Are Facebook Ads Worth The Investment?

Are Facebook Ads Worth The Investment?

Discover what Facebook Ads can do for your business. Step up your sales game and start driving traffic, right now.

The countdown to 2017 has begun, and with just hours left before we all get a fresh start I thought I would consolidate one of my favorite traffic driving strategies into a quick tutorial. This approach is near and dear to my heart because it’s quick, it’s cheap, and it works. Simple as that.

I’m going to show you exactly what you can expect out of a Facebook ad campaign. Ads like this can light your New Year traffic on fire. If you happen to be in the coaching business, the health or fitness scene, work with food, or finances…buckle up. This ride was designed for you.

The Adjusted Sales Funnel

One of the most exciting things about the start of every new year comes in the form of an adjusted sales funnel. During the greater part of the year most of our sales funnels look something like the following, with a fairly sizeably distance between awareness and conversion.

Standard Sales Funnel - Are Facebook Ads Worth The Investment?

Unlike the greater part of the year however, for many businesses, most potential customers will arrive at your store during January on a mission. To purchase something quickly, cheaply, and happily.

At this point of the year people want to start something new. They are prepared to make a commitment, and they are ready to pay for it.

PRO TIP: If you’ve got a subscription service to offer or an option to pay upfront for a 6 or 12 month period of your services, now is the time to promote that.

Because of this super goal oriented way of shopping, your sales funnel effectively shrinks for the duration of your New Year campaign. The awareness phase is your biggest hurdle. The education phase is scaled back to just the basic facts, and “capture and engage” get skipped, scaled back to almost nothing, or goes missing all together.

These changes get translated into a sales funnel that looks more like this…

Adjusted Sales Funnel - Are Facebook Ads Worth The Investment?

This adjustment means you will need to tweak your follow up activities and sales pitch strategy.

Although it might seem like a very academic thing to consider, the implications of a smart sales funnel strategy are very, very real.

During this high spending period people have a finite amount of money available to be spent. This number might be very tangible in the form of a budget, or arbitrary in the form of what each person feels they can afford to part with. Budgeted or not, the New Year spending also comes with an expiration date. The closer January 31st gets the harder it is to convince people to spend that money.

Simply put, if you don’t convert people quickly in January, someone else will.

Adjust your email follow up strategy to be a bit more aggressive, update your remarketing campaign to push more clearly towards a sale, and switch your content strategy on social media to “sales” mode.

It might feel like you’re breaking the cardinal rule of modern marketing by being so straight forward, but this time of year people just don’t require so much nurturing.

Use it to your advantage.

Read More: Learn more about optimizing your Sales Funnel here

The Top of the Funnel

Remember that bit I mentioned earlier about Facebook being one of the cheapest and easiest ways to get in front of an audience?

Facebook and Instagram, Twitter, LinkedIn, and Pinterest all offer great ad solutions for bloggers and small businesses looking to produce a successful campaign very quickly. With the level of targeting available on each platform and the totally affordable denominations (Facebook has a $5 option for boosted posts) it’s easy to see how these channels are great choices for small businesses.

Speaking from personal experience, I’ve seen Facebook specifically, offer some of the cheapest CPOs (Cost Per Order) of any advertising platform.

Average CPO by Channel - Are Facebook Ads Worth The Investment?

What Can I Expect From Facebook Ads?

When you invest in ads on social media (or sponsored Tweets, or boosted posts), you’re basically paying to have your message served to more people than you could get to organically. The only thing you can really expect from ads like this is reach.

Just because you put an ad out there does NOT guarantee it will grab anyone’s attention. That part is up to you and your ability to stand out.
I have, however, a few general formulas that will give you a pretty good idea of the results you can expect from a well executed campaign. Before we dive into those, you need to know a little more about the different types of ads available on the different networks.

The Demographics of Facebook

Facebook ads give you the option to run campaigns on several platforms. You can choose to include Facebook, Instagram, Facebook Messenger, Atlas, and Audience Network (5). Keep in mind though, that the people who are using Facebook, Instagram, and those other apps are probably not the exact same group of people. Each platform caters to a different type of person.

As of April 2015, Facebook was populated by about 72% adult users whereas adults on instagram make up just 28% of the social network (6). Basically, you’re way more likely to run into an adult on Facebook than you are on Instagram. This is an important distinction depending on what exactly you’re marketing. Is your ideal customer a woman in her 30s who has just started her own business? Facebook might be a better bet. You can control which networks your ad gets published to, which makes Facebook advertising really powerful.

Facebook also offers several different types of ads, each designed for a different goal. This conscious optimization of content helps you to reach your own goals much more effectively.

Post Types - Are Facebook Ads Worth The Investment?

Each of these ad options offers a slightly different set of options to configure. But the real question is…which one works the best?

Well, “best” is a relative term.

I’ve compiled all the data from all the campaigns I’ve run in the last year to find out which Facebook ads worked the best, what an average result from a campaign is, and what exactly your money buys. The data I’m using to draw these conclusions has been created over 75 campaigns conducted between November 2015 and October 2016, from accounts in the USA, Canada, Germany, Sweden, Finland, Norway, and Denmark.

It’s important to keep in mind that your industry, your targeting settings, your ad settings, text, and copy, and your offer all play a big part in changing the metrics you achieve. The data below is designed to give you an idea of what an “average” campaign that I’ve run looks like compared to the data collected by a few other sources.

How Much Reach Will I Get with Facebook Ads?

Generally speaking, your targeting settings and budget will influence the reach on your ads more than anything. Over the last year I’ve collected data on campaigns run with a $150 budget all the way up to a $50,000 budget. I’ve run campaigns through the Ads Manager, the Power Editor, and the Business Manager.

My favorite way to create and manage ads is by far the Ads Manager. I feel that it’s the most organized and consistent of the 3. It is also worth noting that the reach you are estimated to achieve actual varies based on which ad editor you’re using.

The table below demonstrates the average reported reach that my accounts have realized broken down by price point.

An investment of $150 led to an average reach of 25,000 people, but an investment of $5,000 usually put us around a reach of 1 million people. Facebook of course changes the amount of reach it provides for the price all the time. This data should serve to temper your expectations. Doubling your investment doesn’t always mean doubling your reach. Depending on your unique product it may be a better investment to run several ads simultaneously directed at different groups of people, rather than investing more with each ad. This way of thinking makes sense until about the $5000 mark, where your reach dramatically increases when upping the investment.

 

Invested

Reach

$150 25,000
$500 70,000
$1,000 100,000
$2,000 120,000
$5,000 1,000,000

 

Another way to look at this however, to simply evaluate the cost per impression (CPI) of each campaign. CPI is actually the cost per 1,000 impressions. My average CPI for the data I’ve collected was about $3,04 for a sponsored story. Salesforce cites the average CPI for this same type of ad as $3,64 (7).

How Many Clicks Can I Expect?

The clicks your ads get will vary wildly based on the messaging and design of your ads, your offer, the market you are serving them to, and the time of day your ad is up. For comparisons sake the table below demonstrates the average number of clicks I’ve seen during my campaigns, versus the estimated number of “clicks per day” that Facebook predicts while you’re setting up your ad. Both sets of data have been confined to just 1 day intervals.

The data in this table comes directly from the metrics calculated for actual advertising campaigns that I’ve run this year.

 

Collected Data

Facebook Predicted

Investment Clicks Investment Clicks
$150 562 $150 95-167
$500 2,755 $500 315-586
$1,000 6,697 $1,000 625-1,161
$2,000 10,150 $2,000 1,250-2,321
$5,000 54,107 $5,000 3,125-5,804

 

As you can see, the difference between actual and predicted is massive, and just goes to show you exactly how a well managed campaign, employing best practices and using a strong target market can make a tremendous difference on your budget.

If we calculate the click through rates on the data I’ve collected, my average CTR is about 3.75%, but the average CTR for all facebook ads (7) is 1.1%.

The reason?
Most users of Facebook ads fail to set up their campaigns properly, or fail to target their ads to a strong core audience.

What is a Good Click Through Rate?

In short, a 1-2% click through rate will serve you well. This level of CTR is totally achievable for small businesses by using simple common sense and a basic understanding of how to use the tools Facebook provides.

Go Launch A Facebook Ads Campaign!

The best way to determine if a channel works for you and your business is to try it. Start by setting a modest budget and put in the effort to set up your ads, optimize your strategy, and evaluate the results over a few weeks.

“Test and learn” is foundation of all good business strategy.

Be smart about your ads. Set your goals before you spend a cent. And don’t be afraid to experiment.

Happy New Year!

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References
(5) https://www.facebook.com/business/products/ads/how-ads-show
(6) http://www.pewinternet.org/2015/08/19/the-demographics-of-social-media-users/
(7) http://www.salesforcemarketingcloud.com/wp-content/uploads/2013/06/The-Facebook-Ads-Benchmark-Report.pdf