The Facebook PPC Opportunity

by Alan Mitchell October 3rd, 2011 

all-cash

Facebooks share of online advertising revenue has grown considerably over the last 3 years, largely due to some significant and innovative improvements to their advertising functionality. PPC advertisers can now target users on Facebook with incredible detail, allowing for highly-relevant campaigns reaching thousands of potential niches.

Facebook Is Not Google

But while Facebook advertising presents an excellent opportunity for PPC advertisers, all too often Facebook is unfairly compared to Google AdWords. Many PPC advertisers take their Google AdWords campaigns, apply them to Facebook, and compare them like for like, writing off Facebook for its high CPCs and low return on investment. This should not be the case. While both platforms are essentially pay per click in their simplest sense, they are fundamentally very different:

Google PPC targets people based on what they are searching for; Facebook PPC targets people based on who they are.

Google PPC targets people who are looking for your products and services at that moment in time; Facebook PPC reaches people who may be interested in your products and services, but need distracting from browsing photos or updating their status

Facebook is more CTR orientated than Google. Even though you can bid a CPC price with Facebook, it is always scaled up to an eCPM metric (effective cost per thousands impressions), to determine how often your ads are shown

This has some important implications:

Click through rate is crucial for Facebook PPC advertising. A typical CTR on Facebook is approximately 0.04%, so anything above 0.04% would likely result in lower CPCs. If your ads can achieve a CTR of 0.5% or 1.0%, you can benefit from CPCs as low as $0.06 or $0.04. Even with a Google CTR of 25% or higher on the most long-tail of keywords, it can be impossible to achieve such low CPCs on Google.

Return on investment with Facebook PPC advertising can be fantastic. While conversion rates may be considerably lower on Facebook than on Google (largely due to Facebook visitors generally not having as strong a buying mindset as Google visitors in that moment in time), if considerably lower CPCs can be achieved, even a tiny conversion rate of 0.2% with Facebook PPC advertising can be incredibly profitable.

Facebook has volume. Huge volume. With a highly-targeted Facebook campaign, it is possible to deliver a huge amount of visitors to your website. Facebook PPC advertising is not like Yahoo! or Bing campaigns, which PPC advertisers often look to set up to deliver an extra 20% of visitors in addition to Google AdWords. A well-executed Facebook PPC advertising campaign can deliver considerably more visitors than Google.

A Different Strategy For Facebook

So while Facebook is also a pay per click medium, these fundamental differences to Google AdWords calls for a different approach and strategy. Since people are not searching for your products and services on Facebook, you need to be more creative with your ad messages, to distract them from their Facebook browsing, and engage them with your product and service offering. Testing and optimization also become all the more important to achieve a high CTR and conversion rate on Facebook.

1. Be Creative With Your Targeting

You can target Facebook users based on age, gender, location, interests, likes, education, workplace, proximity to a birthday, and more. Each combination of segments can become a potentially profitable niche. If you are selling fitness equipment, females aged 20-24 who live in New Zealand and like Health & Beauty are a different target segment to Males aged 25-29 who live in California and like going to the gym. Both segments can be profitable; they just need to be targeted differently.

2. Be Targeted With Your Ads

Providing one generic ad to thousands of different searches on Google never works. The best Google AdWords campaigns have thousands of different ad messages, all tailored to the specific needs and requirements of thousands of searchers. The same methodology is true with Facebook. Your Facebook ads need to be relevant and engaging to the specific niche you have targeted.

For example, if you are an Australian travel agent looking to promote holidays to Whistler, Canada, you could target students in Australia aged 20-30 who like snowboarding are a fan of Whistler Blackcomb (ski resort in Whistler, Canada). Your ads could include messages such as Snowboarding Deals to Whistler! " Great Student Rates!, and have a picture of a snowboarder. You could also target people who like skiing; perhaps instead including an image of a skier in your ad.

Similarly, you could target married couples aged 40-50, who live in Melbourne, Australia, and like eating out or luxury dining. Your ad could have a message such as Experience Whistlers World Class Restaurants " Great Package Rates from Melbourne, and include a picture of a gourmet meal. Even better if you could show your ads around 5pm when people are starting to get hungry

3. Be Detailed With Your Testing

So many possible segments; so many possible niches. You need to get testing! Test different images; test different messages. Different ages, genders, interests, and locations will no doubt perform very differently to each other, so test them.

How do single males aged 30-39 who live in Sydney, Australia and like hiking respond to your ad promoting Whistlers summer walking trails? Does an image of a happy hiker work better than an image of a sunny mountain landscape? How do females aged 20-24 who like skiing respond to your ad boasting about Whistlers amazing snow conditions? Does a picture of a happy young female skier work better than skis on a freshly groomed ski run?

Luckily, its possible to create up to 1,000 different campaigns and 5,000 different ads within a single Facebook PPC account (without any increase in limits), so this presents a great opportunity to carry out multivariate testing.

Tag your URLs with every variable you are looking to test (e.g. age, gender, location, interest, image style, message style). Multivariate analysis using PivotTables in Microsoft Excel have never been so powerful.

Seize The Facebook Opportunity

Dont write off Facebook due to apparently expensive CPCs or low conversion rates. Perhaps this is a sign that your Facebook campaigns need a more strategic and tailored approach. Be creative with your targeting and be targeted with your ads. But most of all " test everything. The Facebook PPC opportunity is there for those who choose to seize it.

Alan Mitchell

Alan Mitchell is the founder of Calculate Marketing, helping businesses of all sizes improve their return on investment from PPC marketing with comprehensive long-tail keyword strategies and intelligent campaign analysis.

Calculate Marketing

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