The whole Facebook ads world can be very confusing.
Target this interest, don’t do this hack, make sure to exclude certain people.
Good lord, where to even begin.
Over the past two years, I’ve spent over $2,000,000 buying Facebook ads (see below) and when I worked there I helped build their ad system.
Needless to say I have some experience and can share exactly how to do profitable ad spending on Facebook.
|(Read all the way to the bottom to download the Checklist to Spend Your First $100 on Facebook)|
There are many advanced things that you can read about but I’m going to focus on the fundamentals. In a future post, I’ll share things like day-parting, ad-refreshing, front-loading budgeting and other buzzwords that you should be ignoring.
A few caveats about online advertising:
Be patient. It can take a day to 6 months to get your online advertising to be profitable.
Not every advertising channel will work for everyone. I’ve spent $100,000+ on Google advertising and only made back $25,000. If you do the math, that’s not good 🙂
When you do find a channel that’s profitable, spend as much as you can, while you can. When I was advertising on a newsletter I found I was spending $750 a week to sponsor and making $1,500 back within 2 weeks. That’s an awesome time to ROI. I didn’t sponsor more than twice a month since I didn’t want to annoy their readers. A friend yelled at me to do more. I moved to four times a month and the ROI stayed at the same rate. I realized there’s a lot of noise online so
it’s okay to advertise
Advertising decays. Over time you need to refresh your advertising if it’s working. At AppSumo we had a full-time person just refreshing our ads a few times a day. It’s a bit easier with news feed ads vs right-side ads.
Profit is all that matters. Ignore people who claim they get some really high Click-through-rate CTR (% of people that actually click their ad). If you are spending but not making money, stop.
Look for free marketing opportunities first. In How to make $1,000 a month business course I personally encourage people NOT to spend on ads until they’ve exhausted other marketing activities. It’s too easy to spend a lot on ads without great results.
Now here’s the step by step instructions on how to spend your first $100 on Facebook:
Step 1: Create your Facebook campaign.
Step 2: Choose Traffic. You can do website conversion but I’d wait on that. Remember we are keeping your first $100 as stupid simple as possible. My progression of spending was not $100,000 the first month, it was actually $400.
Step 3: Create your Ad.
a) You need a Facebook fan page to place ads in the newsfeed. Create one here, it’s free and takes a few minutes.
b) Generally I keep the images simple, ideally of yourself or something not boring.
Look at this boring advertisement, yawn! Such a neat idea for a product.
c) Try to create an ad that uses natural text versus something that seems like an advertisement.
Imagine what you naturally write/post on Facebook vs something that seems like a paid placement.
Here’s behind the scenes of setting it up:
1- Connect to a fan page
2- Choose destination
3- Headline: Give away something for free
4- Text: Social proof showing why the reader should care
5- Call to action: Choose “Learn More”
6- News Feed Link Description: Give call to action for them to get benefit
Here are a couple templates, feel free to copy:
Key notes on creating your newsfeed ad:
- Include a bit.ly link up top which will get you extra clicks
- Use the button “Learn More,” we found it converted better than the other ones and versus having nothing.
- Do not include a right side advertisement. Those are effective for retargeting but personally with the CTR so low it’s not worth it when you’re starting.
Step 4: When trying to figure out your first interest group to target I recommend a few options:
a) Take your top 10 best customers and search their email address / name on Facebook. Then go to their likes and create a spreadsheet of common interests. What you are doing here is finding things you can target for new customers. Look for the 1-2 similar likes across your top customers. That’s who you can target.
b) Go to a competitors fan page and look at the people who like it. Click on their profiles and do the same with option b. We did this with Macheist in the beginning of AppSumo.
c) For the experts out there, we will cover Custom Audience in a future post.
d) If those don’t work I love targeting a direct competitor. At AppSumo I started with Macheist.
Caveat: DO NOT let Facebook recommend broad interest categories. Facebook’s goal is your money. They want to show your ads to whomever is most likely to click. But it’s your job to ensure it’s targeting people that will work.
Step 5: Narrow Your Target Audience. When I first started advertising AppSumo and Monthly1k.com I try to target less than 10,000 audiences. The narrower your target group the more likely you are to have a higher CTR and ultimate conversion to email subscriber or buying customer. If your audience is broad, go more narrow geographically.
Anyone who brags about paying a low CPC (cost per click) is likely getting a horrible ROI (the profit from the amount of money you spent on the advertising). Spent $50, made $100 in profit, roi = 100/50 = 200%) is likely not showing the amount of profit they got from that campaign.
Step 6: Do not buy likes. I hate when people brag about how many likes their fan page has. Facebook controls that communication with your customer, you don’t. Would you like to only talk to your wife through another person. I can’t imagine you would.
When you do Facebook posts, etc, you have almost no say on how many people it will reach. It makes sense to create a free fan page and promote it but do not spend money towards it in the beginning.
Step 7: For the age and gender category, again look at the demographics of your top customers or the people you have email addresses for. The narrower the BETTER. For the Monthly1k course we targeted 25-40 year olds who are in the United States.
Step 8: For the other categories: Languages, Connections and more Categories. I personally encourage you not to touch these in the beginning. Yes, I know the dissenters out there will complain to optimize everything, but I am trying to streamline the process so you can start investing immediately.
Step 9: For countries: Try to pick one or even go deep within a specific city or state. Focus on ONE state / country to begin with. Remember, do less than 10,000 people total.
Step 10: Avoid showing your ads to mobile traffic. You can choose this from the Power Editor but I won’t get into that tool at this time. Most likely your page is not mobile designed and that traffic is less likely to purchase or sign up for an email address. After you get your campaign working that is something you can begin optimizing for mobile.
Step 11: Budget and pricing your Facebook ad
Start small. Set your daily budget at $3.33 (this’ll ensure you don’t spend more than $100 a month).
Aim for $.75 a click. (Don’t worry if that seems high; it’s only 4.4 clicks). The point is to get some clicks to your ad going and then you can lower the amount.
A few notes for you to benchmark your performance with:
- On most paying products we’ve advertised the conversion from click to paying customer is about .1-2%.
- Conversion rate to collecting an email should be around 20%.
Things I’ll cover in a future article: retargeting and conversion tracking.
Step 12: Now you’ve gotten started. Congrats… but the real thing is profit. So how do you track your ROI and make your money back?
To start, do stupid ghetto math. Here’s how I do it with advertising Okdork.com:
I spend around $3 / email per sign up.
On some emails I will proudly mention things I’m working on like our How to Start a $1,000 a month business course and our new product SumoMe (free tool for getting more emails / shares on your site).
Surprisingly that is one of the top ways we’ve sold the course this year. Each course makes us around $267 after refunds / dropouts / etc. So I do back of the envelope math as follows:
Course Profit = $267
Email Cost = $3
$267 / $3 = 89
So if 1 out of 89 people via new email signups buy the course then buying ads is profitable.
With AppSumo we’ve built our own internal system to calculate this but I’m showing you the fundamentals for a less complex business. In the next week, we are releasing a simple tracking tool for free via SumoMe, grab it now for free.
Good luck advertising 🙂 Leave a comment on OkDork and share your questions or experiences with Facebook ads.