The 6 Most Asked Questions About Facebook Advertising (and the Answers, of Course)

The 6 Most Asked Questions About Facebook Advertising (and the Answers, of Course)

March 25, 2014

Knowing everything there is to know about advertising on Facebook is a full time job – trust us, we would know. But just like everyone else, we started as beginners and had to learn the good old fashioned way by asking LOTS of questions. Thankfully, we now answer them more than ask, and having been there, we understand that having easy access to the answers you seek can be a godsend when your checklist is a mile long.

Between sales calls, customer meetings, new hire training, and the everyday conversations we’ll have with marketing-minded folks, we’ve compiled a list of the six questions we’re asked most about advertising on Facebook, paired with succinct, insightful answers straight from our team of media experts:

  1. Which targeting tools should I be using beyond Facebook’s native tools?

In addition to using Facebook’s native targeting tools – which include options to target by location, gender, age, and broad and precise interests – we recommend that every ad campaign use Custom Audiences.

Custom Audiences are created using customer information from your CRM – such as email addresses, Facebook UIDs, phone numbers, app user IDs, and Apple IDFAs. These groups consist of people who have previously interacted with your brand – so their purchase intent is higher – which increases conversion rates while lowering costs.

Custom Audiences can also be used to retarget previous website visitors or mobile app users – an especially powerful tactic for direct response campaigns or mobile app re-engagement campaigns. Building Lookalike Audiences off of those users (via the API only for now) can expand new user acquisition efforts.

Regardless of the targeting tools – always A/B test different interests to define your perfect audience.

  1. What are the benefits of choosing a more targeted audience over a broader audience?

It’s good practice to start broad (an audience over 100,000 is recommended) and move forward with highly targeted audience group tests to uncover high performing segments. You never know what interest will uncover an untapped pocket of users for a particular brand or advertisement. Try different interests, different partner categories, and different Custom Audiences in multiple variations.

Different audiences are also in various stages of the purchase funnel. Limiting your target to something as small as a single day combined with broader demographics can yield surprising results.

  1. How do I track ad performance?

First, define your objective, then choose the appropriate metric:

  • Direct Response: Use ad tools to look at clicks to your website/app and/or conversions. To measure conversions, set up a pixel; this is essentially a line of code pasted on a website that tracks whether someone who clicked then performed the desired action (purchased an item, downloaded an app, retrieved an offer, etc.). This information is sent back to your measurement tool and tells you how many conversions resulted from the ad, but also lets you create even more fine-tuned Custom Audiences for future retargeting.

  • Branding: Branding objectives measure for ‘likes’ and engagement. Just as one would with clicks, look at the percentage of people that engaged/liked the ad and cost per engagement.

  • Mobile Objectives: For mobile objectives – like mobile app installs and mobile app engagement – the business or app developer has two options to track down stream conversions: integrate with the Facebook SDK or use a mobile measurement partner (MMP). Ampush partners with Kochava, AD-X, Apsalar, and other third-party mobile measurement solutions to provide businesses these services.

Facebook’s Ad Create tool and Power Editor are great for tracking basic metrics such as impressions, clicks, spend, and CTR. However, more built-out campaigns that want to see ROAS and in-depth insight into conversions can benefit from using a third-party marketing platform like AMP 2.0 to measure overall campaign success.

  1. How do bidding strategies differ? Why use CPC, CPM, oCPM, or CPA, and in what scenarios?

Again, if you know your objective it will drive your bidding strategy.

  • CPC: Pay for each click taken on the ad. This can get expensive quickly – especially for direct response campaigns – so be mindful of the ads goal when using CPC. An advertiser should use CPC bids when trying to establish a bid cost for a new campaign, or when reach is the goal of the campaign.

  • CPM: Pay per thousand impressions. Use this bid when awareness and branding is the main goal of the campaign.

  • oCPM: Optimized CPM. The advertiser can choose whether he/she wants the bid to be optimized around reach, click, social impressions, or a specific action. This bid type can and should be tested for all types of campaigns. However, oCPM takes a while to optimize, and, as the name suggests, the ads come at a premium for that optimization.

  • CPA – Only pay for the desired action (an install or click to website). CPA is essential for mobile app installs and increasingly so for direct response with the new CPA for website clicks. This bid eliminates spend on things such as ‘likes’ or ‘shares,’ and cuts straight to the objective.

  1. How does Facebook’s second-price auction work?

Facebook uses the Vickrey-Clarke-Groves auction in determining bids. Essentially, the highest bidder wins, but the actual cost is a weighted average of competitors’ bids, not the price they themselves bid. This style of auction has been around for over a century and encourages “real value” bids. The actual cost on Facebook is a weighted average of competitors’ bids.

Don’t bid for lowest CPC or CPM – you get what you pay for! Lower CPC and lower CPM usually mean lower quality.

  1. What are price-volume trade-offs and why does this matter?

Typically, there is a tipping point at which you need to increase your bids in order to increase volume. If you’re driving 1000 installs per day for $1.50, but would like to increase volume to 2000 installs per day, the CPI will likely increase 20-30%. At a certain point, the price to reach a larger audience will cost more than the audience is worth, limiting your ability to scale. This is important to understand for planning purposes and to set appropriate expectations.

Any we missed? Be sure to tweet them @Ampush! We love to be of help. Be sure to subscribe to the blog as well for on-demand Facebook advertising news and insights.