How 2% of ads drive 67% of E-commerce sales
2% of ads in e-commerce generate 67% of all revenue. So, do performance marketing agencies just know which ad will be in that top 2%?
No, they perform an insane amount of testing on thousands of ads until they find the winning ad. They then scale this ad (pour money into it) to generate as much profit as possible while it works.
These agencies create personas of their ideal customers, form hypotheses about messages these personas could react to, and develop scripts. They hire creators to record these scripts, which they then edit into thousands of variations. Each ad is given a budget and tested for a week. Based on performance, they decide whether to stop the test or scale the profitable ad. They operate with budgets of tens of thousands of dollars.
What lessons can we learn from this ad strategy?
Every assumption will be put to the test.
Angles for ad creation are based on the pain points or desires of their ideal customer.
Volume eliminates the factor of luck.
They outsource content creation to get more content faster. More testing = faster results.
They measure each ad’s performance through these metrics:
Thumb-stop rate: (3-sec video plays / Impressions). This metric judges the effectiveness of hooks. The more scrolls we stop, the more people will hear about their offer.
Hold Rate: (ThruPlays / 3-sec video plays). Defines whether or not what comes right after the hook is engaging. Generally, the higher, the better.
CTR: Click-Through Rate. To judge how effective their ad is when building desire.
CTP: Click-to-purchase. (Purchases / Link Clicks) * 100. Out of the people that clicked, what percentage bought. This tells them about the quality of traffic and how persuasive their ad is.
CPA: Cost-per-action.
You can create content on similar principles: high volume, based on your customers' pain points or desires, measuring content retention power, and outsourcing parts of its production.
