Solved: Figuring Out Average Meta Ads Cost for New Customer

Hi there,

Thanks for reaching out – happy to give you some initial thoughts and guidance on your D2C e-commerce business selling luxury fragrances and Meta ads.

It's tricky to give an exact cost per acquisition (CPA) figure without knowing all the ins and outs of your business, but I can share some experiences and things you should consider. It's great you're focusing on Meta to start; it's usually a solid choice.

We'll need to look at targetting...

First thing, forget about generic industry averages. What other companies pay to acquire a customer in the "luxury goods space" really won't mean much to you. Your CPA is going to depend almost entirely on your specific product, website, ads, and – most importantly – your targeting.

Think about who your ideal customer is, where they hang out online, and what kind of messaging will resonate with them. Are you targeting a younger demographic interested in trendy scents, or an older one looking for classic fragrances? Are you focusing on a specific region, or a broader audience? Really narrow this down.

I remember one client of ours who was also selling luxury goods. Their initial campaigns were super broad and scattershot, targeting anyone who showed even a passing interest in "luxury." They were wasting a lot of money, and the cost per sale was through the roof. When they narrowed their focus to very specific interest groups and demographics within Meta (e.g., people who follow specific luxury influencers, or who frequently engage with high-end brands), their CPA plummeted. Don't make the same mistake.

This is the main advice I have for you:

Once you've defined your audience, it's time to start testing different ad creatives. Don't just run one ad with the same image and copy for everyone. Create several variations and see which ones perform best with different segments of your audience. High-quality images and compelling copy are a must in the luxury space. You also want to look at your performance metrix: Do you have really low CTRs and high CPCs? -> Your ad copy/product images likely need work.

I'd say you should focus on website optimisation...

Next, how's your website looking? Does it exude luxury and quality? Is the user experience smooth and seamless? Is it easy for people to find what they're looking for and make a purchase?

Think of your website as your digital storefront. If it's not up to par, people will bounce, no matter how good your ads are. We recently worked with another client who was getting tons of traffic to their site, but their conversion rate was abysmal. It turned out their product pages were poorly designed and didn't showcase the value of their products. Once they redesigned their site, conversions went up dramatically.

And look at your analytics. Where do people drop off? - Do you get visitors to your start page but only a small percentage of product page views? -> You're either getting the wrong type of traffic (look at your ad targeting/keywords) or maybe the products features aren't a good fit. - Do you get lots of product page views but no adds to cart? -> Likely your product photos, product descriptions, or pricing needs work. Maybe a special offer could help. Maybe people aren't ready to buy now and need long-term retargeting.

You probably should test and refine...

Don't go all-in with a massive budget right away. Start small and test everything. Run multiple ad sets with different targeting options and creative variations. Track your results carefully and refine your campaigns based on the data. And don't get discouraged if things don't work out perfectly at first. It takes time and experimentation to find what works best for your business.

A/B test everything, ad copy, images, offers, and landing pages. Use different variations and only keep the best performing elements. Once you find winning strategies, increase the ad spend to scale your campaigns. But before scaling, make sure you get a positive return on investment.

That's important because Meta's ad auction is also a bit of a black box. Prices fluctuate depending on demand, competition, and a whole host of other factors. What works today might not work tomorrow. So be prepared to adapt and adjust your strategy as needed.

You'll need a few things to launch...

Here’s what I mean:

It is quite common for ecommerce campaigns to plateau at some point where you can't scale further without lower ROAS/higher CPA - because you are only selling one product and can't easily branch out and there will be a limited number of people likely to convert for this product. So as you scale, costs increase.

Scaling software campaigns can be a challenge, so, if you feel you need some expert help, we'd be happy to have a chat about your business and your goals. We've run quite a few campaigns for luxury goods, eCommerce and software and know what works. We offer a free consultation, where we can talk in more detail about your situation and how we can help.

Regards,

Team @ Lukas Holschuh