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11-year old’s Guide to Facebook Advertising

When you want to advertise on Facebook, there are three marketing goals that you can choose from in order to identify a roadmap for your advertising mission. The three goals areGet people to notice (raise awareness)

  • Get people to notice (Raise awareness)
  • Get people to engage (grow engagement)
  • Get people to act (boost conversions)

On Facebook, you not only get a huge audience but also get to home in on just the exact audience for your products. If you want to show your ads to just those of a specific age or to just men/women it is all possible on Facebook. You can go by just the job title of people or by their relationship status. Let us get you into the sphere of Facebook advertising, making it as simple as it gets.

Three Targeting Strategies

Ad sets are components in an Ad campaign. The targeting is implemented at the level of ad sets. There are three modes that you can pick from in your targeting action plan which are Core Audiences, Custom Audiences, and Lookalike Audiences. Core Audiences mode uses Facebook data only while Custom Audiences apply to people you already are in touch with on your website, mobile app etc. Lookalike audiences brings up new audiences based on a mix of your custom audience and targeting by Facebook.

Core Audiences is the default option. Beginning with the entire core audience, you can exclude and include different sets of people to make up your ‘Saved Audience’ within the overall core audience. The first attribute that you can use to include or exclude is that of Demographic. Here, you can include or exclude people based on their education, family, career etc. All of this information consists of that given by Facebook users themselves. The second attribute that you can use to filter your Saved Audience is Location while the third attribute is Interests. A fourth attribute is Connections wherein you can include or exclude customers based on how they have reacted previously to your posts, events, app. After this including and excluding exercise, you have your Core Audience ready and filtered in your Saved Audience.

When using Custom Audiences, you can also further specify their particular interests, location, age group etc. so that you reach out to a highly filtered audience.

Setting your Budget

Facebook allows the setting of a Daily Budget or a Lifetime Budget. The Lifetime Budget runs over the life of the adset. Daily spending depends on the advertising opportunities that the system identifies over each day of the adset. You can also set a minimum budget that must be spent each day. The minimum budget for clicks and likes is at least $2.50 per day. For lower-frequency events such as app installs, the minimum budget is $20 per day.

Now, to the Auction

With your Audience and Budget identified, you move to the auction.  At this point, Facebook steps in to balance your targeting with the interest of the consumer. So, it is not only about your targeting but also what Facebook knows about the customer and whether he/she would be interested in viewing your ad. Hence, when you and other advertisers bid to advertise to a particular audience, Facebook gives preference to those ads that it deems the customer will view and would click.

This is calculated as the ‘Total Value’ of the ad: It consists of your bid value, Facebook’s prediction of the customer response to your ad and the relevance of the ad to the customer.

When the relevance to the customer is high, your costs will be low.

Two ways to go about it

The ‘Lowest Cost’ bid strategy informs the system that you want the lowest cost per event while spending your budget set for the day.  You can also set a ‘Bid Cap.’ For a particular optimization event, within your marketing-goals choice of getting the customer to notice, engage or act, this bid cap will be the maximum that is possibly bid at the auction. In the ‘Lowest Cost’ bid strategy, the focus is on getting the most value for your bid. The result is that there could be upswings and downswings depending on the competition.

To avoid this upswing and downswing in costs, the ‘Target Cost’ bid strategy informs the system that you are aiming to be at or about your specified cost. Here, the system keeps your costs stable. This strategy is only available within lead generation, app installs, conversions or catalog sales marketing objectives.

The Bid Cap or Target Cost settings can be changed at any time by going to Ads Manager > Edit.

We have now reached the stage where we see how the auction works.

These are the components we have:

[Advertiser Bid] x [Estimated Action Rates] + [User Value] = Total Value

For the ‘Advertiser Bid’ component, you have set either the ‘Bid Cap’ or the ‘Target Cost.’

For the ‘Estimated Action Rates’ component, the previous actions of the targeted customers and the way your ads have performed are used to arrive at the person most likely to perform the event you have targeted( within your notice, engage or act marketing goal categories). Your bid is given a rank called eCPM which stands for effective cost per thousand impressions. An impression is when an ad is displayed on a customer’s screen. The eCPM takes the total amount spent on a campaign, divides it by the number of impressions, say $10 with thousand impressions, and then multiplies it with 1000, to get an eCPM of $10. An ad that is optimized for clicks and one that is optimized for actions such as app installs will all be converted to an eCPM. This provides a rank for the different ads participating in the auction. And then crucially, there is an ad quality component too.

To now move to the third component of Total Value, which is User Value. Here, your ad is given a relevance score. This is based on feedback from customers. Again, in addition to the Relevance Score, ad quality is combined to determine the User Value.

Here we are then, at the crucial moment of action, with results of the auction. Among the competing bids, based on their Total Value, the ad that is more relevant wins the auction. Its price is based on the value lost by all the bids that have lost.

As we wind up this guide, the two most important points to note are:

   • Your ads will be delivered only when your targeted results are going to be achieved
   • If your results are not being achieved, you won’t be charged

Facebook also provides ‘Estimated Results’, when there is enough data to deduce it, which informs you on the number of people that you can probably reach and the number of intended results that you can probably expect.

Now that you have the all the information you need on Facebook advertising, get going on your campaign and bring in the exact results you seek. Remember that the optimization of your budget is always carried out by the system. So, it requires you to place your confidence on the system and not to set out with very low budgets which will not enable the system to do its work effectively.



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