and when a new offer went live, okay? So, this is June 22nd and June 23rd. So, so just this week, okay? And what you'll see is that these different products are producing really different AOVs. Now, the samples here are relatively small, but I'm going to show you um in ad set one, this is this ad set is a mix of different products all in this ad set, okay?

So, this is a $65 AOV. Ad set two right here, this one actually is all the same product cuz this is a higher spending ad set in general on a product that we know we can spend on. So, we isolated it into its own ad set, okay? Ad set three, also all its own product, okay? And ad sets four and five are mixes. So, what you can see is that we've tried to do some separation here. So, when I look at this and when I think about where to set the cost cap for this, what you'll see is that I have pushed for for uh for ad set two, for this product cuz I know it's all the same product, the product that tends to get spend.

I've pushed the cost control up to $77 in this case above 70, 75, 75, and 70 for the rest of these, okay? And and it's actually getting a lower CPA than that right now for a bunch of different reasons, but that's because it's relative to this $97 AOV, which I basically trust. I have a bunch of historical data on this even though there was a sale of days before this, so it makes some historical data sketchy. I have a lot of non-sale historical data.

The other thing is, over this time, the client um launched an offer that's sort of an evergreen offer about uh cart size relative to um uh it's like a gift with purchase based on your cart size, okay? So, it's not just free shipping, but it it's something like that. So, okay. So, there's that. So, that is a fairly straightforward one. So, I can look at that. I can measure the AOV, see that it's higher. You've got um in the AOV window here, you've got 23 purchases over 2 days, so I kind of sort of I I adjusted that up a little bit uh today.

But, I'm going to watch that carefully and see how the AOV shakes out as the sample size builds, and we're going to see how that goes over more time. Okay, but here's where it gets really tricky, okay? When I go into this uh ad set, which as I said, is actually a mix of products, you can see that there are two products that are spending the most money in this ad set. Now, if any of you have paid attention to my content, and you see some ads that are turned off, and you go, "Andrew, you are fried.

You always say don't turn off ads." It's because those ads have been moved around into other ad sets. So, relax, all right? Uh so, it's not that they're turned off, they're just moved, okay? Here's this. So, um Okay, so, these two ads are a great example of this problem at play. One of them is producing a $108 AOV, and the other one is producing a $46 AOV. And so, how do we handle this? Now, the interesting thing is, right now, the ROAS is actually relatively similar on both, even though the cost the CPA is very different on the two of them, 45 and 85.

So, um So, it's So, what do you do here? Okay, so, I'll tell you what I told my team to do in this case. The first is, this second one with this $108 AOV, I think is probably not reliable. It's only 12 purchases, and this ad actually got a bunch of spend on this product previously. And the reason, by the way, we have these uh these products combined into one ad set is exactly what I said earlier. If I split them all out into their own ad sets, they're all going get a few conversions a day, or at least they historically would have, and it wouldn't have been enough for me to be excited about it.

So, I actually told the growth strategists on this team who's working on it, I said, "One thing you might want to do is go make more creative for each of these products and see if you by getting more creative, if we could sort of generate enough purchases on each of these products so they can sort of each have their own ad set." Uh but they have not been consistent enough spenders for me to do that even though we're spending a lot right now.

So, so is a concern, okay? So, uh so, uh as number two, 12 purchases, I don't trust this $108 AOV yet. It is too small of a sample. It is too noisy. So, I'm not going to go do anything crazy here. On the other hand, this product uh is at a $46 AOV. And uh and it is across 25 purchases. So, that sample size is building. Plus, if I'm going to go to that if I go to the website and look at it, what I see is that the product is dramatically marked down, okay, in its price.

It's So, it's actually discounted really heavily. So, it's not surprising exactly what I was saying earlier, which is that Meta is shifting spend toward a product that is a really low AOV for precisely the reason I said earlier. It's on a cost cap. It's going for highest volume, and that's what it's doing, okay? So, I told the growth strategists in this case, "You know, it'd be interesting for you to go to the client and say, 'Could you go raise the price right now on this product and see uh maybe with this ad spending a bunch, maybe there's actually it's a newer it's a newer uh piece of creative, and so maybe it wasn't performing well before, and maybe the reason you marked it down and it was slow-moving inventory before was because the creative was old and outdated and bad, and with new creative it's performing better.

And so, okay, what happens if you go and raise that?" I also said, "There's some merchandising you can do. Raise the price on this product on that on the collection page that this is going to, there's some other products on that page that are sort of bundles, etc. Move those up the page a little bit. Take the sold-out product off the page. Like, see what happens. Think about where that uh threshold is, and then let's watch it for a couple days.

Let's see if we can push the AOV up here, and we can get that more more uh better performance on this ad, okay, with more margin, more AOV, etc. And if we can also get that combined with some other ads that are spending, so you have a big bunch of ads all spending all at the same time. Now, with this second ad, what I'm going to do that is spending, you know, a decent amount of money over these couple days, with this second ad, by the way, this is not the entire account spend.

This is one campaign. Um with the second ad, what I'm going to do is watch it. I'm just going to watch and see where does the AOV come in at each day. And if it ends up being at a similar enough place to some other products, I might lump it with some other products in the same AOV range. I might give it its own ad set. We'll see. Um I might, you know, there's a lot of different things you could do there. But that's the way we're looking at it right here.

And this is the kind of thing that happens all the time, especially if you have uh materially high amount of skew sets, okay? So that's the way this actually plays out in an ad account is that you see these things together, you you split some out, you keep some together, but you watch because over time, my concern here is that if I don't make an adjustment, the cost cap is going to be too high. So $70 cost cap producing a $46 AOV, that is a recipe for overspending on a product that is going to get beat up.

So there has to be a decision there, okay? And then for that higher AOV product, it's going to underspend on that eventually. And so the two of those, you got to make a decision to do something there. Otherwise, you're going to have some combo of waste and opportunity cost in a way that's really going to hurt you. So as great as it is to say get everything consolidated and create some real problems. All right, I hope that's helpful to you.

Really in the details, really in the weeds on this episode, but it's something I see a lot and I wanted to get it out there for people who are trying to manage carefully, who see the value of great media buying, and who see how much it matters to pay pay attention to the details and understand the tools you're working with deeply. >> [music] >> All right, the upside of all that for this brand is that they are starting to spend more money each day on these ads as we've sort of gotten those things sorted out and gotten into those details.

So um that's the ultimate goal, right, is scale at the efficiency target that we want. And we're seeing some of those things happen. And I think everything we're doing in some ways is contributing to that between [music] the account structure to offer testing to to all to creative everything it all works together to to make the whole thing work. So, I hope you enjoyed this episode. I hope it was helpful to you as we got into the details here.

If you are interested in working with me and my team, you can go to ajfgrowth.com and check out the website, fill in the intake form, tell me a little bit about your brand and about where you're at and and I'll see if I can be a good fit for you. Oh, first email me a comment. I try to respond to every single one of those. I'd love to hear your thoughts on this episode. Sponsors IntelliJaMS for this episode. Anytime we're talking about price testing or anything like that, IntelliJaMS is always going to come up because it's just so helpful on this stuff. intellijams.io use the code fair is 20 f a i r s 20 to get 20% off your first 3 months.

And of course my friends at More Staffing. I just made another hire from More Staffing. Literally just signed it, sent it away, opening up another job description also with them this week as well. So, just completed another hire, opening up another one right now. Just couldn't tell you enough good things about them. morestaffing.co/ajf to go check that out. I think that's everything. Subscribe wherever you're watching or listening.

Tell me if you like this really highly tactical content. I'd love to hear what you think. Thanks so much. See you next time.