Facebook advertising – an untapped opportunity

May 26, 2010 by Stephanie

Recent news suggests that Facebook is quickly becoming the largest publisher of online ads. Yet many companies have not shifted online ad budgets to Facebook; in fact, many are not even aware of the deep levels of demographic and keyword targeting available through Facebook.

There are currently two primary forms of Facebook advertising – homepage or block ads, which are sold on a CPM (cost-per-thousand) basis through Facebook reps only, and inside page advertising, available as CPC (cost-per-click) when you set up those campaigns through Facebook’s self-serve tool. While I do believe in the value of homepage advertising, Facebook’s minimum spend for those campaigns is higher than most small- to medium-sized companies would be able to spend on an ad campaign. I think the real opportunity for most businesses is in the CPC product.

I recently ran a CPC Facebook campaign for a client wishing to target a specific geographic locale. We were able to localize ad display within 25 miles of the city in question, though you can target as close as 10 miles or as far as 50 miles away. We then segmented for women only within a specific age range. Before committing to the ad Facebook will estimate the total number of people the ad could potentially reach – which is all of the people who meet those criteria in their database. (Although I didn’t for this campaign, I’ve also targeted based on interests, which are drawn from people’s profiles; they can include brand names, hobbies, movie/book titles and more.)

So let’s just say that the total number Facebook could target was 6,250. It’s amazing to me that Facebook has such specific information on each of its users that it can tell me that there are 6,250 people, living within 25 miles of my targeted city, who are women, in my specified age range. Wow. So now I can decide how much I’m willing to pay to reach those users; Facebook will give me a suggested bid range and I can adjust once I see how it’s performing.

For most of the campaigns I’ve run the bids have been in the $0.50-$2.00 range, per-click. That may seem expensive to those that are used to long-tail Google AdWords prices. But given the level of targeting – hey, I’m getting in front of the 6,250 people that are right in my local and demographic sweet spot – it’s really very cost-effective. For direct marketers who measure ROI numbers through clicks-to-conversions ratios, this kind of per-click advertising could work really well – though it’s up to you to make the sale once you’ve brought people to your site.

For those not working off of a hard conversions ratio, you’ve also got impressions. With this type of Facebook advertising you’re only paying when people click through to your ad. And because Facebook has so many fewer ads spots than Google, and they’re all accompanied by a small graphic, the likelihood that your ad was noticed by someone seems much higher than with Google or even banner advertising. While you may end up paying for, say, 2,000 clicks, you may get 10 million impressions or more. That 0.02% click-through-rate is pretty close to what I’ve seen across a number of campaigns – and though it seems low, it’s to your advantage, because you’re only paying for clicks. So if you’re advertising something that will benefit from impressions as well as clicks, it’s a huge bonus.

Are you using Facebook advertising to promote your brand, product or service? What’s been your experience with Facebook ads? Or do you want to get started? Leave your thoughts and comments below. And of course please contact me if I can be of assistance to you in setting up and managing Facebook ads.