Many businesses face the challenge of inefficient ad spending, where significant resources are allocated to underperforming products. While these products may generate substantial website traffic, they often fail to convert into actual sales. This leads to a drain on advertising budgets and limits the potential for more profitable investments.
While there are various methods to identify underperforming products, the most common approach involves:
Set a Spend Benchmark
Filter out the products that have already consumed a significant portion of your budget. Determine a reasonable amount of ad spend to give a product a fair chance.
Set a ROAS Benchmark
Set an acceptable ROAS based on your campaign objectives and product margins. The more you invest in a product without any substantial revenue, the higher the loss from that product.
Stoploss Best practices
In the example shown below, there are around 23 products wherein the client has spent around 1.2L (more than a 2000 per product (3 times of average cost per sale)) whereas they have only generated a revenue of 20K with a ROAS of just 0.23x. This set of products are merely generating 2% of the client’s revenue after spending around 25% of the entire budget. Clearly, this business is wasting the budget on the products that don’t sell well.
So, it's time to reevaluate and reallocate resources from non performing products to more profitable products!
This is where our Product Stoploss feature comes handy.
Poor performers, the exact opposite of the top performers are often promoted via Meta and Google algorithms owing to the high engagement and CTR, but ultimately they give negative returns. The key is to start slow!
Limiting or removing too many poor-performing products from promotion at once can have a negative impact on overall ad account performance. The recovery can take some time, so begin gradually by tweaking Spend and Product ROAS thresholds (resulting in 5-10% of Total spend).
Once you implement stoploss, you’ll even be able to keep a track of the savings you’ve made so far.
When you implement stoploss, the product is excluded from running in the ads. You can decide if you want to exclude the product in just Meta or Google. The product will only be excluded from the concerned platform.
Steps to setup stoploss - Official documentation