The Cheat Code to 2x ROAS Overnight

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Hi, and welcome back to The ADvantage Newsletter – your go-to resource for mastering e-commerce ad strategies that give you an unfair advantage over the competition.

Today, we’re diving into one of the best-kept secrets in performance marketing: catalog ads (aka Dynamic Product Ads, or DPAs). Think of them as the cheat code many top ecommerce brands are using to unlock consistently higher returns.

Plus, I’ll share eye-opening data on how catalog ads drove impressive results for DTC brands in 2023—and, most importantly, how you can level up your creatives to maximize impact and efficiency.

We’ll focus primarily on Meta Catalog Ads, but the strategies apply across any platform offering catalog ad capabilities.

Ready to supercharge your campaigns? Let’s dive in. 

What exactly are catalog ads (aka DPAs)?

Catalog ads are essentially personalized, dynamic ads that showcase your entire product catalog. Meta automatically generates these ads by pulling product details—such as images and descriptions—directly from your Shopify store or a CSV file. These ads are then intelligently served to users based on their interests, behavior, and activity both on and off the platform.

Catalog ads excel at one thing: promoting a large variety of products simultaneously. They’re perfect for brands with 10 to 100+ SKUs, allowing you to reach your audience with the right product at the right time, without creating individual ads for each item.

However, if you only have a few SKUs, catalog ads might not be the best fit. But for those with extensive product lines, they’re a game-changer.

How do you create them?

For Meta Catalog Ads, the setup is straightforward. Simply go to Meta Business Manager, navigate to “Facebook Commerce Manager,” and click the "Create a Catalog" button. Choose your catalog type (eCommerce for most) and follow the easy prompts.

You have a few ways to upload your product data:

• Upload a .csv from your Product Information Manager (PIM).

• Connect Shopify (or BigCommerce), select your products, and let Meta import the details.

• Use Shopify’s plugin for a more detailed data set.

The beauty of catalog ads is that you can import hundreds of products at once, making them ideal for brands with large product ranges.

Once your catalog is set, you can run DPA ads just like any other campaign. Meta will automatically distribute these ads across its platform. For targeting, you can create custom audiences or use an Advantage+ campaign—Meta's optimization is quite reliable for scaling efficiently.

The cool thing about catalog ads is that they automatically pull product images and descriptions directly from your ecom store or CSV file. For marketers without a full creative team constantly producing new ads, this is the easiest ad type to set up. Meta handles pulling the product photo, title, and description, allowing you to run ads with minimal effort. However, to truly unlock the power of catalog ads, you'll want to customize the designs. I’ll delve into how to enhance these ads in detail.

How effective are Catalog Ads/DPA ads?

Here’s where it gets really interesting. I reviewed a report by Varos that analyzed catalog ads' performance in 2023.

The report examined data from 3,500 Meta ad accounts, which collectively spent over $4 billion last year. Here are the standout findings:

Catalog ads emerged as the top-performing ad type for the brands in this study. The average ROAS for catalog ads was 3.075x, compared to 1.725x for traditional static or video ads. This means catalog ads delivered a 78.3% higher return on ad spend. While we don’t have details on the exact spend distribution, DPAs generally perform well, often matching or surpassing the efficiency of other ad formats.

In terms of performance peaks, the best month for static and video ads saw a 2x average ROAS, whereas catalog ads achieved a 3.4x average ROAS. Surprisingly, catalog ads also had a 36% higher click-through rate (CTR) than fully designed creatives. The annual average CTR for catalog ads was 1.17%, while custom static or video ads had an average CTR of 0.86%.

Why are catalog ads outperforming?

Varos identified two key reasons for the impressive performance of catalog ads:

1. Advantage+ Shopping Campaigns (ASC)

2. Growth of Facebook Shops

Meta is increasingly relying on Advantage+ Shopping Campaigns (ASC), where their extensive data library automates your ad management. This AI-driven approach handles full-funnel targeting, testing, and budget optimization, significantly reducing manual effort.

As advertising continues to evolve toward greater automation, Meta is likely to push fully automated solutions like ASC, and catalog ads fit right into this trend. While this is speculative, it’s possible that Meta is optimizing catalog ad performance to encourage their use among brands with extensive product ranges.

Another reason catalog ads excel is that Meta gains a comprehensive understanding of your product catalog when you upload a detailed CSV file. By analyzing the data, Meta can match your products with the most relevant users.

For instance, if you sell high-end smartwatches, Meta knows which users are interested in smartwatches and which prefer premium brands. With dynamic catalog ads, Meta can precisely target users looking for high-end tech gadgets, ensuring your ads reach the right audience.

Which Brands Shouldn't Use Catalog Ads?

Catalog ads are most effective for brands with extensive product catalogs. If you have only a single SKU, are a SaaS company, or are focused on driving app downloads, catalog ads might not be the right fit. For brands with limited product ranges, traditional static and video ads are likely a better choice for now.

How to Supercharge Your Catalog Ad Creative

To truly elevate your catalog ad performance, it’s crucial to enhance your creative. Meta provides basic tools for catalog ads, but to go beyond the standard, you’ll need something more robust.

With RetainIQ, you can create a wide range of dynamic creatives for your catalog ads. Think of it as a powerful design tool specifically tailored for catalog ads. It offers a user-friendly visual editor that allows you to customize background colors, add dynamic text and tags, and leverage AI-driven design and copy concepts. See some examples below:

Example 1:

Example 2:

Example 3:

If you’re curious about how RetainIQ can transform your catalog ads, explore some more enhanced catalog examples through this link.

RetainIQ enables you to incorporate your logos and brand colors, and even apply dynamic filters for promotions that sync with your product feed and update in real time. It’s an invaluable resource for brands looking to enhance their catalog ad effectiveness.

Final Thoughts

In conclusion, catalog ads are a powerful tool that more brands should be exploring. While they’re already a significant asset for large brands, their importance is set to grow, especially for DTC brands with extensive product catalogs this year.

The data clearly shows that catalog ads are outperforming other ad types. As marketers or brand owners, it’s essential to test this strategy yourself and evaluate its effectiveness. The results we’ve seen with our clients are quite impressive.

Cheers to impactful Ads!