If you’re looking for a beginner-friendly way to grow your dropshipping business, you’ve come to the right place.
In this in-depth tutorial, I’ll discuss the following:
- What dropshipping is
- What Facebook ads are
- How to use Facebook Ads for dropshipping
- Our best Facebook marketing strategy
You’ll see the exact strategy that is working great right now.
Let’s get started.
What Is Dropshipping?
As a beginner, it is easy to overlook the exact definition of dropshipping.
Some people think it’s a get-rich-quick scheme or an easy way to make money online.
However, these statements are false, and no successful dropshipper will agree with them.
That being said, let’s talk about what dropshipping actually is.
Dropshipping is a form of B2C (Business-to-Consumer) eCommerce, which occurs when a business sells products directly to consumers through its own online store.
Traditionally, eCommerce stores buy inventory, store their products, and then manually ship them to customers.
This is where dropshipping is different from traditional eCommerce.
Dropshipping is when businesses work with a supplier that stores and ships the products to the customers.
Here is how the timeline looks:
- A customer purchases an item from the dropshipper’s online store
- The dropshipper fulfills the order by forwarding the customer information to the supplier
- The supplier sends the item directly to the customer’s address
- The customer receives the dropshipper’s product
Now you may be wondering, “Why would I work with a supplier instead of buying my own inventory and shipping it myself?”
And that’s a great question. But the answer is simple.
By not holding and investing in inventory, the dropshipper’s initial risk is greatly reduced.
Furthermore, this allows the dropshipper to test and market different products until finding one that is profitable.
So the benefits of dropshipping are:
- Low risk
- Low initial capital investment
- Sell and test more products
- Can start a business anywhere in the world
- Highly scalable
- Don’t have to manually store and ship out products
- Unlimited product selection
As you can see, dropshipping is indeed a lucrative venture.
However, creating a successful dropshipping store is difficult and takes patience.
Luckily for you, I’ll guide you through the entire process of setting up your first Facebook ads campaign.
What Are Facebook Ads?
If you’ve stumbled upon this guide, chances are you know what Facebook ads are.
However, most people don’t truly understand the power of Facebook ads and how to use them effectively. Here are some of the best examples to inspire you.
Through my time running eCommerce dropshipping businesses for over 4 years, I’ve learned that the Facebook ads platform is still one of the best to sell your products on.
It’s got an extremely advanced machine-learning algorithm, a massive user base, and a great ability to scale.
Why Should You Use Facebook Ads For Dropshipping?
I could go on and on about why the Facebook ads platform is so powerful.
However, let’s just discuss the top reasons why you should use it for your dropshipping store.
Machine Learning Algorithm
Facebook’s machine learning algorithm is the main reason advertisers choose to use Facebook ads.
Simply explained, the Facebook ads learning algorithm automatically finds the best users to deliver your advertisements to.
Here’s how it works:
- Facebook collects data on each user that interacts with your advertisement and website
- Facebook creates a “Perfect Customer” profile based on similar traits of customers
- Facebook delivers your ads to people with the “Perfect Customer” profile
Massive User Base
Facebook’s active user base is extraordinary. With 1.79 billion average daily users, there are so many potential customers to be found.
A user base is as large as Facebook’s means two things.
First, you can always find fresh new audiences to target, and second, you will never run out of people to deliver your ads to. You can use it in promoting agencies too.
Pinpoint Targeting
Facebook’s interest targeting allows you to find users interested in any type of niche. No matter what kind of products you sell, there are always relevant audiences to advertise to.
On top of that, the amount of targetable interests allows you to be creative when targeting. You never know what kind of audience will be the most interested in your products.
Scalability
Scalability is when you increase your advertising budget while sustaining your profit margin. Usually, when you increase an ad budget, your return on ad spend will decrease.
Although this happens with Facebook as well, the Facebook algorithm makes sustainability more possible.
Facebook Ads Structure & Basics
Before we move on to the actual strategy, it’s important that you understand how to set up your Facebook ads.
You should have already created a Facebook ads account.
Here’s what your blank ads manager will look like:
So, a Facebook ad is broken down into 3 parts: campaigns, ad sets, and ads.
You will complete the campaign setup first, then the ad set, then the ad. After completing all 3 steps, you can finally publish your campaign.
Campaigns
The first step is setting up the campaign. At the campaign level, you are able to choose the overall objective/goal of your advertising campaign.
For example, I always choose “Conversions” as my campaign objective.
I recommend you do the same as a dropshipper because choosing Conversions enables Facebook to find actual purchasers.
Ad Sets
After setting up your campaign, it’s time to move on to the ad set.
The ad set is where you dive deep into where, how, and who you want your ads to be displayed to.
You have the option of:
- Scheduling the start date and time of your ad
- Choosing countries, genders, languages, and ages
- Targeting specific interests and audiences
- Choosing where to display your ads on Facebook
Ads
The ad section is the last part you will be setting up.
This is where you will upload the photo/video you made for your advertisement. To speed up the design process, you can use Facebook ad templates.
Furthermore, you will write a caption and any accompanying text you want to display with your image/video.
How to Run Facebook Ads for Dropshipping
At this point, you should have a full understanding of why Facebook ads are so important and how to set them up properly.
Now, it’s time to dive into our beginner Facebook ads strategy.
This strategy focuses on spending $30 a day on your advertising budget.
The goal of this strategy is to help you start building cash flow for your dropshipping business. Furthermore, you will learn a lot about Facebook ads by actually managing your own campaigns.
Our strategy is broken down into 4 different stages: 3 testing and data collection phases and 1 final scaling phase.
Every effective Facebook ads strategy starts with audience and creative testing.
Product Price
Before we begin, it’s important to know that this strategy works best for products that you can price for $30 or less.
Since our daily budget is only $30, it will be significantly harder to try to sell more expensive products.
The cost per purchase on Facebook directly correlates to the product price.
For this reason, you should be selling products that your supplier sells for $1-13. Then, you can mark up your product accordingly.
Stage 1
Objective: Find a Good Audience and Advertisement
Stage 1 starts by creating a new campaign in your Facebook ads manager.
Set the campaign objective to ‘Conversions’.
Then click ‘Create Campaign’.
At this point, your campaign setup is complete, but you will need to set up your ad sets next.
So, check the box next to your ad set and click ‘Duplicate’.
Duplicate the ad set 9 times into the current campaign.
You should have 10 blank ad sets now in your dashboard.
Next, select all 10 ad sets and click to edit them.
In the ad set edit menu, set the:
- Conversion Event - Purchase
- Budget - $3 per day
- Schedule - 12 AM the next day
- Location - Choose the countries you want to advertise to
- Age - 18 to 65+
- Language - English (All)
- Placement - Automatic
The last thing to set up is the ‘Detailed targeting’ section. Detailed targeting is where you can type in specific interests related to your store’s niche.
So, go back to your ads manager dashboard, and instead of selecting all 10 ad sets, only select one.
Each ad set should have a unique audience that it’s targeting.
In ‘Detailed targeting’ type in various keywords related to your niche and pick any that interest you.
After choosing an interest, it will also display the audience size and potential reach. I recommend choosing interests with 10 million people or more.
When you’ve chosen the audience for your ad set, rename your ad set to the audience name.
For example, if you selected the interest “Dog Lovers”, change the ad set name from “Copy 1 - Ad Set” to “Dog Lovers”.
This will help you stay organized when you monitor ad performance.
In the end, your goal is to have 10 different ad sets each containing a unique audience.
After finishing your ad sets, it’s time to edit your ad.
So, select your ad sets and click to edit the ads attached to them.
Upload the photo/video you created for your product advertisement.
Then, fill in the caption, accompanying text, and URL.
At this point, you will have 1 campaign, 10 ad sets, and 10 ads.
However, our strategy involves using 2 ads per ad set because we want to test different creatives as well as audiences.
So, select all 10 ads and click duplicate. Choose to duplicate them 1 time.
Now, select all the new duplicated ads and click to edit them.
Import your second image/video and change any text to match the new creative.
At this point, you will have 1 campaign, 10 ad sets, and 20 ads.
Congratulations!
You have completed the Stage 1 Facebook ads setup.
Now you can finally publish your ads by clicking ‘Publish’ on the top-right corner of your screen.
Monitoring Ad Performance
With your first Facebook ad campaign running, the next step is to monitor its performance. Our goal is to turn off underperforming ads and ad sets as soon as possible
Here are the guidelines:
- After 24 Hours - view your ‘Ads’ and turn off any ad that has a Cost per Click (CPC) over $1
- After 48 Hours - view your ‘Ad sets’ and turn off any without an Add to Cart (ATC)
- After 72 Hours - view your ‘Ad sets’ and turn off any without a Purchase
At the end of 3 days, your goal is to have at least 2 profitable ad sets and 1 profitable ad creative.
If you find yourself turning off all of your ad sets and ads, you will have to start over with new audiences and creatives.
However, if you have at least 2 ad sets and 1 ad turned on, you can move on to Stage 2.
Stage 2
Objective: Verify the Results from Stage 1
Stage 2 of our beginner Facebook ads strategy revolves around testing if the results from Stage 1 are consistently profitable.
To do this, we will test audiences that are similar to the winning audiences from Stage 1.
So, select the winning ad sets from Stage 1 and duplicate them into a brand-new campaign.
Name the campaign “Stage 2 Testing”.
Your goal is to again end up with 1 campaign, 10 ad sets, and 20 ads before publishing.
Next, depending on how many ads set you saved from Stage 1, you will have to duplicate accordingly to reach 10 total.
Once you have 10 ad sets, it’s time to select new audiences for the duplicated ones.
So, click to edit each duplicated ad set individually.
In ‘Detailed targeting’, you can click ‘Suggestions’ to find related interests.
Select a unique audience for each ad set.
Lastly, make sure you have 2 ads for each ad set by duplicating accordingly. It’s okay to have the exact same ad creative on both ads.
You can finally publish your ads once you have 1 campaign, 10 ad sets, and 20 ads
Monitoring Ad Performance
We will be using the same guidelines from Stage 1 to monitor your ad performance.
Guidelines:
After 24 Hours - view your ‘Ads’ and turn off any ad that has a Cost per Click (CPC) over $1
After 48 Hours - view your ‘Ad sets’ and turn off any without an Add to Cart (ATC)
After 72 Hours - view your ‘Ad sets’ and turn off any without a Purchase
To move onto Stage 3, your goal is to have at least 2 or more ad sets with a purchase.
If not, you will have to start from Stage 1 again with new creatives and audiences.
Stage 3
Objective: Collect More Data & Utilize Campaign Budget Optimization
First, duplicate the profitable ad sets from Stage 2 into a new campaign.
Name the new campaign “Stage 3 Testing”.
In the campaign edit menu, toggle on ‘Campaign Budget Optimisation
At this point, you should have enough cash flow from the profitable ads to increase your budget a little higher.
So, set the CBO budget to $90 daily and select ‘Conversion’ as the objective.
Next, set the ‘Minimum Ad set spend limit’ based on the following equation:
- Minimum Spend for Each Ad Set = (CBO Budget / 2) / # of Ad Sets
For example, if you brought 5 winning ad sets into Stage 3, then your minimum ad spend would be (90 / 2) / 5 which equals $9.
We are choosing to use CBO because they outperform ad set spending at higher budgets and are easier to scale.
Next, publish your ads.
Monitoring Ad Performance
The rules for monitoring your Stage 3 ads are different from Stage 2 and Stage 1 because of the higher budget.
After 2 Days of Ads Running
- Look at campaign level - if the Cost Per Purchase (CPP) is more than $10 above your target CPP, turn off the campaign and go back to Stage 2 with new ad creatives
- If your campaign CPP is okay, look at your ad sets - turn off any ad sets that have spent 2x the target CPP and have 0 purchases
How to Calculate Target CPP
First, pick a net profit margin that you are comfortable with. I usually aim for 20%.
Next, plug your number into this formula:
- Target CPP = Price x (1-DPM) - Cost
- (DPM = Desired Profit Margin) For example, .20 for 20%
If the campaign meets your target CPP you can start scaling your ads.
Scaling Guidelines
You can scale your ads by doubling the CBO budget to $180. If your scaled ad campaign brings negative results, scale back down to the original $90. On the other hand, if the ads are performing well, you can double the budget again.
However, always descale your budget if the scaled campaigns aren't performing well.
If the scaled campaign brings consistent results you can move onto Stage 3 once you’ve spent a total of $500 on your ad account.
Also, if you didn’t make it past Stage 3, you can move to Stage 4 if you’ve spent $500 on your ad account.
This is because we will be using the data you collected with your ad spend.
Stage 4
Objective: Scaling Your Ads With Lookalike Audiences
Stage 4 is when you finally get to use all the data you collected to make lookalike audiences.
So, make 5 different lookalike audiences from 0-5% for these custom audiences:
- Facebook Engagement
- Pageview
- View content
- 75% Video Views (if using video ads)
In total, you should have 20 total lookalike audiences if you are using video ads and 15 total if you aren’t using video ads.
With these lookalike audiences created, follow this CBO strategy:
Final Thoughts
At this point, you should be well on your way to creating a successful dropshipping store.
Our Facebook Ads strategy for dropshipping is perfect for beginners who want to take action.
However, it’s important to start learning and understanding how Facebook ads work and the reason behind our decisions.
It will be hard to adapt and remain successful if you can’t adjust to changes in the Facebook ads platform.
I recommend that you remain diligent with your ad and campaign creation and not look to take any shortcuts.
About The Author
Larry Li
Larry Li is the Chief Content Officer at Verum Ecom. Leaving behind a career on Wall Street to pursue entrepreneurship, he now has 4 years of eCommerce under his belt. His newfound goal is to empower other eCommerce entrepreneurs by giving them all the resources and help they need to succeed. He loves sharing his knowledge with others and writing about all things eCommerce.
