Many marketers have an understandable hesitation when it comes to new features introduced by advertising channels. After all, every such test can lead to increased spending – whereas the proven strategy is, well, proven.
There’s value in becoming an early adopter of a new bidding strategy or optimization, though. Being among the first to try something can, in itself, become a strategy in a competitive market. Want an example? Let’s talk a bit about Minimum ROAS.
Early Adopter Gets The ROAS
Last September, Facebook had introduced a new bidding strategy – Minimum ROAS (return on ad spend). It allows advertisers to tell the algorithm they want to target people who’ll provide them with at least X% return on the spend, as measured by Facebook.
Initially, marketers could define Minimum ROAS between 1 and 1000, with the apparent implication that the lower the setting, the higher possible distribution can be. After all, there aren’t that many people who’d give you 100% ROAS – at least when it comes to the revenue Facebook tracks.
And it worked. As long as best practices were observed, the results were great. From day one, we saw a massive bump in ROAS. The same thing happened we got access to Minimum ROAS under 1% several months ago. One client had a whopping 84% increase in Day 7 ROAS; another had more moderate yet still very impressive 27%.
After a while, these numbers have stabilized, while remaining impressive. They also became more predictable, with no substantial performance peaks like the ones we’ve observed in the beginning.
By bidding on 0.5% minimum ROAS, we were telling Facebook’s algorithm that while we’re not looking for the people who spend the most money in apps, we do want people who spend money – eliminating the non-paying crowd. And with the relatively sparse competition, Facebook’s algorithms were allocating quality audience for our ad sets.
But this didn’t last. It couldn’t. With increased availability for <1% minimum ROAS, new players entered the field, and it became very competitive very quickly. Nowadays, we still see good results for this type of campaign, but it’s decidedly less attractive than when it was new.
When the feature is useful, indecision can be way more costly than the occasional risk-taking. As long as the market is hesitating and the web isn’t filled with best practices guides, there’s a unique opportunity to get ahead of the competition. This is one of the things we’re focused on at Bidalgo. We are among the first to adopt new features, and keen to participate in testing of new channel features – not just to learn more about them, but to get the best results for our clients.