TikTok beats all advertising channels?
DTC #119: Been 14 months of testing ad channels. TikTok Ads has given the most pleasant experience (not 100%). Others not so much. Facebook, Google, TikTok and Shopee - How do they all stack up?
👋 Hola! Welcome to Out of Singapore. This is Shan, I write this weekly Sunday newsletter. Why do I write every week? I attempt to condense my learnings as a DTC operator. I am also worried that I will forget everything. That scares me. Hence I put down my learnings in this blog. Say, I lose my memory or sanity, I can recover after reading these writings (if you watched Queen of Tears, YKWIM). 😆
Last six months have been bitter sweet. Out of the two brand projects, one failed. I moved my entire focus to one brand to scale. While it scaled, it hasn’t scaled to my imagination. That sucks! This brand is my lifeline. Considering that, it sucks even more.
I wrote about conversion rate changes on our homepage last week. It was my first graphical write up. If you haven’t seen it yet, you can find it below. I will also write about the product page UI changes in an upcoming edition.
Today, I will talk about the performance of our advertising channels. Tiktok is my favourite child. Though it’s not perfect (quite painful actually). We will discuss these today.
How did we spend across the channels (media mix)?
How did the revenue scale across channels? (Attributed revenue, last click)
Which delivered better performance? (ROAS)
Let’s start.
#1 Spend mix by advertising channels
We advertise across a few channels, however the key ones are -
Facebook Ads - drives sale of our website
Google Ads - drives sale of our website
TikTok Ads - drives sale of our TikTok Shop
Shopee Ads - drives sale of our Shopee store
To start, have a look at our spend pattern from Oct 2023 to May 2024 (solid 8 months of data).
We spent a ton of money on Facebook ads at the start. We were hoping that the ROI (or ROAS or MER) will catch up within a few months. It didn’t happen. So we reduced our spends on Facebook.
The initial spends on Facebook did it’s job of creating awareness in Singapore. In a short span of 6 months, everyone who should know about us, knew about us.
Google ads is supposed to capture the demand created on Facebook. Users see us on Facebook, then search for us on Google and then they buy. I don’t entirely agree on this path (backed by data). So I have been behind our agency to scale up spends on this channel. However, the spends have conservative and stable across the past 8 months.
TikTok ads have been used to boost livestreams (our key sale lever on TT) and sales from our and affiliate videos. It has done it’s job phenomenally. The cost has been quite insignificant. However, can I scale this spends by a few times next month? I have been struggling on that front.
Shopee ads captures demand from the Shopee marketplace platform. We have also spent on collaborative Facebook-Shopee ads to drive sales. These collaborative ads have done pretty bad. Shopee’s search and discovery ads have done well. One of the best drivers of revenue for us.
If you see the video again, few things have happened
Facebook ad spends have been brought down (quite significantly, 3-4x lower).
Shopee ads has been scaled month on month. We are trying to scale this further.
TikTok ads has been slowly scaled. The pattern will be more obvious in next few months, since we moved to their new Shop ad type in April. Now, we will start launching custom ads on TikTok.
While Google is the world’s biggest advertising channel, it hasn’t been great for us. We have not seen great success and hence have not scaled this yet. Yet!
#2 Growth of revenue attributed by each channel
This is the most interesting graph. Look at how scale has changed over the months.
Few things to note here.
Facebook has always been the main revenue driver (albeit at high costs). The growth in revenue hasn’t happened unlike other channels. We have spent last five months fixing the ROI of Facebook ads. This translates to lower spends to maintain the same revenue. It has been successful in this objective.
Shopee has grown consistently month on month. In fact, since March 2024, it is our top platform in terms of revenue.
TikTok has been a real roller coaster. In Feb 2024, it scaled beyond our imagination. I was so happy and expecting it grow further 2-3x in next few months. Instead TT closed our shop. In March, we restarted with a brand new shop. It has been a slow growth since then. Good thing is that we didn’t lose our entire revenue base.
This graph tells you why I dislike Google’s performance. While everything else has scaled 3x, Google has not seen major changes. It isn’t a channel that can be tweaked for growth. (or maybe I have not optimised for google well, will see!)
TT ads have been on auto-pilot since April onwards. The platform automatically adjusts and spends on daily basis. At the next stage, this needs more work with custom ads to drive more sales.
I have been most active in tweaking Facebook and Shopee ads. Why? Because they drive the most amount of revenue for us.
#3 How did they perform (ROI)?
ROAS or ROI is defined as revenue (attributed by individual platform) divided by ad expenditure on the platform. So, if I get 10K SGD in revenue from Facebook and I spent 5000 SGD on sales, the ROAS is 10000/5000 = 2. Now moving on to the learnings.
Now, check this ROAS (return on ad spend) data for the same period.
Tiktok has been the best performer. Consistently from day 1. It’s lifetime performance is better than every other platform put together. I love the platform.
While our performance was at its peak in Feb, we had to deal with shop closure. Since March, the performance has been improving each month. We are working to scale this further.
Tiktok demands great story and video production. We have not great job in it. But we are trying. I think we need to hire one story writer and 2 production staff.
Shopee has also performed well for us as well. However, scaling the ads here has been a challenge. So, we buy campaign packages to get a boost in visibility on Shopee app. It hasn’t worked very well yet. Our ROI has not been stable on Shopee due to scaling efforts.
Google ROI has improved month on month. However, it has the lowest scale compared to all channels. That is sad, in my view.
Facebook ads has been a money guzzling platform. So improving its performance by even a few percentage points, makes a lot of difference to our profits. Must say that it has been the most difficult platform for us. If I had to draw efforts and results chart, Facebook would be at the bottom. So low that you won’t even see it in the chart. It is that bad.
At the moment, I really need to figure out to how to scale spends and revenue across these platforms. ROI loss of 30% isn’t a pain, however, when it falls by 2-3x, it becomes more than just a pain in the ass. Our efforts at PR led sales hasn’t gotten us much result as well. I haven’t stopped trying though.
Beyond what’s mentioned here, we need a big boost in sales. Something that will improve the performance of all my advertising channels. Will it be PR? Will it be celebrity collab? Will it be endorsement by celebrity or large influencer? I don’t know. 🤷I am trying to figure out.
Thanks for reading again. You have been super star! 😍
It has been late this week. I didn’t have a topic in mind. I was way too relaxed for past two days. I slept 12 hours yesterday and 10 hours today (make it 12, since I got 2 hr later 😆). Finally, this topic came out well (I hope so).
Jisoo time
Jisoo as cute as ever. Though Lisa gives her a tough competition. 哈哈哈
Okay, sleep well and have a great week ahead. Thanks for taking the time out. Goodbye!