In our last three years in operation, we got to work with multiple DTC brands which had one thing in common – all were high-SKU stores.
Think fashion, jewelry, home decor, lifestyle accessories, etc.
By high-SKU, I mean brands having more than 1000 products listed in the store across a wide range of collections.
Unlike single-product or limited-SKU stores, these brands have their own set of challenges when scaling through Facebook Ads.
In this email, we’ll be discussing the same and the ways in which high-SKU brands can and must scale.
Let’s dive in.
A. High SKU DTC Brands & Their Challenges 💡
Imagine having more than 1000 products in the store but no idea what the customers will buy.
That’s exactly the challenge high-SKU brands have to tackle in their marketing effort.
Apart from just marketing, this problem extrapolates in the form of dead stock and a huge pile of inventory waiting for its customers.
Let me share an example. One of the US-based fashion accessories brands that we worked with made more than 80% of its revenue from just 5 out of 2000 products.
Another home decor brand had the majority of its sales coming from the top 8-10 products out of 1500+ products, and just 2 out of 20+ collections.
When working with scale, the Pareto Principle or the 80-20 rule is evident in most cases. In order to scale such stores with paid social, finding the core 20% that will bring 80% or more revenue is crucial.
In order to fulfill this hypothesis and find what truly scales a high-SKU brand, the advertising strategies have to revolve around a customer’s browsing behavior.
Facebook’s dynamic catalog ads are one of the best tools to achieve the same.
These ad formats allow users to experience the length and depth of your brand. What we popularly call “window shopping“ is exactly the experience you want to offer users, ultimately leading them to the purchase.
B. Using Commerce Manager to Run Dynamic Catalog Set Ads 📈🛒
Whenever someone thinks about running Facebook ads, everyone starts to think of a clever image ad with a punchline or a professional brand commercial video to grab eyeballs.
While these could be great top-of-funnel ad formats, the context for high-SKU brands changes completely.
Facebook ads have this section dedicated to dynamic product features brands can strategically advertise their products directly from the website or a custom product feed.
Yes, it’s the ‘Commerce Manager’ inside Facebook Ads.
This is where you can either sync all your products directly from a Shopify feed or create a custom product feed for Facebook to fetch your products.
The best feature of the commerce manager is ‘Sets’.
When you have tens of collections and thousands of products, it’s imperative to bifurcate the entire catalog into different catalog sets.
You can promote these catalog sets as individual carousels or collection ads.
Here are different ways we make use of sets:
Creative a manual catalog set for bestsellers only
A set of products for each collection
A set of high-AOV products for premium customers
A set of cross-selling products for recent customers
A set created for a specific event, theme, festival, or a SALE
You need to be creative and test different catalog sets to see what customers respond to the most.
Here’s how you create product sets:
#1 – Select your catalog from the dropdown
#2 – Go to ‘Sets’
#3 – Click on ‘Create Set’
#4 – You can either choose to create a set using different filters
#5 – Or you can manually select and curate products to include in a set.
Since we are dealing with thousands of products, it is more feasible for brands to test and scale collections and product sets instead of each product individually. There are multiple ad formats to showcase these sets to customers;
– Dynamic carousel ad with the product set
– Collection ad with the product set
– Advantage+ Creative Format with the product set. Here Facebook creates auto-generated creative formats using the products inside the set that are more likely to get conversions.
Facebook’s machine learning learns from the engagement on catalog ads, and you’re more likely to discover new potential hero products this way.
Whenever you use catalog sets to run dynamic product ads, you can improve your ad’s CTR and conversion rates by using dynamic creative elements over each product.
STEP 1 – Click on ‘Edit Creative’ when setting up a dynamic catalog set carousel ad.
STEP 2 – Click on ‘Frame’ and upload a transparent PNG image that will overlay the product image in your dynamic ad.
This is an interesting feature because you can use this very creatively in multiple ways:
Using a frame for ongoing SALE and highlighting the offer on each product
Using a frame to keep consistent branding across the catalog
Using a frame to showcase specific callout texts such as ‘New Arrivals’, ‘Best Sellers’, ‘Limited Stock Left’, etc.
Using a frame that displays a vibe of certain festivals such as Christmas, etc.
STEP 3 – Click on ‘Catalogue Information’ and add dynamic product attributes on the products.
This is another cool feature where you can showcase numeric elements to improve clicks.
If your prices are competitive, you can showcase the product price directly on the product image. If you use optical discounting wherein you strike out a higher price for a lower selling price, a ‘Strikethrough price’ element can help improve the clicks to the product page.
Percentage off and Free delivery are other good offers you can feature on your dynamic product.
WHY YOU MUST RUN DYNAMIC CATALOG ADS?
Time and again we have found the best results from dynamic catalog ads.
✅ Better CPMs and CTRs
✅ Low Cost per Purchase
✅ Better longevity with no creative fatigue
✅ Scalable ad format even at higher budgets
D. Tweet of the Week 💎
Ron & Ash, the co-founders of OBVI are doing a fantastic job building their personal brands.
They very well understand why content and distribution are going to be key factors in growing consumer and B2B brands in the future and why founders have to be leading their ships from the front.
I personally learn a lot from their Linkedin posts, tweets, the ‘Chew On This’ podcast, and now their newsletter too.
If you’re a founder and want to embark on your personal branding journey, Ron Shah has some great points in his Twitter thread.
Tap the image to read more 👇🏻
E. Linkedin Post of the Week 🥇
This was an insightful read for me this week. DTC founders and marketers have tons of variables that they can test and optimize their business and marketing KPIs.
However, ‘WHAT’ to test and ‘WHEN’ to test are what will actually have a significant impact on your numbers.
With limited time and budget, you can’t test everything.
If you’re an absolutely new brand, you’ll probably have to swing your bat harder for the home run; to find statically significant insights. Whereas, brands at scale can witness statistically significant insights and incremental growth with smaller tests.
Jake Abrams has written a solid post on LinkedIn using a baseball analogy for how to classify different testing variables and when to test each variable.
Tap on the image to read the post 👇🏻
That was all for this week. If you’re a high-SKU DTC brand or a marketer handling one, I hope this newsletter helped you understand the commerce manager and its capabilities better.
Stay tuned for more upcoming releases every weekend.
PS: If you are a high-SKU DTC brand owner wanting to scale on META ads, let’s talk. Whenever you’re ready, book a FREE discovery call with us.
Don’t forget to follow me on social. Let’s keep in touch!👇🏻