Welcome to DTC (fashion) Decoded, I’m happy to have you here! The fashion business really is different, so it’s about time we got a DTC growth newsletter written just for the industry.
My goal is to share actionable info that you can read here on Tuesday, implement on Wednesday and start seeing results by the weekend.
Before we get into it, I want to give a big thank you to our launch partner: TESMO. TESMO is a full-service Amazon management agency for DTC brands.
TESMO specializes in scaling the Amazon channel for tricky categories like fashion. If you've considered launching on Amazon, or are unhappy with the state of your Amazon business, you should reach out to them.
I’ll be sending out this newsletter weekly on Tuesday mornings. The first four weeks will be completely free for all subscribers. After that, every other issue will go behind a paywall. You can click here to become a premium subscriber.
An annual subscription is only $50. You’ll make that back in a day if you apply what I’m sharing here.
Ok, intro over. Let’s talk Meta Ads. Meta can be a powerful growth channel for fashion brands. There is no one right way to manage the channel, but there is definitely a wrong way.
This post is going to outline the strategy, account structure and creative strategy that will get a healthy brand to $5-8k/day in profitable ad spend.
Scaling beyond that might require different media buying strategies which I'll share in future issues. But if your account is "stuck", this is a great place to start–especially the merchandising and creative strategy tips I'm about to share.
First Principles: In Market Demand
“In market” consumers are folks who have high purchase intent for a specific product or category.
If you’re looking for red ballet flats to pair with a dress you’ve already purchased for an event that’s taking place in two weeks, you’re “in market” for shoes.
Compare that to a situation where you are passively browsing new arrivals on a few brands’ websites. You might buy if something is really compelling…or not.
Meta helps you find new customers at an affordable cost by putting your ads in front of the right “in market” buyers.
Your job is to help Meta find your most relevant audience, and then get as much of that audience as possible to convert. This will net you more revenue for every ad dollar you spend. In this post, we’re talking about running ads to acquire brand new customers.
First Principles: Business Health
It has to be said: Meta ads will only “work” for brands with product-market fit that do not have any major merchandising issues.
A good benchmark: you want your repeat customer rate (number of new customers who make a repeat purchase) to be at least 22%. You can find your repeat customer rate by using the Lifetimely app.
If the rate is below 22%, you’re going to have a hard time running Meta Ads profitably.
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One of the biggest myths in retail: "I can't sell fashion on Amazon."
More than a third of all US apparel sales take place on Amazon, and slightly more than half of US households are Amazon Prime members. Fashion is being sold on Amazon. If your brand doesn't have a presence there you could be missing out on a huge source of revenue.
That said, selling on Amazon isn't exactly easy. Amazon has its own conventions, unspoken rules and best practices. Many brands who think "Amazon can't work for me" are simply ignoring these rules.
TESMO has been helping premium apparel brands scale on Amazon since 2008. They are a full service agency who does one thing extremely well: growing the Amazon channel. TESMO will integrate closely with your team and their senior leaders will be "hands on keyboard" in your account.
Click here to book a call with the TESMO team to discuss the size of your brand's Amazon opportunity.
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First Principles: Pixels, Feeds, Etc.
To get optimal ad performance it’s important to pass as much accurate data to Meta as possible. To do this, you need to properly set up Meta’s conversion pixel and conversion API (CAPI).
If your eCommerce site is running on Shopify, it should be easy to set this up properly via Shopify’s built-in integration. If you’re running on a different eCom platform, it might require more hands-on technical work to get right.
You can get a read on your data quality and the accuracy of your integration in the Events Manager section of Meta Ads Manager. You want your Event Match score as close to a 10/10 as possible, especially for critical events like Purchases. If your scores are <7/10, get an expert to review your setup (I am not an expert here).
What KPIs Should I Use?
Brands typically use one of two KPIs for their Meta Ads:
- Cost Per Acquisition (CPA) - how much the brand is willing to pay to acquire a single customer
- Return On Ad Spend (ROAS) - revenue driven from an ad divided by budget spent on that same ad during a set time period
Your specific CPA and ROAS targets will depend on the unit economics of your business, your brand’s growth goals, and how much you’re spending on other marketing activities. I’ll do a deep dive in a future issue.
If you sell a wide variety of AURs, or if your AOV varies seasonally, you should use ROAS to manage your ad spend. CPA might be overly restrictive–on many days you’ll miss your CPA target but exceed your ROAS target.
If Meta and Google are your only paid marketing channels and your brand is not a household name (like Nike, Gucci, etc), you do not need attribution software to manage your ad spend. Use it if you find it helpful for dashboards, process management, etc. But it’s not a requirement.
What Products Should I Feature?
The “customer journey” for a Meta user in-market for fashion is “see it, like it, buy it”. What products you feature in your ads are a huge component of your success.
Your conversion rate is determined by what percent of those who see it, like it. Your conversion rate is a big driver of your return on ad spend. And your return on ad spend is a big driver of the profitability of your advertising.
Over and over again, for client brand after client brand, these are the products that drive the best conversion rates:
- Core Product - styles that have been solid sellers for multiple seasons
- On-Trend Product - if the market is talking about ballet flats, and you sell ballet flats, feature them in your ads
- Other Best Sellers - if you have best-selling styles that don’t fit into the first two categories, they’ll probably do well on Meta
- Scroll-Stopping Product - product featuring bright colors & patterns, metallics, sequins, or anything else that catches the eye and “stops the scroll”
When you plan shoots for ad creative, make sure that 80% of what you shoot falls into one of these four buckets. The product you feature in your ads will be your #1 determinant of success.
You can feature your entire catalog using feed-based DPAs. But most brands can achieve a higher ROAS using a mix of DPAs and photo/video ads featuring specific products.
What Price Points Should I Feature?
The Average Order Value “sweet spot” for Meta Ads campaigns is $100-200. This is high enough to justify the average cost of a Meta Ads impression, but low enough to sit in the “impulse buy” zone for many Americans.
I’ve seen fashion brands succeed with AOVs of up to $300-400. But if your Average Unit Retail (price of a single item) is >$500, your total addressable market (the pool of Americans who can afford that) is probably going to be too small for Meta to find efficiently.
If your AUR is under $100, use offers or bundles to get your AOV as close to $100 as you can. If your AOV is <$50 it will be hard to break even on your ad spend.
What Kind Of Ads Should I Run?
I recommend that fashion brands start off with two ad formats first:
- Single photo or video featuring a single product.
- Dynamic catalog ads. These ads feature your eCom images, and show a personalized set of products to each user who sees them.
If these formats don’t work for you, you can try others–collection ads, carousels with manually defined creative, etc.
What Kind Of Ad Creative Should I Shoot?
Remember the “see it, like it, buy it” framework. To like it, your consumer has to see it first. This means the photos and videos you use in your ads should:
- Be clear, not blurry or over-filtered
- Make it obvious what product is for sale. Make the featured product the most compelling thing in the shot, and don’t over-style the models.
- Illustrate key details like fabrication, silhouette and proportions.
Your ads should feel more like a catalog shoot than a campaign shoot, but that doesn’t mean they have to be boring or “commercial”.
Many Facebook and Instagram users dismiss and scroll past content when they realize it is an advertisement. I call this the “mental ad filter” (admit it, you do this too).
To get around the filter, you can produce ads that use the same conventions of organic content on the platform.
In practice, this is what it means to get past users’ “mental ad filters”:
- Content shot with a phone camera (photo and video)
- Content shot in a “real life” setting, not a studio
- Selfies and “try on” videos
- Popular video editing techniques from TikTok & IG Reels
- NO LOGOS ON THE AD
Can you break these conventions and still run a profitable Meta Ads campaign? Yes, but it will be a lot harder to do, because your cost per conversion will be higher.
I’m going to deep dive into creative strategy (with examples) in a future issue. The big takeaway here is that many brands will need a separate content production workflow for Meta Ads. Repurposing the 8-10 studio shots from your lookbook probably won’t cut it.
What Audience Targeting Should I Use?
Before 2020, audience targeting was almost more important than ad creative. After 2020, it’s less important, but still plays a role.
I recommend that brands test three audiences to start:
- A 10% Lookalike of your best customers (top 10-25% LTV net of returns, pulled from Shopify).
- An audience containing 5-10 relevant interests.
- A “broad” audience (no targeting set), limited to ages 21-65 and the gender of your primary customer.
Each of these audiences should contain at least 10 million people. Any smaller and you may hamper the algorithm.
You should also exclude the following prior customer audiences:
- Your entire customer list. Download it from Shopify every 1-3 months and upload to Meta.
- A pixel-based audience of anyone who bought in the last 182 days.
Other Meta Campaign Settings
Enable Facebook Shops if you’re able to sync your product catalog to Meta successfully. Facebook Shops lets people check out directly via FB/IG with stored credit card info. It reduces purchase friction, which can help your conversion rate.
You should run campaigns with a conversion objective. Conversion campaigns target Meta’s “in market” audience. Some folks might advise you to go “up funnel” and use a page view or add to cart objective. But if you can’t hit your KPIs with a conversion objective, going “up funnel” probably won’t work.
You should probably use the “Shop Now” CTA on your ads, although it may be worth testing other CTAs.
Keep the copy in your ad descriptions short. Ad description copy doesn’t move the needle much for the fashion category unless you’re featuring a sale or promotion. Including emoji in the copy can help “stop the scroll”, leading to slightly better ad performance, all else equal.
If you’re comfortable with featuring “social proof” in your ad description–the number of 5-star reviews you’ve received, your free shipping policy, your returns policy–go for it.
How Many Campaigns & What Type?
The big thing you need to know: a single ad set needs to drive 50 conversions per week to achieve optimal performance. If you split your daily budget across too many campaigns, none of them will achieve 50 conversions per week.
If your AOV is $100, you should spend at least $100-200 per day per ad to get a true read on your ad(s) performance. Once you establish a baseline ROAS for the account, the daily budget of a single campaign should be at least 2-3x your ROAS.
If you’re spending less than $15k/day on conversion campaigns:
- Don’t manually split the account into Top, Middle and Bottom of funnel campaigns.
- Don’t run video view, pageview or add to cart campaigns.
CBO, ABO and cost cap campaigns are all valid ways to run an account. Personally, I prefer CBO if an account is starting from scratch, ABO for structured creative testing, and cost caps for high volume creative testing (usually vetting which styles have scaling potential).
Unless your product assortment is very narrow, you’ll probably need more than one ad campaign to maximize your scale. If you’re a “lifestyle” brand that sells bags, shoes and apparel, you’ll probably need to dedicate separate campaigns to each of those categories. This is another topic I’ll cover in-depth in another issue.
What Landing Pages Work Best?
Your winning strategy here is to showcase the product in the ad creative AND as many other popular related products as possible.
If you send your audience directly to a product detail page and something about the featured style turns them off, they’ve reached a dead end. But if you send them to a page with multiple relevant product options, they’re more likely to keep clicking/scrolling and find something they like.
Link to your best sellers page or the category page of the product featured in the ad (i.e. if the photo in the ad features jeans, link to the “denim” category). Sort the product featured in the ad to the top. If you have multiple ads running, sort all of those products into the first ~2 rows in your category page grid.
If you’re running Dynamic Product Ads, you should stick with the default option of linking to the PDP, because that’s what Facebook and Instagram users expect.
If you have a core product with a strong narrative, or functional features and benefits, you can try building out a traditional direct response landing page (like this). But this type of page doesn’t really work if your main selling point is “our product looks cute”.
Linking ads to the homepage typically doesn’t work well for fashion brands.
“Why Aren’t My Ads Working?” Checklist
If you can’t get Meta Ads to scale, use this checklist to trouble shoot:
- Your ROAS target is too high. You probably won’t achieve a 5x ROAS with Meta ads prospecting unless your brand is generating demand somewhere outside of Meta.
- Your daily budget is too low relative to your AOV. You need to spend at least 1.5-2x your AOV per day for Meta to collect enough data to find an ad’s audience.
- Your budget is split across too many ads/campaigns. If you’re only spending 1.5-2x your AOV per day, you need to do so in one campaign with 5-6 ads.
- You’re promoting the wrong products. Your ads should feature your best sellers. You can’t use Meta to profitably “push” demand into slow moving styles.
- Your ads don’t showcase the products effectively. It’s too hard for the viewer to discern what you’re selling.
- Your ads aren’t compelling. Too hard to summarize this in a single sentence.
- Your website loads slowly, isn’t mobile optimized, confuses visitors, is buggy, etc. If it’s too hard to check out, most people will give up.
- People can’t find the product featured in the ad on your website.
- You sold out of the product featured in the ad(s) driving the majority of your traffic, or the size run is broken.
- You launched a new product collection/drop, and adoption is slow OR you transitioned a best-selling season/drop off the site.
- You made a major change to the site design or experience. This could be as major as a site redesign, or as seemingly minor as a change to your navigation structure.
There you have it: my basic playbook for scaling Meta ads as a fashion brand. If you’re doing something different, and it’s working for you, great! But if you’re struggling to scale, try some of the strategies outlined here.
If You Made It This Far...
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