Debunking the MYTH: Do Coupons help increase your overall return?

Our Objective:

Determine if coupon code incentives for Facebook/Instagram ads help or hurt an e-commerce brand’s overall return on ad spend.

The Strategy: 

Icon Swim, an e-commerce swimwear brand, wanted to better understand if coupon codes would help increase their already robust sales. The key for them is that they already have a successful product at an accessible price point.

We split test two Dynamic Product Ad campaigns against each other, one with a 30% off coupon code in the ad copy and one without. All other ad variables were constant.

Key Results:

The Campaign with NO coupon code:

  • 8.77 ROAS
  • $3.22 CPA
  • 8.69%  CTR

The Campaign WITH a Coupon Code

  • 5.36 ROAS
  • $4.88 CPA
  • 7.38% CTR

As the results clearly show, the campaign with the 30% off coupon did not perform nearly as well as the campaign that had no coupon at all. The Click Through Rate is also surprisingly lower for the coupon campaign.

In fact, the difference in return on ad spend between the two campaigns is 38%, just about the size of the coupon code. The Cost Per Purchase was also 34% less with no coupon. The coupon was unnecessary and ultimately cost SwimWear Inc. a sizeable return.

For this brand, coupon codes were a detriment to their overall return and the decision was clear, no more coupon codes!

Adam Giladi