How to Make Money With Facebook Ads, Part 1

by 17 01/02/2012

You’ve seen them before…

…you may not know much about them, but they certainly seem to know a lot about you…

…so much so that that you’ve probably been creeped out by them at times.

No, I’m not talking about your spouse’s co-workers, I’m talking about Facebook ads.

The paid ads on Facebook are located in the “Sponsored” section on the right side of your screen in Facebook and look like this…

Facebook Ad Example

So how do these ads know so much about you?

Well, that gets to the heart of what makes Facebook ads such an intriguing marketing opportunity.

See, Facebook advertisers can target you by the information you put in your profile like gender, age, college, marital status, favorite books/movies/TV shows, pages you’ve Liked on Facebook, etc. (I’ve even seen tests recently where ads are targeted based on words you type in your Status Updates).

This is quite different from other online paid advertising programs such as Google AdWords.

With AdWords you target people by what they want and are actively looking for (based on the search queries they type into Google).

On Facebook you’re targeting them by who they are. And you’re doing this using arguably the most complete and accurate set of demographic information available to marketers.

One is not better than the other. They’re just different ways of reaching your target market. Which is better for your business depends largely on who your prospects are.

If you’re a DUI attorney, no one on Facebook is Liking pages that say “Hey, I like to drive drunk.” You’re better off targeting people typing “DUI attorney” on Google because they’re actively looking for you at the moment they have a serious problem you can help them with.

On the other hand, if your prospects are accountants, it may be very difficult to find keywords that only accountants are typing into AdWords. Targeting people by profession and/or college degree in Facebook is likely a much better way to reach your prospects.

Why Now?

Before we get into the nitty gritty of converting on Facebook, it’s important to understand what makes it such an intriguing opportunity right now. There are a few big market forces in motion that make it a great time to jump on board the Facebook paid advertising train.

  1. The Undisputed King of Social Media – Facebook has passed the 800 million user mark. Half of whom log in every day, visit an average of 5 pages and spend an average of 23 minutes on the site PER VISIT. Your prospects are on Facebook and they’re spending a lot of time there. No other site can match numbers like these.
  2. Facebook’s impending IPO – Facebook is expected to go public early next year. The thing with public companies is they have to make money (and a lot of it) to keep investors and analysts happy. Advertising is the major source of revenue for Facebook (as it is for Google) and they need to make their paid advertising program even more attractive to advertisers to boost their revenue and profitability.
  3. (Relatively) low click costs – They’re on the rise, but clicks can still be had on Facebook for well under $1 and even CPMs (cost per 1000 impressions) can be had for under $1 as well.

It Ain’t All Sunshine and Roses

While there are plenty of reasons to love Facebook paid advertising, there’s plenty of frustration waiting for you if you do.

If you give Facebook paid advertising a go, be prepared for frustrations including:

  • No conversion tracking (there was at one time, but they took it away) which makes it harder to measure success
  • Ad approval is inconsistent at best (I recently had a new ad rejected because of the image in the ad – never mind it was the exact same image I was using in a similar ad for the past 3 months. I resubmitted the ad, making absolutely no changes to it, and it was accepted the second time. This is not unusual.)
  • It’s hard to do true split tests of ads to determine which ads get the best results because of the way Facebook ad serving works
  • While reporting does provide some interesting data, the data is all over the place. Also, the data in Facebook Insights (which is FB’s internal Analytics program) is delayed by a few days which can make it hard to spot evolving trends you can take advantage of
  • Ads tend to get stale fairly quickly so you have to frequently create new ads or change your targeting

Facebook is still trying to figure out this whole paid advertising thing and, hopefully, may of these issues will be fixed sooner rather than later.

However, the frustrations caused by these issues, and others, also offer an opportunity. A lot of people give up because they think Facebook paid advertising doesn’t work. That gives those who stick with it a definite advantage over their more easily frustrated competitors.

What does it take to run a successful campaign on Facebook?

Step one is getting someone to click on your ads.

Unlike AdWords, where ad copy rules, when it comes to Facebook, the image you choose has the biggest impact on whether you get the click or not.

Remember: people aren’t on Facebook to look at ads. They’re on Facebook because they want to see what their “friends” are up to, to kill time, and/or to find, and connect with, interesting people/groups/etc.

So to get them to notice your ad, you need to have an attention grabbing image. Here are a few good examples:

This first ad uses a few great tricks to grab attention – using a cute, crying toddler, having text in the image of the ad and using a red border. Any one of those strategies is good, using them together is great.

Good Facebook Ad Example

I used this next image in an ad campaign targeting CPAs. It ran successfully for about 3-4 months (which is a long run for a Facebook ad). Using big, red letters that specifically called out my target audience and positioned them as a hero (which tied in to the messaging of the overall campaign) was very appealing to accountants.

High Converting Facebook Ad

This one is fairly obvious…using a smiling, attractive woman in an ad works just about anywhere (just be careful because Facebook says the image you use has to be related to your business, which doesn’t appear to be the case here).

Good Example of a Facebook Ad

Lastly, you can use the power of social proof in your ads by running ads targeted to Friends of people who Like your Facebook page. This ad shows me that some people I’m connected to on Facebook Like HubSpot and displays an image of one of them. This really plays into the social nature of Facebook and is a great way to get the click.

A Social Example of a Facebook Advertisement

Another key to a successful Facebook campaign is smartly targeting your prospects. As a marketer, Facebook’s 800 milliion users don’t mean much. So what numbers are important?

Well, according to Facebook…

  • There are 17,220 women on Facebook, age 21 and older, within 25 miles of Chicago who are engaged (I’m sure there are some wedding planners, florists, caterers, etc. in Chicagoland who care about that)
  • There are 156,800 people in the United States, 21 and older, who like the movie “The Inconvenient Truth” or the Sierra Club (Anyone out there sell green products?)
  • You can reach 19,480 men and women between the ages of 21 and 25 who are currently in college (Own the coolest new bar in Boston?)

And here’s the beauty of Facebook advertising. You can break things down even further. That bar owner in Boston can run ads mentioning specials for Harvard students just to those who attend Harvard or “BU Night” only to those who go to Boston University. They can even run ads targeting students from all the local schools who are Engineering majors.

In general, the more specific you are in your targeting, the more specifically your ads speak to target audience, the more likely you are to get the click.

But getting the click is just the first part of the equation. The second, and more important part, is how to turn those clicks into business.

And that’s exactly what you’ll learn how to do in next month’s post!  Make sure you don’t miss it by subscribing to The Daily Egg!

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About 

Adam Kreitman coaches business owners on how to make their websites more compelling to their prospects.. and to Google. He owns Words That Click, a firm specializing in Conversion Optimization and managing Google AdWords campaigns for small businesses.Follow him on Google+

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17 COMMENTS

Anne Holland

Adam – have you run any a/b tests on Facebook? I know it’s not easy, but would love to write about any you have run!

January 2, 2012 Reply

Adam Kreitman

Hi Anne-

I’ve tried my best! For the most part, however, Facebook basically shuts down the more poorly performing ads so quickly that it’s tricky to get any meaningful results.

Let me look back through some campaigns that I think I’d be able to share data from and see if there are some A/B test results that would be good candidates for you to use.

I’ll email you a follow up soon.

Thanks!
Adam

January 2, 2012 Reply

Niyi Sodipe

Great post! I started advertising on Facebook last month and learned the information you’ve given here. But my problem is converting clicks and Likes into actual sales.

“On Facebook you’re targeting them by who they are.” – I’m gonna use this in my sales pitch to clients :) I’ve been looking for a short and direct sentence to describe Facebook advertising and this is it.

January 4, 2012 Reply

Adam Kreitman

Hi Niyi-

Converting clicks and Likes into sales is the trick, isn’t it?! My post next month will be on that very topic.

Thanks!
Adam

January 4, 2012 Reply

Navigator Multimedia

Thanks for the informative article, Adam! I agree with commenter Niyi; you provide several direct and comprehensible explanations of the purpose of Facebook advertising.
Cheers,
Sarah Bauer
Navigator Multimedia

January 5, 2012 Reply

Rich Gordon

This is a great article. Looking forward to the next article on converting Clicks and Likes. i know a call to action and some kind of offer is supposed to be important, at least on a website or sales page, but what is the difference between those that really drive sales?

January 8, 2012 Reply

Oded

Pretty basic stuff for everyone who ever bothered reading about Facebook ads. I was expecting a bit more and not the same rehashed content that’s found on about 5000 other posts talking about Facebook ads.
Plus isn’t the title – How to convert?
You talked mostly about CTR(clicks) not about conversions really, no?
And yes, of course you can reply and say that with the targeting your chances of converting is higher, but… comon.
Verdict – disappointing.

January 13, 2012 Reply

    Russ Henneberry

    @Oded — Sorry to hear that. There is another installment to this post coming this month that will be taking the process through conversion on the landing page. Hopefully this post will get us back in your good graces.

    January 13, 2012 Reply

      Oded

      Cheers mate.
      Can’t wait for that! I adore CrazyEgg, expecting only the best from you :) the higher the expectations… :) lets hope next time you’ll blow my mind

      January 13, 2012 Reply

Dr Paul

Harsh, Oded. I’ve used FB ads for a while but still got good info here: text in picture, red border… I will be suing both of these in my next fb ad.

I think that info alone justifies the title of the article. What did you expect: The Rosetta Stone?

January 13, 2012 Reply

Oded

Sorry but I don’t mince my words.
“I think that info alone justifies the title of the article” the title of the article is about conversions, the content is about getting clicks or CTR. A red border or a woman’s image will get you more clicks but aren’t really relevant to your CVR (unless u count a conversion as a LIKE).
And the fact I was expecting some new info that’s not been blogged about 500 times before, does not mean I was expecting the Rosetta Stone.

If you find this article useful, I suggest you read Finch’s premium posts (http://finchsells.com/premium-posts/) your mind will explode. I love crazyegg, and that is why the standards I’m expecting from them are high. Should I lower my expectations?

January 13, 2012 Reply

Phil

Adam,
I own a startup daily deal website similar to groupon and living social. I did a test where I took 5 different possible images relevant to my company. I had each ad say “If you like Groupon you’ll love KnockHalfOff.com” or “If you like Living Social you’ll love KnockHalfOff.com” followed by a quick “facebook ad text box limit” pitch to get them to either click or like the ad to get a like on their page. Basically, I had 30 different ads running to geo-targeted customers within 25 miles of my city I was promoting, who already “like” groupon or livingsocial. I did a middle of the road ad cost of approx. .50-.75 depending on the recommendation by facebook, and I ran it as a CPM campaign to get people to repeatedly see the different ads over and over, as opposed to CPC which would end up costing me more.
my result? 9,000 images shown, 2 clicks, 1 like. FAIL. I suspended my campaign after 3 days. The avg CPM was .11, far from the .75 but i still spent $10 to get that 2 clicks and 1 like.

Any suggestions? Or Thoughts? Thanks!

January 18, 2012 Reply

Adam Kreitman

Hi Phil-

A few quick thoughts/suggestions:

I would test different messaging – you’re in a very crowded space and you may need a more compelling/unique message to stand out and get people to click on your ads.

You may also try different targeting options. I wonder if there’s some degree of burnout among people who already like Groupon or Living Social and other daily deal sites from getting inundated with coupons each day. Maybe trying targeting people who like sushi with ads offering discounts on sushi, people who like tanning with tanning discounts, etc.

If you offer some unique deals that other daily deal sites don’t, I’d first try focusing on those in your ads and targeting.

If CPM ended up costing you $5 per click, I’d test a CPC campaign. You should be able to get clicks for much less than $5 that way.

Hope this helps!
Adam

January 19, 2012 Reply

Joe

Which is the better test life cost for an ad – $10/$5?

April 30, 2012 Reply


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