If you are losing money and wasting time, you are going about Facebook ads the wrong way. Here is how to fix it.
Facebook ads are touted as the magic bullet to scaling success these days. “Start a Facebook ad campaign” says these “gurus.” “You’ll sell all the things and be profitable.”
If only it was that easy.
Facebook advertising success is possible, and my company, The Ad Strategist, has helped thousands of entrepreneurs break the elusive glass ceiling using a simple framework we call “StrADegy,” which was developed by analyzing the results of tens of millions of ad impressions and millions of revenue generated for our clients in the last 18 months.
As a result, we know that there are two main reasons why Facebook ads don’t work.
- There’s a misunderstanding around ad metrics and results
- There isn’t a strategy in place
The metrics that matter
Let me ask you a few questions: “What is your average cost per lead?” Go ahead and calculate it. Can’t? “What is a lead even worth to you?”
Are you shaking your head and murmuring, “I don’t know” right now?
When we don’t understand the metrics that allow us to make Facebook advertising decisions, silly mistakes are made, including paying more for unqualified leads and haemorrhaging money into a lead generation system that’s entirely ineffective.
To be profitable with Facebook ads, focus on these two metrics as a starting point.
1. Earnings Per Lead (EPL) is the revenue generated from one new lead. To calculate EPL for a campaign, take total revenue generated and divide it by the number of leads acquired to generate that revenue.
This number is important for advertisers because the greater the EPL, the more wiggle room you’ll have to spend on generating traffic, leads,and sales with Facebook ads.
2. Cost Per Lead (CPL) is the cost to generate one new lead. To calculate CPL for a campaign, divide total ad spend by the number of leads a campaign generated overall.
Most advertisers start by focusing on lowering the lead cost into their sales pipeline. The trouble is that there is only so low you can go. Advertisers who focus on cost-cutting typically generate poorer quality leads and hurt their sales conversions in the long run. Contrast that with focusing on the expansive upside of increasing the earnings potential per lead. Creating more revenue from your customer base is easier than cutting lead acquisition in the first place.
Build your ‘StrADegy’
Now, numbers are meaningless unless you can take attention and turn it into revenue. Until you create a repeatable and scalable sales process, Facebook ads will never work for you.
As an advertiser, focus on a process that guides prospects through the customer journey. To stand out in the crowded Facebook marketplace, I recommend implementing our StrADegy system.
Connect. Commit. Close.
The StrADegy system has three phases:
Connect: Taking attention and warming people up to your brand. It’s a simple branding process of illustrating what you stand for as a brand. The end goal is moving cold audiences into prospects that know, like,and trust you.
Commit: To lead new audience members into a sales conversation, ask them to make a micro-commitment to your brand. This is what a majority of Facebook advertising dollars is currently being spent on: lead generation.
Close: The point in the process that initiates a sales transaction. The Holy Grail. In the close, brands use retargeting to speak directly to prospects with a high likelihood of purchase intent.
After setting up your StrADegy system, you’ll have a consistent flow of new leads into your sales pipeline. In fact, if you have a website or an active Business Page on Facebook, you’ve likely already built at least 1of the 4 core warm audiences that has greater potential into moving deeper into the “commit” and “close” phase.
The four warm audience you may have missed
Have you ever noticed that when you visit a website, the next day you start seeing ads for the exact same thing? It almost feels like you’re being stalked. This is a form of retargeting. Facebook gives you the ability to get in front of the people who have previously interacted with your brand in a meaningful way, serving up ads that drive micro-commitments and sales transactions.
The external audiences available for Facebook retargeting:
- Pixelled website traffic: Once the Facebook pixel is installed on your website via a small snippet of HTML code (super easy), your website will consistently send data back to Facebook about the site visitors. Check out the link for more instructions on getting this set up.
- Email list subscribers: Easily export a list of your email subscribers then upload them directly to your Facebook Ads Manager. Again, I provide instructions in a Google document.
Facebook’s internal custom retargeting audiences:
- Facebook Page engagement: With a Facebook Business Page, Facebook automatically tracks the users who interact and engage with your Page. From the users comments, reacting, sharing, and clicking. On my website (hyperlinked), I go a little more in depth.
- Facebook video viewers: A custom audiences of users who watch a minimum of 3-seconds of videos posted on a Facebook Business Page. Check out the tutorial in the hyperlink for more information.
These users are already expressing organic interest in your brand and typically have a higher engagement rate when presented with your ads.
Now with a better understanding of the metrics that matter, you can make better advertising decisions following a strategic framework that moves attention into sales potential. You know have the arsenal to understand why your Facebook ads may currently be broken and a roadmap to move you towards advertising success.
Need some more guidance? Check out the video above where I talk about Facebook ads for the series Tough Love Tuesday.