It is rare that we speak to a customer at Littledata who isn't spending a majority of their PPC budget on Google and Facebook, and this hasn't changed with browser and OS privacy changes and the renewed focus on first-party data. It has just become more complex.

Facebook Ads are used by top DTC brands to find new customers and retarget shoppers, and dynamic ads are one of the secrets to success on that paid channel. But without the right tools, dynamic ads can be difficult to run correctly — let alone optimize for higher ROAS. In this post, I look at what dynamic product ads are, the main use cases for DTC marketers, and how to use tools such as the Facebook Conversions API (CAPI) to improve your ecommerce advertising.

incch blue ecommerce website example

What are dynamic product ads on Facebook?

Dynamic ads, or specifically dynamic product ads, allow you to show a Facebook user an advert for the same (or similar to) the product they browsed on your store.

This dynamic product ad is typically displayed to an audience that has added a product to their cart but has not yet purchased.

Facebook has shown using this strategy increases click-through rate (CTR) on ads and reduces your cost per acquisition (CPA). In one example, Inch Blue, a children’s shoe manufacturer, more than doubled their return on Facebook Ads spend by using dynamic product ads and lookalike audiences (another technique described here).

dynamic product ads how they look

What do I need to set up dynamic product ads?

To enable dynamic product ads, you need to feed four things from your store to Facebook:

  1. An event telling Facebook which users have viewed a product
  2. An event telling Facebook which users added which products to their cart
  3. An event telling Facebook which users have completed purchases (so they can be excluded from the audience)
  4. A product feed matching the product ID viewed, with the image and description you want to be displayed in the dynamic ad

It's important to send all of this data to Facebook Ads, because otherwise you could waste a lot of money targeting shoppers with the wrong products, or retargeting customers who already bought the item!

Using Facebook Conversions API to run high-performing ads

The four necessary events above are increasingly being blocked by anti-tracking technology in web browsers when tracked via Facebook Pixel.

Ad accounts missing the “add to cart” event will have a smaller audience to target. Those missing the “purchase” event will be advertising to users who already purchased. Both of these problems increase CPA.

Facebook Conversions API (CAPI) solves this problem by sending the events from server to server, where they cannot be blocked, and so they can contain more complete customer data to match to a Facebook user. This increases the relevance of the audience on Facebook and reduces CPA.

This is a big uplift — many brands report a 20% to 30% increase in purchase tracking after using Facebook CAPI, meaning they can save up to 30% of their ad budget since they avoid retargeting customers who purchased already.

Shopify stores report a 20% to 30% increase in purchase tracking after using Facebook Conversions API, meaning they can save up to 30% of their ad budget.

Some Facebook CAPI solutions only send the purchase event server-side — which only solves part of the problem. Littledata’s connector for Shopify to Facebook CAPI also sends the add-to-cart event server-side. This means that it is captured every time and can be sent to Facebook automatically.

Note: Littledata’s Facebook Conversions API connection is in public beta for Shopify stores. Sign up for early access.

What’s the best way to retarget product ads?

Facebook recommends targeting an “add to cart” event with a broad product group. So, you can either retarget based on a product ID or a product category.

Retargeting using the SKU or product variant is less successful, because the user is likely looking for something like (but not exactly the same as) the product they abandoned in the cart.

In addition to using add to cart events, you could also target a broader audience who viewed the product details page (see below the ‘Viewed or added to cart but not purchased’ option). It depends on the type of product you are selling.

facebook ad retargeting audience

How do I set up dynamic ads with Littledata?

Littledata’s Facebook CAPI integration sends all the required events you need for product targeting via Facebook CAPI.

The only limitation is that the Product Viewed event (from the product details page) is still sent client-side (via Facebook Pixel). This means some product views might be missing due to browser cookie blocking, although in a future iteration this will also be moved to Facebook CAPI.

You will also need a product catalog feed for Facebook: Facebook Feed by Littledata reliably performs this role.

How do I configure the dynamic ads within Facebook?

To configure dynamic ads, you will first need to create a new campaign with Facebook Ads manager. Start with a Catalog Sales campaign.

create new facebook ad campaign

Next, link the campaign with the product catalogue you set up.

product calatog facebook ads

Then name the campaign and edit how it interacts with your product catalog.

name campaign facebook ads

Then link the event data source you configured Facebook CAPI to send to.

connect event source to Facebook CAPI

Finally, you are ready to configure the audience rules. In this case, I have chosen to retarget users who viewed or added to cart but did not purchase.

set audience rules Facebook ads

What are the other options for setting up Facebook dynamic ads for a Shopify store?

As we wrote last year, there are a couple of other options for connecting Shopify to Facebook CAPI.

The options are:

  1. Shopify’s inbuilt Facebook channel
  2. Server-side Google Tag Manager (sGTM)

But both have their limitations.

Shopify’s Facebook channel has problems with order duplication — so revenue and order volumes are double-counted, making ROAS hard to calculate. It also doesn’t send add-to-cart events server-side, resulting in lower retargeting rates.

Server-side Google Tag Manager is more reliable but puts all the onus on you to maintain the integration. Facebook’s marketing technology changes every month, and we believe paying for a constantly maintained connection is a better long-term solution.

Of course, if you just want to prospect new customers with selected products from your catalog, you could do this without sending events to Facebook—but then you’d be blind to whether the campaigns were really working or not.

What to do next to set up dynamic ads

Are you ready to boost the effectiveness of your Facebook Ad spend? What would a double-digit uplift in your ad spend effectiveness mean for your brand?

You can get started today with just three things:

  1. A Facebook Ads account
  2. product catalog feed from Shopify to Facebook Ads
  3. An event data feed (also known as Facebook CAPI)

Happy retargeting!

Note: Littledata’s Facebook Conversions API connection is in private beta for Shopify stores. Sign up for early access.