Relevancy + Targeted Demographic = Lower cost per click

While we all love Google AdWords (and Yahoo! and Bing, of course), fundamentally it’s difficult to know very much about the demographic viewing the ad. You can fine tune with geo-targeting, day-parting, and niche keyword phrasing, but there’s no clue if an ad is being seen by a 55-year old man on his home computer or his 10-year old daughter. What Facebook brings to the table, apart from over 400 million active users, is the profile demographic before your ad is shown. We’ve consistently seen the same effects as ads are fine-tuned based upon demographics, and the results are good news for marketers – well written ads that are targeted appropriately absolutely lower the cost per click:

• You have a choice of paying by click (CPC) or per 1,000 impressions (CPM). Start with broad ads on CPM and then create more targeted ads using CPC for the best impact. In other words, target a campaign to everyone broadly, and after 100,000 impressions use the insights to see who clicked the ad. If the results showed 25-30 year-old married females represented most clicks, rewrite the ad with that demographic in mind, and reset as a CPC campaign.
• Demographics enable fine segmentation of your ads. Why push one Valentine’s Day ad to everyone, when you could create dozens appealing to different age groups, genders, and relationship statuses? The more finely segmented the ad, the better the click-through rate (CTR). And the better the CTR, the more you should use the CPM payment model than CPC.
• Fanpages are not the only target: ads can link to external landing pages too. Generally speaking, we’ve found fan pages to be highly successful for B2C business – especially those such as hotels, restaurants, bars and retail – and landing pages better suited to B2B products, but it’s still working experimenting for your particular market.
• Birthdays are a special option in Facebook ads, enabling users to only see an ad on their birthday. Generally these ads have a high CPC yet lower CPM, and a low click rate. But when click occur, these are highly targeted and can be easily to convert.

Use the ‘Always Be Testing’ mantra to fine-tune your ad copy and demographics – the results can be substantially lower cost-per-clicks compared with Google.

Targeting factors

Targeting by demographic is almost an SEM dream come true, but it also takes some fine-tuning. There is a natural skew in the Facebook userbase that’s younger than the national average, with females being more active than males. Also, this isn’t a US Census so some degree of ‘misstating the facts’ occurs, including misrepresents age, college education, relationship status and ‘interested in’. As you modify these factors, Facebook provides an estimate of the number of people who might see the ad.

• Start small: I often get best results when initially targeting an ad to an audience of 10,000 people – especially when considering 50% of users log into Facebook on any given day. This provides excellent metrics that help keep the campaign cost under control when the ads are scaled to larger numbers of viewers.
• Use the network: click-through rates are substantially higher when you target friends of connections. Friends trust fan pages and products that other friends are connected with.
• Exercise those keywords: since Facebook updates the estimate as keywords are added, it’s very easy to see how many people have expressed an interest directly in a given topic.
• Don’t forget different languages: profile indicated a user’s first language – it’s inexpensive to get ads translated to languages other than English, but frequently the CTR is much higher, simply because so many advertisers neglect customers whose first language isn’t English.

Don’t forget to check the profile of people who have clicked your ad. If you’re attracting the wrong customer base (eg. fans from New York for a zoo in Seattle), use the information to redefine. While clicks and fans are great, the ultimate target is to generate conversions.

Facebook provides more best practices for advertising – great advice for first time advertisers on their platform.