Solved: Minimum daily budget for luxury retail store ads?

Hi there,

Thanks for getting in touch. I'm happy to give you some initial thoughts and guidance on your luxury retail strategy. I can see you're selling items ranging from $20 socks to $19k dresses, you're testing 16+ creatives, and you're thinking about budget and platform allocation.

Let's break this down. There's a few things I'd look at first.

We'll need to look at budget...

Okay, first off, budget. This is a tricky one because "it depends" is the most honest answer, but not the most helpful. You've got a really wide price range, from everyday socks to investment-piece dresses. This means you're potentially targeting different customer segments, or at least, different buying behaviours within the same segment.

I'd say you need to factor in the cost of acquiring a customer for each segment. Selling a $20 pair of socks will have a vastly different CPA (Cost Per Acquisition) target than a $10k dress. Don't just look at an overall average ROAS (Return on Ad Spend). You need to break it down by product category, at least initially.

For testing 16+ creatives, you're going to need enough budget to actually get statistically significant data. A few pounds a day per creative just won't cut it. At a minimum, I'd suggest $50/day per platform to start, and possibly more if you want to see results quickly. I'm not sure if you're already aware but you may need to up that to around $100/day.

One thing to watch out for is ad fatigue, especially with luxury items. People often need to see the ad multiple times before they're ready to commit to a purchase. So, you need enough budget to keep showing the ads to the right people, without bombarding them to the point of annoyance.

I'd say you probably need to look at platform allocation...

Right, onto platforms. You mentioned Meta and TikTok. Both have their pros and cons, especially for luxury retail.

Meta (Facebook/Instagram) is generally good for targeting a slightly older, more affluent demographic. The targeting options are also pretty robust, allowing you to hone in on specific interests, behaviours, and even income levels.

However, Meta can be expensive, especially for competitive niches. And the algorithm is constantly changing, so you need to stay on top of things.

TikTok, on the other hand, is great for reaching a younger audience and building brand awareness. It's also generally cheaper than Meta. I'm not sure whether you're already aware but the platform is more visual which is good, but it can be harder to drive direct sales, especially for higher-priced items. TikTok users are more likely to be browsing for entertainment than actively looking to buy a $10k dress. Think about whether your target audience will even be on there.

My advice would be to start with one platform and master it before moving onto the next. Meta is probably the safer bet, given your product range. Once you're seeing consistent results on Meta, then you can experiment with TikTok.

Don't forget about other platforms either. Pinterest can be great for visually-driven products like fashion and home goods. And Google Shopping Ads can be effective for capturing people who are actively searching for specific items.

You probably should focus on creatives...

Okay, 16+ creatives is a lot. I think you're probably better off focusing on the top ones rather than spreading your budget too thinly. It's better to have a few really good ads than a bunch of mediocre ones.

For luxury retail, the creative is everything. You need high-quality photos and videos that showcase the products in the best possible light. Think about lifestyle imagery, showing people wearing or using the products in aspirational settings.

Video content is particularly important. People are more likely to engage with video than static images. And video allows you to tell a story and convey the brand's personality. I know that one campaign we worked on had some very good results with UGC videos for a SaaS client. Make sure your video looks professional.

Don't be afraid to experiment with different ad formats. Carousel ads can be great for showcasing multiple products at once. And collection ads can create a more immersive shopping experience.

Remember to A/B test everything. Try different headlines, descriptions, calls to action, and imagery to see what works best. For one client in the outdoor equipment space, we used different campaign structures to drive 18k website visitors. Keep a close eye on your metrics and adjust your creatives accordingly.

You'll need to consider your target audience...

This may seem obvious, but it's worth reiterating. You need to have a clear understanding of who your target audience is. What are their interests, behaviours, and pain points? Where do they spend their time online?

For high-end items like $10k dresses, you're likely targeting a very specific niche. You'll need to use precise targeting options to reach these people. Think about things like income level, luxury brands they follow, and events they attend.

For lower-priced items like socks, you can cast a wider net. But you still need to target people who are interested in fashion, style, and quality.

Remember to build custom audiences based on your website visitors and customer data. This will allow you to retarget people who have already shown an interest in your brand.

And don't forget about lookalike audiences. These are people who share similar characteristics to your existing customers. They can be a great way to expand your reach and find new customers.

You probably should consider your funnel...

Think about the customer journey. What happens after someone clicks on your ad? Do they land on a relevant product page? Is the checkout process smooth and easy?

For luxury retail, the entire experience needs to be seamless and premium. From the ad creative to the landing page to the customer service, everything needs to be top-notch.

Make sure your website is fast, mobile-friendly, and visually appealing. Use high-quality product photos and descriptions. And make it easy for people to contact you with questions.

Consider offering a concierge service for high-end customers. This could include personal shopping assistance, styling advice, and exclusive access to new collections.

Also, think about your email marketing strategy. Email is a great way to nurture leads, promote new products, and build customer loyalty. Send targeted emails based on people's interests and purchase history.

I recall one software client who got 4,622 Registrations at $2.38 Cost Per Registration for a B2B Software by building audiences, as I talked about.

I've detailed my main recommendations for you below:

I hope these thoughts help you! Scaling a luxury retail store with paid advertising can be tricky, but with the right strategy and execution, it's definitely achievable.

However, it might be worth considering some expert advice. We’ve helped businesses across many niches with their advertising campaigns. For example, I remember working with a women's apparel client and seeing a 691% return with Meta and Pinterest Ads. With our experience, we may be able to help you reduce your cost per acquisition for customers.

If you would like to discuss this further, I'd be happy to arrange a free consultation.

Regards,

Team @ Lukas Holschuh