Must-know for Entrepreneurs: How to Advertise on Facebook, Part 1

Our awesome summer intern Jasmine @_jgao attended @GA Facebook Workshop series.  She attentively took notes and later, back at the office, gave the rest of the JumpThru team a tutorial on how to use Facebook advertising.  It was so helpful that we’ve decided to share with our readers the wealth of knowledge she shared with us.  Enjoy! 

Advertising on Facebook: The Types of Ads and Basic Acronyms along with Their Significance
CPC vs CPM, high CTR = low CPC/CPM = high ROI and vice versa—-um English please?

Recently, I had the pleasure of attending a Facebook Workshop Series at General Assembly, an urban campus for entrepreneurs. This series was led by Jason Mitchell of Movement Strategy, a full-service Social Media and Interactive Design Studio, and explored various Facebook-related topics such as Advertising, Content Posting Strategy, Plugins, and the Social Graph.

I think most of us have heard of this statistic: around 80% of all brand purchasing is made by women. Clearly, we, women, have incredible purchasing power and therefore represent a huge opportunity for retailers and advertisers alike. And out of the myriad of websites on which one can reach out to the powerful female demographic, Facebook is definitely one of the best.  As of 2011, women make up 48.8% of all Facebook users,  and more specifically 58.4% of all users ages 45-54, and 60.2% of all users ages 54-65—-with these two age ranges being the fastest growing demographics on Facebook. In addition, with over 700 million registered users who put up massive amounts of personal information, Facebook is gold mine for data-mining and thus a premier advertising platform.

On Facebook, you have the option of creating either a Facebook-run advertisement that can cost upwards of $10,000, or a self-service advertisement (think of self-service copy & print at Kinko’s) with which prices range anywhere from a few cents to a few dollars per click. Regardless of your choice, make note that Facebook only runs display-type ads that are composed of a single image and some text; you won’t see a video or interactive banner game ad anywhere on the site.

According to Jason, it is with self-service ads that you can get the biggest bang for your buck. These ads are bought via an auction process where the amount you bid on an ad determines how much you’re willing to spend per click (CPC) or per thousand impressions (CPM).  When deciding whether to pay for clicks (CPC) or to pay for impressions (CPM) one should know that the CPM method offers cheaper clicks and faster testing to see if an ad is good or not (determined by the click-through rate, which is explained later) but requires a lot of monitoring since prices fluctuate more often. In contrast, CPC method requires less maintenance. Regardless of your bid range, if your ad is good and your click-through rate is high, your CPC will be low. Typically, the CPM method is only recommended if you are very sure that your ad will get a click-through rate of over 0.08% (significance of numbers also explained later).
Now there are three types of self-service ads one can run:

  • an ad to a Facebook page or event
  • an ad to an external website
  • a Facebook-sponsored story

The first two are pretty straight-forward and are aimed at getting traffic to a specific page, event, or website with the intention of increasing the amount of “Likes”, event attendees, or sales—-and sometimes even all three. A Facebook-sponsored story can be used to achieve the same ends but uses different means—-three actually:

  • a Page Like Story – when Kashton Akutcher likes your page “Women in Technology Rule”, his friends will see a story about it

  • a Page Post Story – when you post an update saying “All the wildly capable women who lead their own business put ya hands up!” on your page “Women-led Startups with Female Target Audiences Are Awesome”, your fans will see a story about it (Only recommended if you have tens of thousands of fans or more)

  • a Check-In Story
  • – when Wred Filson and his wife Woanne Jilson check into your business using Facebook places, their friends see a story about it

 

 

 

 

turns into 

 

These Facebook-sponsored stories are most effective for big brands that are really well known (think McDonalds and Lady GaGa).

Of all the different kinds of ads you can run, ads to Facebook pages are the most common for they offer the cheapest clicks and the best return on investment (ROI).  And when you think about it, it makes sense: people who are logging onto Facebook aren’t really looking to be redirected to another website.

 

So what determines a good ROI? The answer is the click-through rate (CTR), which is the percentage of clicks you get on your ad out of all the impressions (number of times your ad is displayed and seen) your ad made.  Really good ads have a CTR that is either at or above 0.1%(out of 1,000 impressions, your ad got 1 click). Now while that number seems to be quite low, it is actually much higher than the CTRs for most web banner ads.

An awesomely ambitious intern, Jasmine is an entrepreneur at heart and is always looking for new opportunities.  She has experience in a breadth of fields such as marketing, finance, public policy, and amateur gaming.

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