Facebook Advertising. The Complete Guide.
In this post, I share with you a complete Facebook Advertising Guide that will change your Facebook Advertising performance & ROI forever and help you utilise Facebook Ads to significantly grow your business.
Note: This guide is constantly being upgraded as Facebook Advertising is constantly changing with new features and deprecated features.
Here is what we will cover.
- Is your audience on Facebook?
- What is Facebook Advertising all about
- What ROI can you expect from Facebook Ads
- What industries and sectors Facebook Ads work for
- The anatomy of a Facebook Ad
- The structure of a Facebook Marketing Campaign
- How to decide and allocate your Facebook Ads Campaign Budget
- What Ad Bidding is all about and how to optimise it
- Facebook Ads Audience Targeting
- Facebook Marketing Analytics
- Facebook Advertising A/B Testing
- Best Practices
- Case Studies
Facebook is not a ‘sexy’ platform like Instagram and TikTok. And you hear many people saying things like ‘Facebook was over when all parents gone onto it’. Well, parents are also jumping on Instagram and TikTok.
There’s no such thing as ‘Facebook is dead’. It’s a live and well. In fact, it still remains the biggest social media platform as we speak with over 2.2 billion active users. And will likely continue to dominate in the next 10 years. What you need to understand is that Facebook was once a platform. Today, Facebook is an ecosystem of social media and communication platforms especially with the latest addition of WhatsApp.
But that’s from a size perspective. Let’s talk about the dynamics and nature of the platform. Facebook is the only platform that’s truly a ‘social platform’ in my opinion – meaning that the range of features you can do on it from tagging friends to sharing news, personal timeline, etc. makes it an all-in-one social platform. All the other sexy platforms have very few features compared to Facebook. What that means is that Facebook is going nowhere but upwards. However, like any other platform, to make the best out of it when it comes to advertising, you need to understand how to utilise it in the right way and how to properly communicate to your target audience through it.
Is your audience on Facebook?
Before I dive into the details & tactics of Facebook Advertising and how to maximise your returns from Facebook Ads, let’s address first the question of “is your audience even on Facebook?”.
The answer is, probably yes.
Recent data by Pew Research Center demonstrates that most age groups use at least one social network platform and younger demographics users have higher percentages. The number of social media users continue to grow year over year with 2020 growth vs. 2019 remains strong at 9.2%.
Here is the most important piece. Facebook still dominates the social media world with 2.5 billion active users and the Facebook ecosystem (Facebook, Instagram, WhatsApp) are capturing the overwhelming majority of the social media population.
YouTube comes right after Facebook and is certainly a powerhouse when it comes to marketing but we’ll cover that in a separate post.
The takeaway is that Facebook has you covered. So, effective marketing on Facebook comes down to how you advertise and market on the platform more than anything else.
What is Facebook Advertising all about?
Facebook Advertising in my opinion is a crucial part of any customer acquisition framework.
To understand Facebook Advertising, you need to get a grasp of an old but important marketing concept and that is Permission vs. Interruption marketing.
Permission marketing is when you serve your audience ads as they are actively looking or searching for your product or service. Interruption marketing, however, is when you serve people with an Ad whilst they are doing something else.
A prime example of permission marketing is Google Ads. You show them an Ad when they search for something related to your product. Likewise, a great example of interruption marketing is YouTube Ads. You get forced to watch an Ad or at least part of it, whilst you are watching something else.
So, where does Facebook Advertising fall into that equation? In my opinion, Facebook Ads are somewhere in the middle of that spectrum. And that’s one of the reasons it makes it more successful as a platform than others and a very effective customer acquisition channel.
Facebook integrates most of their into a natural seamless user experience flow. If you think about your experience on Facebook (Desktop or Mobile), as you navigate through your newsfeed or watch, you get served ads without really realising they are ads. And that’s because they really nailed the aesthetics of Ads making them look as close as possible to a normal feed post or video.
So, what happens when you see an Ad? Either you stop scrolling and engage with it or you keep scrolling. You have essentially been interrupted, very very momentarily. So, going back to the Permission vs. Interruption marketing concept, you can make a case that whilst it’s not really permission-based, the interruption component is negligible.
Here is a Facebook Ad.
Notice how seamless it looks. For a trained eye, you can tell it’s an ad but for most other users, it doesn’t really look any different than the rest of the feed.
The takeaway from this is that Facebook Ads is all about a seamless user experience and that a big part of your job as an advertiser, is to serve your audience with Ads that are engaging enough to make them want to stop the scroll and check it out.
What ROI can you expect from Facebook Ads?
Facebook Advertising has in my opinion one of the best marketing ROI out there. Like I said earlier, it all depends on how effective your Ads are. Here is the downside. It’s getting more and more complex as the Ads platform features continue to grow with a fast-paced introduction and deprecation of features. Hence, hiring one of the best digital marketing agencies to manage your Facebook Ads and Advertising, in general, is probably a great investment.
So, what are ROI can you expect?
To determine your ROI, you need to have an idea of what the CPA (Cost per Action) is going to be. Here is a summary of Facebook Ads CPA by industry put together by WordStream.
You’ll see that the average CPA is around the $19 mark but that varies dramatically by industry. For example, the CPA in education is $7.85 vs. a whopping $55.21 for the technology industry. In my experience, they all stack up well when you compare CPA to your customer life-time value i.e. how much a customer is worth to your business. For example, for apparel, the average CPA is $10.98 and so if you sell a suit for $200, your ROAS is 1821% and that’s only on the first purchase. If this customer liked your product and brand, they will more likely become repeat buyers.
So, what ROI can you expect, very high – potentially. And it all depends on what you and your digital marketing agency can achieve.
What industries and sectors Facebook Advertising works for?
As you saw in the above Cost per Action illustration, Facebook Ads work for almost every industry out there. What you need to do is work out who your target audience specifically is and how you can ‘interrupt’ them and serve them with ads they want to see and engage with and how those ads turn strangers into customers through your digital marketing funnel.
The anatomy of a Facebook Ad
Getting the most out of your Facebook Advertising has some prerequisites and one of them is understanding the different ad types Facebook offers and their corresponding creative elements.
Let me start first with the creative components since they are all (for the most part) common across the different ad types.
Image (or Video)
From a space perspective, this is the biggest and most crucial part of your Facebook ad. This is your primary element to use to catch the attention of your target audience. As mentioned earlier, you need to get people to stop scrolling. An interesting or shocking visual is a great way to achieve that. Your image or video needs to draw people in and of course, be somewhat relatable and related to your business, product or service.
Ad Text
Your ad post text is super critical to get right. As we speak, the character limit for the post text is 125 characters. This text is typically above your image/video and it’s the first copy your target audience will see.
How long should it be? I’ve seen a lot of high performing ads with relatively short post text and I’ve seen also many high performing ads with the ultra-long post text. The best advice I can give you is
- A/B test to determine what works best
- Focus on the quality of the copy rather than the quantity.
Headline
Facebook allows 25 characters for the headline. The headline by default stand out a bit more as it has a bigger font size.
Headlines can make it or break it. You certainly want to have a strong, powerful headline and you want to A/B test it. There are a lot of ways and techniques to write compelling headlines that can create a sense of urgency to click on the ad. I’ll be covering this in a separate post.
If your post text and image/video didn’t do the job, the headline is probably your last chance to grab attention and get the click-through.
Description
This 200-character component of your Facebook Ads only shows in a couple of Ad types. It normally shows under the headline some from a structural standpoint, you want it to build on what the headline is saying. Your description can allow you to go into more depth.
Call-to-Action Button
Your call-to-action button normally appears on the bottom right of your ad. You can just write whatever you wish. Instead, Facebook has a big list of CTAs to choose from including “Learn More,” “Shop Now,” “Sign Up,” etc.
Your CTA button takes your target audience to your landing page or native Facebook form or their Facebook messenger to chat/engage with your business. This is where you get to build your top-of-the-funnel and turns clicks to leads and buyers.
Note: In the coming days, I’ll be covering the following.
The structure of a Facebook Marketing Campaign
A Facebook Ad Campaign is the very first building block of your ads. It’s one of the primary things you have to set up. When creating a campaign, you’ll have to decide on a few high-level items such as the OBJECTIVE of the campaign. It’s important to choose the right objective as that will determine the direction of the campaign as well as what Facebook Ad features you can unlock.
As we speak, there are 3 Campaign Object Categories; Awareness, Consideration and Conversion. These categories mimic the natural progression of buyers journey before they make a purchase. If you’ve read our digital marketing funnel guide, these categories will resonate and make a lot of sense. The folks at Facebook are masters at marketing and they know how to leverage their platform to allow brands to maximise their returns.
A. Awareness Campaigns
Awareness campaigns sit at the highest level of your marketing funnel. And for many businesses starting their Facebook advertising, an Awareness campaign might not be the right place to start especially if you have small budgets. However, there is certainly use and value in awareness campaigns. For example, if you are a fashion brand or an FMCG business that heavily relies on your brand awareness as part of your growth marketing strategy and let’s say you want to break into a new demographic (age group, country, etc.), an awareness campaign is the right choice.
Brand Awareness
An awareness campaign is about showing your Ads to people who are likely to recall your brand and measuring how many people recall your brand/ad after two days of seeing the ad.
Reach
A reach campaign is focused on maximising
- How many people see your ad
- How many times they see your ad
Every time someone sees your ad, that’s an ‘impression’. A reach campaign goal is to maximise your impressions and minimise your CPM.
B. Consideration
A consideration campaign is where things get interesting. Here you are engaging with your target audience that you know is somewhat interested in your product or service. You have an idea who your buyer’s personas are. And you understand how to communicate to them, what their needs are, etc. Your consideration campaign basically aims to engage with these people and if you get conversions or purchases, great. However, this is the step where you are creating a real interaction between you and them and paving the way for purchase later on.
Traffic
A traffic campaign allows you to direct people to your site or start conversations with them through Facebook Messenger or even WhatsApp. A lot of people use traffic campaigns to direct people to their site or landing page to make the pitch and either get
- Enquiry
- Purchase
In both cases, you need to make sure your landing page is highly optimised for conversions.
Engagement
Engagement campaigns are focused on getting you more page likes, event responses or offer claims. These types of engagements can certainly increase your traffic, exposure, and lead generation potential down the track.
App installs
This one is pretty straight forward. You have a mobile app and want to increase your app download and installation, this campaign is where you do that.
Video views
Video marketing is a powerful tool to increase brand engagement and lead generation. Your videos could be anything from Product Ad videos, explainer videos, testimonials, etc.
Lead generation
Lead generation campaigns are one of my favourite campaign types simply because this is where you get serious with generating sales and growing your business. A major reason I like this campaign type is because it doesn’t require users to leave their Facebook app. They see an ad, click on it, fill out a form and then wait to hear from you. This can all be done in a very short period of time which minimise the interruption and allows you as a business to extract the info you need to convert them later on.
Messages
This campaign type is about engaging people through Facebook Messenger, WhatsApp or Instagram Direct. Showing them an Ad while they are browsing through their conversations to get them to directly talk to you can be very effective.
C. Conversion
The bottom of the funnel is all about getting sales and conversions, right? Here are the three conversion campaign types.
Conversions
This is quite similar to the Traffic campaign type in the sense that you drive traffic to your site, app, messenger, etc. What’s different is the audience you are targeting, the ‘results’ you are aiming for and measuring.
Catalog Sales
This campaign type is designed for e-commerce businesses. It saves you time by syncing with your website, the products you are offering. The sync checks for things like product image, title, price, availability, etc. If you have a large e-commerce site, this campaign type can save you time and help you automate a big part of your ads setup.
Store Traffic
Do you have a physical store? If you do, this campaign objective is for you. It helps you get more foot in the door.
How to decide and allocate your Facebook Ads Campaign Budget
Budget allocation is one of the most important parts of your Facebook campaign and online marketing in general. Sadly, not many people get it right. So, here is how I think you should go about it.
- The first step is you want to start with your campaign objectives and outcomes. Most of the time these outcomes will be tangible business outcomes. For example, if you want to generate $100,000 worth of sales from your online store or through your B2C channel, that’s your starting line. So, I’d certainly start with the highest level possible and break it down from there.
- Next, you want to look at some industry benchmarks and figures to get a rough idea on some important Facebook metrics. If you already run Facebook campaigns and have these metrics, great.
- You need to find estimates to the following metrics and important to note that these vary by sector. A good place to get an idea is on WordStream.
- CPC (Cost per Click)
- CPL (Cost per Lead)
- CPA (Cost per Acquisition)
- Conversion Rate %
- Average Sale Value (Ticket Size)
- Once you got these metrics figured out, start with breaking your Sales target to how many customers / purchases you need. For example, if your average sale value is $200, then you need a thousand customers / purchases.
- Now that you now how many purchases you need (500), you need to know how many interactions, site visits, leads, etc. that you need. You do that by dividing the number of sales needed by your Conversion Rate %. Let’s say your industry average conversion rate is 2.5%. In this example, 500 purchases divided by 0.025 which gives you 20,000 clicks/interactions.
- Are you still with me? At this point, you need to multiply your required number of clicks by the cost per click. Let’s assume that the average CPC is $1.2. Your budget would be 20,000 X $1.2 = $24,000.
To recap, here is your formula.
Ad Budget = ((Total Sales / Average Sale Value) / Conversion Rate) x CPC
What Ad Bidding is all about and how to optimise it
If your advertising campaigns are profitable, your business will grow. That’s trivial. But the more profitable your ad campaign is, the fast you can scale and re-inject money into more ads. For starters, you need to assess what an ‘action’ or a ‘result’ is worth to you by looking at marketing metrics like cost per lead and cost of acquisition. From there, you can assess what an ‘action’ is worth to you as part of the entire process. If your for example you cost per lead is $50 and you know that on average, email subscriptions convert to leads on 20% basis, an email subscription is worth $10 to you ($50 x 0.2).
Like any other ad channel, one of your main goals is to utilise the best bidding strategy that can maximise reach, clicks and conversions at the best cost possible. Bidding is different on every ad platform.
The Facebook Ad platform has a few ways you can bid to suit your campaign strategy. The high-level idea to understand first is Cost vs. Control.
Firstly, you need to decide whether you want to cost control or not. Most people prefer to cost control especially when they are starting and are unsure how things will play out.
Lowest Cost
This is the default option where the Ad platform will aim to get you the most result within your budget. Here, Facebook will manage bidding for you.
Cost Cap
This strategy will focus on getting you the most volume within a set cost per result that you set. However, that cost is going to change (increase) at some point as you start to saturate your audience. This is where new ads, A/B testing and new audiences can come in to allow you to keep that cost at a minimum as much as possible.
Bid Cap
This bidding strategy is about maximising the volume you get at a specified max. bid. It gives you a relatively higher degree of control on how much you spend to reach your audience. If your bid is less than your competitors, you might not spend all your budget. The downside to a bid cap strategy is that you’ll need to spend more time managing bids to control cost.
Target Cost
In many cases, the target cost strategy can be a very good start. It allows you to maintain a consistent cost for your results. The downside is that if Facebook has cheaper ways to get you the results, you miss out on that.
Facebook Ads Audience Targeting
Audience targeting is another important part of your Facebook Ad strategy. However, in my opinion, it is not as important as other areas like the Ad Creative, Ad Copy, and A/B testing – especially because Facebook’s machine learning algorithms have done a good job in recent years in serving your ads to the right people. So, your marginal ROI on spending a lot of time on Audience targeting is not that high compared to other optimisation areas. In saying that, it pays dividends to have a clear and laser-sharp audience targeting in general and certainly on Facebook.
To get it right, the first step is to understand your audience. One of the best places to start this is by doing a customer persona exercise to really understand who your buyer personas are, what they like, how they talk, how they spend their time, their demographics, etc. Hubspot has a nice tool to help you build a customer persona.
Once you understand who your audience is, you can start building Audiences on Facebook. There are various ways you can build audiences.
Saved Audience
A Saved audience allows you to choose characteristics about buyer persona that Facebook knows and understands about its users. For example, you can filter people by where they live, their age, the language they speak, interests, jobs and a lot more. This is the first step to building traction on Facebook. A Saved Audience is particularly effective for Top-Of-The-Funnel marketing because of the nature of wide and general they can be. But that’s not to say they can’t be effective for sales and conversions campaigns too.
In the detailed targeting section, you can start entering the interests, demographics and behaviours you know about your target audience. Once, you start adding a few, the tool will start to add other suggestions related to what you just added.
Similarly, you can add exclusions to ensure you filter out specific type of people that you think will not be interested in your product or service.
Finally, you can add another filter layer by specifying if you want this audience to be related or unrelated to your Facebook page or App. You can do that in the ‘Connections’ section at the bottom.
Make sure you keep an eye on the size of the audience as you are building a saved audience to make sure it is big enough but not too big to be defocused. You need a fine balance. That fine balance will depend on your business and what you are selling. You will see a message next to the audience size if the tool thinks that the audience is too small.
Lookalike Audience
A lookalike audience is basically a way Facebook can generate new audiences for you based on audiences that you already have like existing customer list or even Custom Audiences.
Lookalike audiences are my least favourite type of building an audience but it can help a lot. I just simply think the algorithms are not effective enough at building similar audiences and we don’t have much visibility on how they work.
To build a lookalike audience, you will need to either upload a CSV sheet or select one of your custom audiences and then select the % of how similar (and how wide) the audience should be. The lower the % you choose, the smaller the audience will be but the more similar they are to your target audience and vice versa.
Custom Audience
This is the holy grail of Facebook Audiences. This is where you get the most juice and really make a dent in Facebook Ad campaigns. This is what truly separates Facebook Advertising from other Advertising platforms.
Most of your conversions, middle of the funnel, bottom of the funnel, will likely come from your custom audiences.
