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Part 1 - The 4 Steps to Follow to Generate $678,000 in Sales During Black Friday
Part 1 - The 4 Steps to Follow to Generate $678,000 in Sales During Black Friday
In this episode, I touch on the most anticipated time of the year for most brands... Black Friday.
I’ve invited my colleague Nathaniel Létourneau Ross, account manager at J7 Media, to discuss this with us. Nathaniel and his team managed over $300,000 in Facebook ads during Black Friday alone. He shares with us the 4-step strategy that allowed him to generate $678,000 in sales with a budget of just $100,000!
In this episode, we will cover the first 2 steps, namely:
1 - Setting revenue targets... and understanding why advertising costs tend to double at this time of the year
2 - Media analysis of past advertising efforts
We hope you enjoy this episode!
A J7 Media Podcast
(Antoine) My name is Antoine Gagné and welcome to another episode of Social Selling.
Fall is a big period for people who operate online businesses. With Black Friday, Cyber Monday, Christmas, and Boxing Day, it can become very difficult for an e-commerce owner or marketing director to accordingly plan [their] marketing strategy.
You also need to be careful, since most of the marketing platforms become very crowded with all the advertisers trying to win the auction at the same time. With that in mind, how should you approach this period? What kind of budget should you have in mind to perform and make the most out of it?
Againwith me today, Nate Ross, Senior Media Buyer at J7 Media, will explain his 4-step strategy that he and his team used to generate close to $700, 000 in sales with only a $100,000 investment. So Nate, how does this approach work?
(Nate) Yeah, thanks Antoine and thanks for having me on the podcast again. So, as you mentioned, we're going to talk Black Friday today. And what we're going to do is, basically, I'm going to walk you through the analysis and decision making process that led us to build a Black Friday marketing strategy which generated over $500,000 in revenue with a major spend of $100,000.
So, we're going to go through an actual real life case and discuss the steps we took in order to highlight some key pieces of information, build a data driven strategy and engage in the right marketing schemes, as well as use the right tools and content type to capitalize on, as you mentioned, one of the most important periods for e-commerces.
In order to build a great e-commerce Black Friday strategy, we're definitely talking about a 4-step process. First, you need to lay down your goals. So it's super simple. You need to know what you're aiming for. Second is a deep analysis. So in order to step in the right direction, you need to understand where, when and how you usually have any success selling online; what's been working for you in the past and how can you leverage this going further. And third, you need to understand, appreciate and leverage the different stages or chapters which make up the Black Friday period. And then fourth, build the strategy and timeline. You could probably add a fifth step in there, which would be hold your breath, stick to the plan, hope for the best. [You'll] probably get that one later on. So let's let's jump right into it.
So, deciding on your goals. This is probably one of the most underrated aspects of having the right Black Friday strategy – it's understanding your expectations [and] what you should be aiming for in terms of sales goals.
The very first thing you should be doing is setting the right revenue objective. Knowing your revenue objective or order amount objective is super important for three reasons. First, if you're listening to this podcast in late spring or early summer, having the right expectations in terms of maximizing your revenue for the period will allow you to order the right amount of product before it's too late. The right amount of inventory, that's super important. You should definitely not go over that step because it will get super important. Second, it will help you set your marketing budget. And then third, and most importantly, it will allow you to set the right offer or discount for the period.
(Antoine) One thing that’s very important to mention – sorry to interrupt you, Nate – is, like you said, we are recording this podcast on May 11th today. And basically, Black Friday is not something that you plan just one month before Black Friday. You don't plan your Black Friday in October or September. It's something that you should have in mind starting in January, right? We’re in May today. And here at J7 Media, a Facebook advertising agency, we manage close to $1,000,000 per month in media spend. And most of this budget, we start to manage way, way more close to this period, but the strategy starts [way] before.It's like a couple of months before that you need to plan that.
And then I think it's very important for [the] people who are listening today that knowing the inventory that you will have that will be available for you is the number one thing that you need to think about right now. Because how many people, Nate, have we seen in 2019 – they just order a bit of inventory, not that much and then they've been only able to operate during Black Friday and Cyber Monday and it was done? They didn't have any more inventory. So if Cyber Monday is out, Christmas is out as well.
(Nate) Yeah, absolutely. And it's super frustrating for them because it's such an important period. And then also you can probably bite on a little more than you can chew at that time. We're going to talk about that a little bit in the episode, but there's other periods right around the corner that can kind of back you up also.
And if you know that you have certain types of collections [that] tend to sell more during that period, it's definitely a great idea to order a bit more than you would probably expect to sell. And yeah, it is super frustrating for many of our clients. As you mentioned, they just didn't have enough inventory. They were sold out on the first day. And then you just miss out on sales that you would have had during the whole weekend and on Cyber Monday. So, it's just an opportunity that you missed right there.
And then just to continue, understanding the value of your inventory and how much profit you can get out of it at a given discount is crucial to setting up the right base for your Black Friday marketing strategy. You need to understand that also promoting crazy types of discounts may generate higher amounts of orders, but overdoing it and giving away too much may very well compromise your net profit margin and maybe hurt your brand in many ways as well.
In the instance that we're talking about in this episode, our client understood that leveraging a 60% off discount on all of his collections would allow him to maximize his orders, revenues, and profits. But that's definitely something everyone should just sit down and think extensively about. And as we mentioned, in terms of ordering the right levels of inventory, I think you should definitely not be afraid, as I said earlier, to bite on a little more than you can chew.
Black Friday has a very interesting timing. If you don't sell as much as you thought you would, there’s Christmas right around the corner, there's Boxing Day in Canada as well that can just back you up, basically.
(Antoine) Yeah, totally.
(Nate) So let's jump into the analysis and the investigations that we made in terms of setting up the right base for the –
(Antoine) Yeah. So, just to be sure for people who are listening today – First thing,
knowing the kind of revenue that you want [and] that you want to achieve is very important. We're doing that right now in May with most of our clients, just setting up the exact revenue objective that they have in mind. This is the most important thing. Based on that, after that, like Nate mentioned, you can plan your inventory and from there you're able to plan your marketing budget and also your offer as well, right? Because if you don't know exactly the kind of revenue that you're able to….that you want to achieve, then if you don't know the inventory that you will have, [then] it's really, really hard to plan your marketing budget and also the right offer for the Black Friday period.
(Nate) Mhhm. Which basically are the base to setting up the right strategy. You can't really be analyzing anything or investigating anything and setting up a strategy if you don't have that base to work with.
(Antoine) Of course.
(Nate)So, definitely. [...]The most important aspect of the strategy is setting up the right base and that will lead you to doing the right work afterwards, and in terms of –
(Antoine) And can you just walk us through maybe - you said, the client that we’re talking about here – 60% was the offer that he wanted to do for Black Friday?
(Nate) Exactly. He came up with that. I think the the client himself is in the best position to have access to the information in terms of what types of revenues he's aiming at, how much, basically, gross margin he's doing usually on these products, and then he's able to set the right marketing budget and discount to go and be aligned with all these metrics. And that’s what he set for the period.
He understood also that it was important for him to have a clear offer, easy to communicate. And it was super simple for us as well in terms of building the content and communicating the offer to our audiences. The discount was simple: 60% off anything on the website.And then we'll also break it down into different types of periods as we go along doing the podcast, but the base offer was 60% off anything. That’s what we could work with.
(Antoine) And we had enough inventory. What kind of revenue [did] he want to achieve as a company?
(Nate) His goal originally was to make $500 000 for the period. So we're really talking about the whole month of November leading up to Cyber Monday, which was on the 2nd of December for 2019. So, he had a marketing budget of $100 000 and his goal was to make $500 000.
(Antoine) So keep that in mind, guys. So $500 000 in revenue – that's what the client was looking to do – with $100 000 in marketing budget and an offer of 60%. That was really clear for us, right? When the client is able to communicate this kind of information to us, to the agency, to a freelancer who's maybe going to do the work for the client, that's where it becomes really, really easy, because – you're going to talk about that in your second point and your third point – when we have this kind of foundation, it's easier for us to know exactly what kind of budget [and] where we should allocate the budget down the road, right?
(Nate) Yeah, exactly. I think you said the right word, it's having the right foundation that we can use and play around with to be able to really leverage the different periods in Black Friday and have the right marketing schemes.
So let's jump to step number 2, which is analyze and investigate.
There are 3 main things we decided to investigate before taking any type of strategic decisions. Number 1 was the CPM, so cost per thousand.
Just as a quick reminder to anyone listening to us right now, the CPM is basically the cost that someone would have to pay to show 1000 impressions of an ad to their audience on Facebook.Facebook is a bid. You're bidding against other advertisers on the platform. And the CPM is, simply put, the cost that it will cost you to put 1000 impressions of your ad in front of your audience.
That was the first metric we decided to take a look at. And we were lucky to have last year's data to be able to take a look at it and see how much it would cost us to run ads during the month of November.
We decided to look at two main time frames. The first was pre-Black Friday and also during Black Friday. So, the first time frame was from November 1st 2018 to November 21st 2018. The CPM for that period, so before Black Friday, was 8.99. Those are dollars, so it cost us $8.99 to put 1000 impressions of our ad in front of our audience during that time period. And then when Black Friday started – so, from November 22nd through November 26th, which was the Thursday just before Black Friday leading up to Cyber Monday – the CPM shot up around two times to go to $17.89. During the days of Black Friday, it cost the client around two times as much to put the same ads in front of his same audience. So, that was pretty crazy.
(Antoine) And maybe to give context [as to] why this kind of thing is going to happen, it's just because more people – like we mentioned it earlier – more people are going to advertise their product when this period happens, right? Black Friday is the time of the year where everybody wants to sell a lot of stuff because people are willing to to spend a lot of money, right? Just before Christmas – it's the perfect timing. Because a lot of advertisers are on the platform, the platform just becomes more expensive.
So it's very, very important to look at these numbers because like you said, everything being equal, you place a marketing message between November 22nd and November 26th and it's two times more expensive than it was the month before. It’s crazy.
(Nate) Exactly. It’s definitely something you have to consider. And we'll also go back to that point a little bit later on in the podcast. So, just to jump to that second thing we decided to investigate as well was the conversion window.
To basically understand your sales cycle better, Facebook allows you to analyze your conversions through different time windows. For instance, you can take a look at your results – actually the results are generated [within] the next twenty four hours after seeing an ad – but also 7 or 28 days after showing the ads to your audience.
When taking a look at our 2018 data, we realized that a great deal of our conversions were happening between 7 to 28 days after seeing the ad. Actually one of the best performing campaigns during Black Friday of the previous year was a lead generation campaign, which had a ROAS of 1.25 looking at the 1-day conversion window, but a ROAS of 3.84 looking at the 28-day conversion window.
(Antoine) So, what does it tell you? (laughs)
(Nate) We’ll get back to that in a few moments. Before that, the third thing we decided to investigate was the audience.
What we were trying to understand was the difference in performance between cold and warm audiences. Naturally, you would expect your warm audience to perform better. But the figures we analyzed for 2018 were indicating that our retargeting audiences performed as much as four to five times better than cold audiences during Black Friday days.
So, just to recap everything and show you exactly how this data helped us in our decision making process. So, the CPM – cost per thousand. While we understood that connecting with our audiences on Black Friday days and up to Cyber Monday would cost us up to twice as much than it would in the weeks before, the conversion window analysis taught us that we make 3 to 4 times as much money when we continuously show ads to the same audience for several weeks.
The fact that our sales cycle isn't so short and that our audiences need to do some thinking and considering before buying meant that we should focus on preparing our audiences.
And then the cold versus warm audience analysis taught us that pushing harder on our cold audience expansion or connecting with new people on Black Friday Day wouldn't get us the best return on our ad spend, basically.
(Antoine) Yeah, because the point is, if you're getting – you just mentioned earlier, point number three, I think in your bucket, number two – you're making four to five times more money with your warm audiences than your cold audiences, which makes sense, right? It makes sense. [For] most e-commerce clients, your conversion will come from remarketing. But knowing that your remarketing is as good as four to five times what you see with your cold audiences, and let's say that every time you invest $1 on cold audiences, you're making $1 in normal times. Imagine during Black Friday when the platform is 2x more expensive, right? You clearly know that it will not be a good time to invest massively on cold audiences and you should focus way, way more on people who already know your brand.
(Nate) Exactly, exactly. I think looking at these data points basically one by one isn't so relevant, but looking at them together is super interesting.And basically it indicated that preserving a large chunk of our budget for Black Friday day could very well compromise our success. Basically, at that point, we just had it. And it was pretty obvious to us, looking at this data, if we wanted to maximize our success during Black Friday, we had to invest a majority of our budget before Black Friday.
So that was kind of an epiphany that we had at that point. And we just knew it, basically. The data was clear. We were making data driven decisions. It was clear to us, the data indicated it. We had to invest a lot of money to prepare our audiences for Black Friday rather than just focus on the peak days when everyone is also investing on the platform. The logical thing to do was to invest before Black Friday.
(Antoine) Of course, because your sales cycle is longer, your remarketing is converting more, and then the platform is just way, way too expensive. I think we're going to get back a bit later [to] how we allocated the budget in different phases [and] why we invested massively before the Black Friday period. But now, I think it's really interesting to have this kind of data that we analyzed and from the moment you got this data, Nate – I'm looking at your point number three here – you're talking about leveraging Black Friday's different phases. Can you tell me a bit more about that?
(Nate) Well, considering that we weren't going to spend most of our budget during the days of Black Friday and Cyber Monday, we kind of had to go back to the drawing board and reset our thinking on everything. What you need to realize is that Black Friday isn't just one day. There are many phases to it. Of course, there's Black Friday, Black Friday weekend, Cyber Monday. We all know about these periods. They're the most important days for e-commerces all over the world. You said it in your intro and conversion rates on those days on Shopify, for instance, they’re on average 2x better for any store than on any other day of the year. So conversion rates for this Black Friday Weekend and Cyber Monday period are super high. So, they're definitely not something you should minimize and you should definitely put some focus and some time on this period for sure.
But still, there are other very important phases to Black Friday that a lot of people tend to ignore or underestimate. And leveraging these different phases allow for other benefits like audience expansion or to focus on different types of buyers. And if you play your cards right during November, it should give you an edge on any other business.
(Antoine) Thanks for being with us for the first part of our podcast, uniquely focused on the Black Friday strategy that you need to implement if you want to thrive in November. That being said, in the next episode we’ll cover steps 3 and 4 of our plan, which are understanding the Black Friday calendar because – yes, Black Friday is not only one day – it's way more than that! And knowing where you should allocate your budget during that time of the year.
Thanks again for being with us and see you soon for a new episode of Social Selling.