What I learned from spending $150,000 on Facebook ads

What I learned from spending $150,000 on Facebook ads

Damien Bos: What I learned from spending $150,000 on Facebook ads

Why wouldn’t you use Facebook ads? According to The Economist, Facebook now controls 9% of all online advertising globally, touching over 1.4 billion users.

That’s a lot of eyeballs to advertise to. Combine that size with Facebook’s intimate knowledge of each of its users, and we get a digital siren song that most markets find impossible to resist.

It was for me. From 2013 to early 2015 I ran the online fashion retailer PrivateSales.hk and spent over HK$150,000 on Facebook ads. Being a small startup, I also spent a LOT of hours learning the system and trying to figure out how to get the best return for my scarce time and limited money.
I wrote this post to share my experiences on how to get the most out of your Facebook ad spend.


A Few Things to Clear Up First:

1. Facebook Ads are display advertising. According to comScore, an American Internet analytics company, the average Internet user is served over 1,700 banner ads per month. How many of these do you remember? Probably not too many.

Display ads on Social Media Marketing (SMM) fundamentally differ to text based Search Engine Marketing (SEM); display ads are not a solution to a query, but an interruption and diversion to the user’s initial task (I was watching cat videos in my Facebook feed, and now you’re trying to get me to purchase a luxury escape to the Maldives?). Keep this in mind.

2. Facebook does not allow click audits. Basically, you have to trust the numbers on Facebook’s Ads Manager and pay accordingly. Hopefully it’s obvious that marketers must use their own external checks and balances, with at least Google Analytics’ goal and conversion tracking in place for every campaign.
Fake accounts and money-wasting click farms aside, knowing your cost per conversion (Customer Acquisition Cost, email signup etc.) will help you determine the quality of your Facebook ad ROI, and thus the real value you receive from spending your money and effort on this platform.

3. You don’t control your Facebook fan base. It’s not about how many likes you have on Facebook, and you can’t organically communicate with most of your fans anyway. Most organic posts for PrivateSales.hk reached 5-10% of our fan base, and a 10% fan engagement level is considered as better-than-average by several of the social media experts I spoke with.
So spending just to develop a fan base on Facebook is a waste of money. We treated our Facebook page likes as bonuses to our real goals, which involved directing traffic from Facebook to our site to either 1.) Sign up to our newsletter, or 2.) Make a purchase. Don’t be fooled into paying real money to spin digital wheels on Facebook: the ROI just isn’t there.


What Did I Learn? The Following 7 Points:

1. Know What’s New and USE IT Before The Competition
Beat the market to new advertising techniques and opportunities by staying in touch with what Facebook is offering next. You’ll be rewarded with lower Cost Per Click (CPC) and decreased Customer Acquisition Costs (CAC). New updates for Facebook business advertisers are posted here: https://www.facebook.com/business/news.

2. Keep it Fresh
There’s no set-and-forget here. Customers get bored of seeing the same ads; displaying new images, text, and calls to action will help keep your Click Through Rate (CTR) and engagement levels high. Conduct your own A/B testing on your campaigns; some variations of ads will perform better, so identify them early, boost these winners and cut the losers.

3. Dedicate Daily Time
Success with Facebook Ads requires constant monitoring, testing, tweaking, and maintenance. You may even choose to log in throughout the day to pause and/or start new campaigns, based on the optimal advertising time-window of your target customers. To get the best results, this platform needs to be managed daily.

4. Use UTM Campaign Codes & Analytics Goal Conversions
There’s no point in flying blind when all of the tools to see and analyse your results are freely available. Get your GA or Universal Analytics goal tracking set up and use this Google URL builder to create custom track-able URLs for your campaigns: https://support.google.com/analytics/answer/1033867?hl=en. You’ll see exactly how much revenue each campaign is driving, and be able to adjust in real time accordingly.

5. Create Separate Campaigns for Each Goal and Ad Format
You may have some campaigns targeted at email sign-up goals, others focused on e-commerce conversion goals, as well as other targets specific to your objectives. Create separate ad campaigns for each of these.

Similarly, create separate ad campaigns for each ad format you create (News Feed/Right Column/Mobile/Audience Network); these ads will display differently, and the image and text you used for Desktop News Feed might not be optimal on Mobile or Right Column. Create separate campaigns and optimize your marketing results.

6. Get Creative With Your Audience Selection
Broad, generic categories will naturally attract the most attention from your less-creative marketing competition. Try to look for complementary demographics and unique ways to segment your target audience for fresh veins of new and untouched customers.

7. Keep Your Real Goals Front of Mind
It’s easy to get distracted by impressive sounding, yet ultimately profitless metrics. So your post reached 1,000,000 people in the last week? That’s great. How many of your goals did you achieve and at what conversion cost? For many smaller startups, the Customer Acquisition Costs (CAC) of app downloads, email signups, or a new customer purchase are the only stats that matter.

How you get to the CAC is often quite different in SMM (say, on Facebook) compared to traditional SEM (say, on Google or BingAds). Our experience on Google AdWords for example, showed a high CPC, but then also a high conversion rate, giving a reasonable overall CAC. On Facebook, our CPC was quite cheap (often 60-80% cheaper than CPC traffic from Google), but our conversion rate was also quite poor, bringing up the Facebook CAC to similar costs as acquiring them through Google.

At the end of the day, as long as you’re acquiring new customers at a reasonable cost, does it matter whether you found them through display-style advertising, or search-query solutions? As long as you have your real CAC goals front-of-mind, probably not. In fact, having a diversified mix of SEM and SMM is probably a great way to reach a broader audience and lower the risks of depending on a small number of sources for new customer acquisition.

That’s my thoughts so far, though it is an ever-evolving landscape out there in SMM. Please feel free to share your experiences and what’s working for you below in the comments!


Similar posts
  • Top 21 Email Marketing Terms & Definitions Have you ever felt out of your depth in a discussion about email marketing? You’re not the only one. These top 21 email marketing terms & definitions below will grow your knowledge and understanding about email marketing, and help you look and feel like an email pro. Read on! 1. Above The Fold This is the part of [...]
  • Crowdfund Your Debt Away! Today’s post comes courtesy of Coverrme (Crowdfunding 2.0) founder Rob van Haaren. Think Kickstarter and Indiegogo are the only crowdfunding platforms out there? Or that crowdfunding is only for tech companies and smart-watch startups? Think again! Over to Rob: Sometimes, life can throw you nasty curve balls: unexpected medical bills, sudden job loss, or creeping [...]
  • Why Your Business Needs a Virtual Assistant Procrastination can be hazardous to your business! (Why Your Business Needs a Virtual Assistant) Guest author Nadia Chiang Geary, founder of The Hong Kong Virtual Assistant, shares her insights on habits of successful entrepreneurs and why your business needs a virtual assistant.   Being an entrepreneur takes a lot of courage and motivation. While most [...]
  • The Cheapest Way to Acquire New Customers Online I’ve looked over a good number of business plans in the past few years, and I’d say this is the most under-prepared section in the average startup’s strategy documents: specifically how are we going to acquire customers, and how much is our Customer Acquisition Cost (CAC) really going to be? Inevitably, those people go on to ask the question, [...]
  • 12 Steps to Optimise ecommerce Conversion Rates Guest writer Nishant Kapoor, Founder of PetProject.hk, LifeProject.hk, and entirecommerce.co, shares his 12 Steps to Optimise ecommerce Conversion Rates:     We broadly define conversion as those people that buy something, or perform a pre-defined action on our website, as a percentage of the number of people who visit our website. Conversion is the holy [...]

No Comments Yet

Leave a Reply

Your email address will not be published. Required fields are marked *