Faire Report #20: Promoted Listings, the story continues...

What’s on my brain this week?

Promoted Listings are arriving in Europe, so the conversation around Faire Ads is only going to get louder.

Alongside the expansion, Faire has introduced Growth Mode—a new setting that lets brands decide how aggressively their ads compete for visibility.

It sounds like a simple setting, but the decision behind it comes down to one thing: your return on ad spend.

Growth Mode is really a ROAS decision

The more aggressive you make your Growth Mode, the more broadly Faire can advertise your products.

Imagine you're a fashion brand selling scarves. On a less aggressive setting, Faire may focus on retailers that are already closely associated with scarves or accessories.

As you become more aggressive, that audience could expand into women's clothing boutiques, gift shops and increasingly broad groups of retailers. That gives Faire more opportunities to generate sales, but it also means you're competing across a much wider range of searches and products.

This is broadly what we're seeing across the accounts we manage: more aggressive settings tend to produce more sales, but ROAS usually drops as the audience becomes broader.

More sales do not automatically mean more profit

It's easy to become distracted by the extra revenue ads generate. But if those sales aren't profitable, the ads aren't doing their job.

Everything else is secondary to ROAS and contribution margin. You need to understand how much profit remains after your product cost, Faire commission, payment fees, fulfilment costs and advertising spend.

If the numbers work and you want to grow faster, moving into a more aggressive setting may make sense. If the additional sales leave little or no profit behind, either reduce the setting or stop the ads while you fix the underlying economics.

There isn't one correct Growth Mode for every brand. Faster, more expensive growth will suit some businesses. Others will be far better served by growing slowly while protecting their margins.

Faire is becoming a more expensive platform

Faire describes Promoted Listings as an advertising product built specifically for wholesale growth. That's true—but it also marks another stage in Faire becoming a platform where brands can pay for additional visibility.

The platform began with commission and payment processing fees. Brands can now add advertising costs on top, and we should expect the cost of competing on Faire to continue increasing as more brands adopt paid tools.

We've seen the same pattern on Amazon. Once paid visibility becomes established, it becomes increasingly difficult to ignore. That doesn't make Faire Ads bad, but it does make sustainable gross margin more important than ever.

If your margin isn't currently strong enough to absorb advertising, you need to work on improving it. That might mean reviewing pricing, production costs, packaging, shipping or which products you choose to promote.

Paid visibility amplifies what is already there

Faire Ads can work extremely well for the right brand, but they don't replace the fundamentals.

If you've already invested in strong imagery, clear product pages, effective SEO, good reviews and a range retailers genuinely want, paid visibility can help you outperform brands that haven't done that work.

The better your listings convert, the less expensive it should be to acquire an order. You're paying to bring more retailers to a page that is already capable of converting them.

But if your listings are weak, paying for more traffic simply means paying more people to ignore you.

Final thought

Don't choose your Growth Mode based on how much revenue you want. Choose it based on how much profitable growth your margins can support.

Start carefully, watch your ROAS and increase the aggression only when the numbers justify it.

See you on the marketplace,

Andy