Practical Ecommerce

The Basics of Advertising on Facebook

Facebook commerce has a long way to go before it’s on par with traditional ecommerce. But many ecommerce merchants report that Facebook Ads, a self-service, pay-per-click advertising platform similar to Google AdWords, generates positive returns. In this article, I am going to outline the details of running a Facebook advertising campaign and provide helpful tips to improve its effectiveness.

Facebook advertising helps merchants promote their businesses.

Facebook advertising helps merchants promote their businesses.

Facebook Advertising Basics

Facebook Ads come in two forms: Premium and Marketplace. Premium Ads are reserved for those companies that have lots of money to spend — at least $10,000 monthly.

For the rest of us, there are Marketplace Ads, which can cost as little as $1.00 per day. These appear in the right-hand column on pages throughout the site. (In order to alleviate “banner blindness,” Facebook has moved ads to the right-hand border on user profiles so they appear to be more a part of the profile itself.) Facebook Ads allow merchants to advertise either a destination within Facebook such as a Page, Event, Application or Group, or a separate website.

Facebook recently introduced a new type of ad unit called Sponsored Stories, which are ads that companies — only Premium advertisers, currently — can purchase that will show up to the right of a user’s news feed and let users know when their friends either (a) “Like” a company’s product, (b) check-in at a company’s location via Facebook Places, or (c) post a comment on a company’s Facebook page. This approach has sparked controversy with some, as a Facebook user’s Likes can appear in a news feed, whether the user approves or not.

Creating a Facebook Ad Campaign

There are three main steps to creating a Facebook Ad campaign:

  1. Identify your goals;
  2. Define who you want to reach with your ad;
  3. Create your ad and set your budget.

Identify Advertising Goals

Just like advertising on any other channel, running a campaign on Facebook requires that the merchant first know what goals he wishes to achieve. These may include goals such as: increasing Likes on the company’s Facebook page, increasing traffic to the ecommerce website, building brand awareness, selling products or generating leads.

The best way to use Facebook Marketplace Ads is to create one advertising campaign per stated goal. Here is an example of a smaller online retailer who had two goals in mind: (a) get more Likes to the company Fan page and (b) sell products. The retailer created separate campaigns to match each goal, each with its own series of ads.

Online retailer's Facebook Ads campaigns.

Online retailer’s Facebook Ads campaigns.

Target the Audience You Want to Reach

One of the benefits to using Facebook advertising is its ability to create highly targeted segments. Very often, the narrower the target the more effective the campaign becomes. In the past, I have created campaigns targeted to a little as a few hundred people.

Thanks to the amount of information supplied by Facebook users through their profiles, more demographic data is available to advertisers than in any other advertising channel, including Google AdWords.

One key to running a successful advertising program is to tailor different ads to reach individualized segments. Facebook offers targeting based on the following parameters:

  • Location. By city, state, province, or country.
  • Demographics. By age range, gender, language or marital status (you can even target users based on their birthdays).
  • Likes and interests. Unlike Google AdWords, which uses keywords people search for, Facebook offers targeting based on their Likes and interests. For example, I may indicate in my profile that I enjoy camping. If a company sells camping equipment, that would be a term the retailer would want to include.
  • Education and work. You can direct your campaign to students in a specific college or people with a particular level of education.
  • Connections on Facebook. Includes connections to Groups, Pages, Events or Facebook apps.

Depending on the goal of the campaign and assuming the merchant has a Facebook page, a couple of targeting options I often choose are: Facebook page Fans, and friends of Fans. (Facebook will not allow you to choose both categories in the same ad.)

Friends of Fans are one targeting option for ads.

Friends of Fans are one targeting option for ads.

Once targeting options have been selected, Facebook will list an approximate number of people the ad will reach. Keep in mind that only those included in that number will ever see the ad. In terms of minimizing wasteful spending, this is an attractive factor.

Create Your Ad and Set Your Budget

Facebook Ads is a self-contained, self-service, bid-based advertising system. If a merchant is used to running pay-per-click ads via Google AdWords or Yahoo! Search Marketing, this will feel somewhat familiar. My experience is that Facebook Ads is a much less complicated system than the other two, which I appreciate.

To create an ad, merchants need to:

  1. Design the ad;
  2. Determine the target audience;
  3. Select a name for the campaign;
  4. Set pricing;
  5. Submit the ad for review by Facebook.

Design the Ad

Facebook Ads look very similar to Google AdWords with a couple of exceptions: (a) there is room for more text in the body, and (b) the use of a thumbnail image is permitted. Facebook Ads consists of a title, body copy, a destination URL that is hyperlinked from the title, and the aforementioned image. (Facebook Ads allow the same amount of characters — 25 — for the title as Google, but permits up to 135 characters for the ad itself, versus the 70 characters allowed by Google.)

If a merchant is promoting the company Fan page, Facebook’s policy is to use the name of the page as the title. When choosing that option, be aware that the ad platform will not allow you to change the title. In terms of creating interest, I find this limiting, as most Facebook pages simply list the name of the company as the page title.

As an alternative, you can create the ad to direct users to a site other than the Fan page, then include the link to the page URL. That provides the ability to create a title that is more engaging and interesting. One drawback to doing this is that you lose the social actions aspect of ads — the Like button — that is included when ads that promote the Fan page are auto-generated by Facebook.

Examples of Facebook ads.

Examples of Facebook ads.

Name Your Campaign and Set Pricing

There are some terms with which you need to be familiar before creating an ad campaign.

  1. Campaign.A campaign is an ad or group of ads that share a daily budget and schedule. Campaigns can contain as many ads as you wish to create. I recommend creating at least five to ten ads (or more) each containing variations in title copy, body copy, calls to actions and images. Once an ad has been created, Facebook offers advertisers the ability to create a similar ad with just the click of a button.
    Facebook makes it easy to create new ads.

    Facebook makes it easy to create new ads.

    Monitor the campaign once it is activated to see which ads generate results in terms of impressions or clicks and which do not. You can alter the copy of the non-performing ads, or pause or delete them.

  2. Ad Pricing Types.Facebook offers advertisers the ability to set bids based on either Cost Per Click (CPC) or Cost Per Thousand Impressions (CPM). Using the former, payment is only required when someone clicks the ad. With the latter, payment is made each time the ad has been shown 1,000 times.

    I have found that, by bidding using the CPC, your ads are likely to get more clicks. That is because Facebook tends to position CPC ads in areas of the page that will generate more clicks. Because Facebook presumably generates a lot of its revenue from ads, this may appear self-serving. But, because it also generates more clicks for the merchant, it’s seems equitable, too.

    In his blog post, “Is Facebook Really Worth It?,” ecommerce merchant and Practical eCommerce contributor Dale Traxler makes this recommendation: “When you do decide to advertise on Facebook, here’s a tip, just ignore Facebook’s recommended PPC bids. They are ridiculously high compared to what you actually need to bid for good results. Also, use CPC bidding for your ads as you’ll likely get better results than CPM bidding.”

  3. Daily Budget.Facebook allows advertisers to set a daily, maximum budget. However, my experience is that you may not reach the budget limit every day.
  4. Lifetime Budget.Lifetime budget works at the campaign level and is very similar to daily budget, but instead of entering an amount to spend per day, you may enter an amount to spend over a campaign’s lifetime, over a specific period of time.
  5. Max Bid.Facebook will suggest a minimum and maximum range for your bid. Invariably, this will be higher for CPC and lower for CPM. You have the option of setting a different bid if you choose.

    Though your goal is to keep the bid rate as low as possible, you are bidding against other advertisers. Therefore, it pays to be competitive. I think the best way to ensure the lowest rate is to do the best job possible when selecting the target audience.

Submit Your Ad for Review

Once the ad has been created and you click the “Submit” button, it is reviewed by Facebook to confirm it meets the site’s Advertising Guidelines. Only on a few occasions have I had an ad be disapproved. Nevertheless, it is worthwhile to acquaint yourself with the guidelines.

Summary

The benefits to using Facebook advertising are three-fold:

  1. Targeting. Facebook offers greater targeting capabilities than any other online channel, including AdWords.
  2. Cost. At least for now, Facebook Ads can be bought for pennies on the dollar compared to other forms of PPC advertising.
  3. Word of mouth. Facebook Ads take advantage of the viral, word of mouth marketing capabilities inherent with the platform. Therefore, social sharing capabilities such as the Like button are included in Facebook Ads, too.
Paul Chaney

Paul Chaney

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  1. mollygriffin January 31, 2011 Reply

    Thanks for Sharing these as they are good resources for small businesses who are looking to improve their use of Facebook. I know here at Dydacomp, our clients often don’t necessarily have the time or resources to devote to a social media associate so this article will be a help to them!