Advertising On Facebook Ads

There are a variety of ways to market on Facebook – today we’re going to look at the company’s paid advertising system, Facebook Ads.

This can be a great venue for small business marketing, as it’s relatively simple to setup, can accommodate small (or huge) budgets, and provides options for precise regional or demographic targeting.

What Are Facebook Ads?

Ads on Facebook appear primarily along the right-hand side of the page. Go to anyone’s profile and you’ll usually see three ads – these two are a small sample. As you’ll see, one is for a local business, a rental community located just a few miles from where I live. The other is for a Facebook game. A large portion of ads tend to be for quasi-junk – games, dating services, and free iPods, so the local business ads often stand out.

These ads are created in Facebook’s self-service advertising platform. All the self-service ads follow this same format, with a short headline, small picture, and longer text below.

Advertising on Facebook can work for almost any type of business. They’re useful for driving awareness, can be used to directly generate leads, and are great for increasing the Fan count on your Facebook Page. It’s harder to make online sales through Facebook Ads, although not impossible.

Getting Started With Facebook Ads

To get started advertising on Facebook, go to Facebook.com/Advertising/. If you don’t have a Facebook account you’ll be asked to create one as part of the ad setup process. There are three sections in the ad creation page – Design Your Ad, Targeting, and Campaigns, Targeting, and Scheduling.

Design Your Ad

Your ad’s design is critical for achieving results at a reasonable price. Here’s what the screen looks like:

Facebook Ads Design Your Ad

The first box is for a Destination URL. You can use your website’s homepage, or may do better with a page specifically designed for Facebook visitors. Directly beneath the Destination URL is a link to “advertise something I have on Facebook” – if you have a Facebook Page setup, you’ll want to click this link to advertise your page.

Then you choose a Title. If you’re advertising a Facebook Page, this will automatically default to your Page title. For anything else, you can choose what you’d like – it’s likely that descriptive or promotional text will work better than your business name.

After the title comes the Body Text. This is like writing any advertisement. You do have a nice amount of space (much more than search engine advertising, for instance), although sometimes shorter text will prove more effective.

Cupcake Living Social Facebook AdFinally, there is a spot to upload an Image. This is very important! The image generally has the largest impact on your ad’s effectiveness. Many companies use their logo, but it’s unlikely this will be the best choice (unless possibly if you are looking to drive general brand awareness). You want something that stands out – check out that cupcake.

Some things to try include using people, something creative, or images that just “pop” when your eye crosses over them. Remember that the picture will be small – it is only 110 x 80 pixels in size. If you don’t have enough images of your own, you can purchase them from iStockPhoto.com.

Targeting

Facebook’s platform allows for some pretty amazing targeting. Here’s the options screen:

Facebook Ads Targeting Options

You start out choosing the Location you want to target. An obvious choice for local businesses, you can get as specific as a particular city. As you update any of your choices, the Estimated Reach box in the top-right automatically updates.

Next up is Demographics. Choose an age range and sex. As we’ll discuss later, you might want to create multiple ads to test different age/sex combinations.

The third option is Likes & Interests – which can be a gold mine if used correctly. You can target users by interests they have entered on Facebook. If you type in job titles, this box will allow you to target by job as well. If you can think of things that your customers might like, your ad will be much more effective, although this will limit the overall reach.

Connections on Facebook is helpful if you have busy Facebook Page. You can use it to increase your “Like” count, by targeting those who are not currently connected to your page, or increase engagement by targeting people who already are connected. Targeting friends of your connections can be an especially cheap way to add more “Likes.”

You’ll have to click a link for “Advanced Targeting Options” to see Advanced Demographics and Education & Work. These provide a wide range of targeting options, including birthdays, sexual preference, relationship status, education, language and workplace. For some companies, these are very useful – such as anyone in the wedding industry, who would want target users with a relationship status of Engaged.

Campaigns, Pricing, and Scheduling

The final step in getting your ad going is to set your bid and budget:

Facebook Ads Campaigns Pricing and SchedulingYou’ll need to create a new Campaign Name, and set a Daily Budget. You can Schedule the campaign to run forever, or set particular dates on which you want it to run (great if you have a special offer going).

Facebook will automatically set a Max Bid – to refine this, click on Set a Different Bid. You can use the default bid if this is just a small test, but if you’re going to be spending any significant money, be sure to keep reading through my pricing section.

Once you have the campaign setup, you’ll have to enter credit card information. Initially you’ll be prevented from spending a huge amount per day, but this will increase after Facebook receives a few payments (they automatically charge your card after a predefined amount of spend). Your ad won’t start running until it has been approved, which generally takes a few hours.

Pricing & Testing

If you’re going to be advertising substantially on Facebook, you need to understand how the pricing works.

CPC, CPM, CTR, ETC.

There are two ways you can be charged (your choice):

  • Pay for Clicks (CPC = cost per click) – You will pay for each click on your ad.
  • Pay for Impressions (CPM = cost per thousand views) – You will pay an amount per view of your ad, with pricing based on 1000 views.

If you simply want people to see your ad, then you can pay by CPM and rest easy. Most people, however, are looking for clicks on their ad. This throws another variable into the mix, your click through rate (CTR). Facebook does not really care what you pay per click, they are interested in how much you are paying per ad view.

To put it one way: CPC*CTR*1000 = CPM. If that doesn’t make sense, just know that the higher your click through rate (which Facebook will report to you), the less you’ll have to pay per click.

Getting Cheap Clicks

Once you have an ad running, you can go to your campaigns page and monitor its status (reporting is delayed, so don’t be in too much of a hurry). A key thing to look at is the CTR %. This will determine how much you have to pay per click. A good target is 0.1%, which will probably be a challenge starting out, although this depends on your product and how refined your targeting is.

There will also be a number for your Avg. CPM. For most US targeting options, you’ll need to keep this around .25+ to keep your ad running. You can increase the number by raising your CTR or increasing your bid.

Throughout all this, you will not be paying the full amount you bid during setup. Ad display is an auction, and Facebook will charge you a small amount more than the next highest bidder. Having said that, if you are not being charged your full bid, you can usually save money by lowering your maximum. Test how low you can go without losing volume.

A final note: if you have a great CTR, it might be worth testing payment on a CPM basis. This often ends up even cheaper, although there have been comments by Facebook that suggest this might not continue.

Testing

I said in the above paragraph that you can increase your Avg. CPM by increasing the CTR. There are two ways to increase your click through – either design better ads, or target more accurately. Both can be achieved through testing.

Lennar Minnesota Facebook Ad - SweepstakesIf you go from the campaigns page to your ad, there is a link under the ad preview to create a similar ad. If you click this, you’ll get the ad creation page filled with your existing options – with the ability to change the ad or targeting. Create something new and put it under the same campaign so that it will stay within your budget.

Ideally you should have several ad variations running at all times, and will want to also try changes to your targeting. Let them run for a while – and you’ll likely see one pull ahead. Remember to test different images, and consider other ideas such as a sweepstakes or a limited-time discount (example on the right).

Additional Details

  • To test not just click through, but also conversion (such as a lead form filled out) you can use Facebook’s conversion tracking or Google Analytics.
    • To use the built-conversion tracking, visit the tracking link on the left side of your campaigns page. You’ll have to add a bit of code to your website.
    • To track with Google Analytics, use the Google Analytics URL builder when creating your ad.
  • Four Firkins Liked Facebook AdA great feature of Facebook Ads is the small “Like” link at the bottom of the ad. See this ad on the right for a specialty beer store – its Facebook Page was liked by two of my friends (replaced by “Example”), which really makes the ad stand out. On another note – I like the text for this ad, but would bet they could have better success with a different picture. The beer is too small to really stand out (although it’s impossible to know if I’m right without giving it a test).

Conclusion

Facebook Ads are easy to get started with, and can be run on almost any budget. If you’re looking for some new marketing ideas, it’s something to try.

Have any questions? Or did I leave something out? Let me know in the comments.

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About Chris Piepho

Chris is the founder of Small Business Shift. You can learn more about him here. If you would like to work with Chris, please get in touch.

5 Responses to “Advertising On Facebook Ads”

  1. Patricia McGuinness March 11, 2011 at 10:07 pm #

    I’ve used facebook ads and found that it definitely increased my website traffic but not necessarily sure I saw an ROI. I’m sure it’s different for everyone.

    Patty
    Unlimited Resources for Limited Budgets

  2. Issac September 9, 2011 at 9:14 pm #

    Not clear on that part about how CPM will increase with increased CTR. If CTR increases and I am playing CPM, wouldn’t CPM decrease?

    • Chris Piepho September 9, 2011 at 10:48 pm #

      Thanks for the comment. If I’m looking at the same sentence you’re referring to, I’m talking about when you’re paying per click. Then a higher CTR will increase CPM, unless Facebook starts adjusting the cost-per-click down (which they won’t do when you’re near the threshold for your ad to display).

      If you’re paying by CPM, it doesn’t matter what the CTR does, the CPM stays the same (but your effective cost per click will go down).

  3. irafinancialplanning.com July 2, 2012 at 8:26 pm #

    Hey! I just would like to give a huge thumbs up for the great info you might have
    right here on this post. I will be coming again to your weblog for extra soon.

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  1. Small Business News: Social Media and the Entrepreneur - September 21, 2010

    [...] Facebook ads revisited. Facebook ads are the latest and greatest online small business advertising and marketing tool since…well, since Google Adsense. We’ve reported on them here at Small Business Trends before, of course, but this post from online marketig consultant Chris Piepho may give the most comprehensive overview of all. Small Business Shift [...]

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