When Should You Stop a Failing Store? | Troubleshooting Facebook Ads

In this video, I’m going to try my best to answer a question that I get asked a lot, which is: “When should you stop a failing store?”.

Since my strategy is to take a proven product, create a one-product store for it, and essentially force it to work through extensive testing, a lot of people wonder at which point they should give up on a store that isn’t profitable.

Simple Answer

• You should stop a failing store when you run out of things to test and you aren’t able to achieve a breakeven ROAS
• You need to pick a product that is proven to sell for this strategy (i.e. you know of a competitor actively running ads for it or you see that it’s selling a lot on AliExpress and trending up) to avoid wasting money

Minimal Testing Framework

• I usually test 3 different leading clips right off the bat, can also test 3 diff. thumbnails & ad copy = 3-9 adsets
• 3 type of LAAs (favorites: 95% vv, top 5%/25% visitors by time spent, ATC, IC, PUR…) for the US, UK, CA, AU = 3*4*3 adsets (3 types of LAAs, 4 countries, 3 segments for each [1%, 1-2%, 2-5%]) = 36 adsets
• At least 10 broad single interest audiences (all e-packet countries, EN speaking) = 10 adsets
• So in general, I’m testing 50 adsets per product minimum (usually more)… You can use this number to decide on your adset budgets (i.e. if you want to allocate $500 for testing each product, then you could test with $10 adsets)
  

Troubleshooting

• As you start spending on these adsets, you can quickly analyze the data to tell if there is potential.
• If you’ve already spent more than 3-5X your breakeven CPP across all your campaigns and you haven’t gotten a single sale, you should probably pause your campaigns and go back to the drawing board.
• Figure out where the drop off is happening – no one is clicking on your ad? Test new creatives or ad copies with different angles. No one is adding to cart? Work on your product page… etc.
• The usual suspect in my experience? Low quality ads (that is, assuming you picked a proven product).
• You should have a clear pass-fail criteria for your adsets
• If you are using higher budget adsets ($20-$50) you can use cost per purchase (CPP) as your main metric and pause any adset that spent your breakeven CPP without getting any purchases.
• If you are using smaller budget adsets ($5-$20) you can use cost per add to cart (CPATC) as a proxy metric and you should know your breakeven CPATC based on historical data [(breakeven CPP)*(conversion rate from ATC to PUR)].
• Using CPATC instead of CPP will allow you make decisions with less data (you can pause any adset that spent your breakeven CPATC without getting any ATCs)
• If during at this point you’re at breakeven or profitability, keep on testing new audiences and killing unprofitable ones. You can increase your profitability by focusing in on the profitable audiences, setting up retargeting, and making compounding improvements
• If you feel like you’ve exhausted your testing options and you can’t reach breakeven, that’s when you can give up and switch to a different product.

Compounding Improvements

• If you’re breaking even with your store, you shouldn’t necessarily stop it. You can continue to improve margins by making compounding improvements to your funnel.
• i.e.
  – 20% decrease in CPM by engaging with comments on your ads, providing good customer service
  – 20% increase in CTR by finding a better scroll stopper or hook for your ads
  – 20% increase in CR by improving your website and product page
  – 20% increase in AOV by testing new upsells or bundles
  -> 116% improvement in your ROAS (in other words, you could go from 2X roas to 4.32X roas by making 4 different 20% compounding improvements to your funnel)