Who should be reading this article on Facebook ads guide for startups & small business and why?
You’re a startup & need to grow fast
So you’re a (relatively) new startup. Why do I say so? Because if you were a behemoth the size of Flipkart or Ola Cabs, you’d already be doing advanced Facebook marketing & could probably teach me a thing or two about running Facebook ads! You wouldn’t have a need for this Facebook ads guide in that case.
Anyway, you’re a startup and you’ve been growing your business organically for a while through various methods – SEO, word of mouth, referrals etc. At some point of time during the life cycle of your startup, you’re bound to reach a scale where these organic methods of growth are no longer feasible by themselves. Especially after you get funded & investors start clamoring for double digit growth. That’s when you have to resort to paid advertising – also known as pay per click or PPC.
You’re a small business that needs to go digital
In case you’re a small business & have just launched or are in the process of launching e-commerce sales of your product then paid ads are a great way to kick start your sales numbers. They can give you instant results, as opposed to some of the long term techniques like SEO.
Why Facebook ads?
Most startups and small businesses use one of the two forms of pay per click ads – Google AdWords or Facebook ads. Both platforms have their own advantages. For the sake of this conversation, we’ll only consider Facebook ads.
They tend to be cheaper than Google ads.
Google ads rates for some categories like banking & insurance can be as high as ? 800 – 1000 per click! Whereas Facebook ads generally cost around of ? 15 per click, regardless of the category you’re trying to advertise
Audio visual format
Unlike Google AdWords, you don’t have to separately create text and display ads. A single Facebook ad can have it all – text, images, videos and even Gifs of late. This makes for a rich audio visual experience for your target audience. Speaking of which, Facebook ads give a new meaning to the phrase “target audience” as we see below.
Large number of targeting options
The number of targeting options in Facebook ads literally is HUGE! You can not only target demographics & behaviors, but also create custom audiences & lookalikes of your existing audiences by inputting phone numbers, email IDs or by placing a small bit of code on your website. E.g. you could place the Facebook pixel (small bit of code) on your checkout page and ask Facebook to get you more people like your existing paying customers!
Unlike those pesky YouTube ads which interrupt your viewing experience, Facebook’s news feed ads fit in seamlessly into people’s news feeds. So your customers don’t hate them. In fact, the newsfeed ads show up as regular posts in peoples’ news feed, except with the word “sponsored” written on the ads. So the whole ads experience seems very natural and organic to your customers.
Which Facebook ad formats are right for you?
For a B2B startup
Let’s say you’re a B2B startup in the education space. Your business growth depends on creating a typical sales funnel à You get 100 leads of school principals, administrators, counsellors etc. (e.g.) à you approach all or most of these leads à you make an offer to the interested parties (let’s say 20) à some of the interested parties want to take you up on your offer (let’s say 5) à a couple of the original 100 ultimately end up becoming your clients or customers.
As you can see in the above example, a starting funnel of 100 only gives you about 2 conversions ultimately. You could have a very good salesperson on your team who could convert maybe 5 or 10 but the conversion rate is unlikely to go beyond that on an average. So a huge funnel is needed so you can have a few conversions. Where do you get such a huge funnel from, month on month, on a sustained basis?
Facebook ads to the rescue! Facebook ads has a nifty little feature called lead generation ads. These ads allow you to create a lead generation form within Facebook, that’s prefilled with a prospective client’s data, out of Facebook records. So if someone is interested in your product or service, all they have to do is to hit the submit button on the pre-filled form & voila! Their contact details come straight to you!
For a B2C startup
In case you’re a B2C startup into say ecommerce or grocery deliveries then you directly need to drive transactions. You need to create a B2C funnel wherein you get say 1000 people to see your ads, out of them a 100 click your ads & 5 people end up buying.
Facebook ads can help you set up this funnel by allowing you to reach out to an audience with the demographics & behaviors of your choice. If you’re looking to sell the latest models of iPhones for example, you’ll want to target someone with enough disposable income. That may be someone aged 30 plus (demographic targeting), using an older model of an iPhone (behavioral targeting).
When someone’s contemplating making an expensive purchase decision like an iPhone they probably won’t buy the first time they see your ad. Facebook ads make it possible to dynamically show someone the items they had seen earlier a few times until they can make up their minds. This is dynamic remarketing using Facebook ads & is a very effective means of driving conversions.
For a B2B small business
Small businesses in the B2B space can benefit just as much from Facebook’s lead generation ads as startups can. Suppose you’re an event management company looking for clients on Facebook & you own and operate a website which gets visited by potential clients. You can make and target lead generation ads that specifically target these people visiting your site. So if someone visits your site & leaves without leaving their contact details, you can show them an ad for your company the next time they log on to Facebook. This will increase the likelihood of them giving you their contact details.
Not only can you show ads to the people visiting your site, you can also ask Facebook to find other similar people just like them! This is a powerful feature known as “similar audiences” which allows you a create a bigger version of a sample audience. But like all samples, you have to ensure that you feed Facebook a good quality one in order to get good results.
For a B2C small business
For B2C small businesses, Facebook has a great ad type called “Local awareness ads” which allow you to drive store traffic by a variety of means, such as by running phone call campaigns or by giving people directions to get to your store. A salon we worked with wanted to create awareness in the area they operated in. We helped them create phone call campaigns, targeted to people within a 2 km radius of their salon. The ad talked about the opening of the salon, offered discounts for first time visits & prompted the target audience to give the salon a ring through the embedded “call now” button.
The response to the campaign was near instantaneous and they built up a steady footfall of customers within a month’s time.
How much to invest in Facebook ads?
Whether you’re a startup or small business, you need to invest at least ?1000 per day (or ?30K per month) to run a meaningful campaign and achieve some tangible results. If you’re really hard pressed for cash, then you could try with ?500 per day as well. But then you’re leaving the success of the campaign more to chance as you’ll get very limited reach out of it.
To make sure that you get the most out of your money, you’ll need to monitor the campaign daily or even hourly for the first week or so! There will good days and bad ones & you need to be alert enough to pause your campaigns on a bad day. Facebook ads’ algorithm is programmed to maximize their revenues so your ads will keep running even on days when you’re not getting results. So rather than burn cash on such days, it’s better to pause them.
Weekends and public holidays are typically bad for running Facebook ads so make sure you have someone keep an eye on them, even though your office may be closed.
How to calculate return on investment?
For B2B lead generation
Suppose you’re able to generate 100 leads for ?100 (total ?10K) in a given month. Out of these, you are able to materialize 1 lead which gives you revenue of ?50K. So the net margin you’ve earned from this lead is ?50K revenue – ?10K marketing expense = ?40K. From this you need to deduct any other direct & indirect costs of making the sale (e.g. travelling expense, cost of goods sold, client entertainment expense, other overheads etc.) to ascertain whether you’ve made any profit on the said lead. You’ll make a profit as long as all of these expenses and overheads are less than ?50K, break even if they’re equal to 50K & make a loss if they exceed 50K.
Suppose you make a profit of ?10K after deducting all expenses and overhead. Since your original investment was ?10K, you’ve made a 100% return on investment! Rejoice and pop a bottle of champagne!
For B2C transactions
The logic for estimating ROI for B2C transactions is similar to that of B2B lead generation. Suppose you spend ?10K in a month and that gives you ?50K worth of transactions (your revenue). Your net margin is ?50K – ?10K = ?40K. From this you need to deduct cost of merchandise, shipping & other direct and indirect expenses like employees’ salaries, utility bills etc. Let’s say all this comes to ? 30K. So your profit margin will be ?40K – ?30K = ?10K.
Considering your original investment was ?10K and you’ve made a profit of ?10K, your return on investment will be 100%.
Beware of frauds!
Of course, both of these are theoretical examples and in reality there is often a break even period during which your costs will exceed the revenues. The trick is to improve your campaigns over a period of time so that you hit break even and then start making profits. Anyone who tells you that you can start a Facebook ads or any other pay per click campaign and start making profits from day 1 is most likely taking you for a ride!
We at Digitree Digital are experienced in phasing client campaigns in a matter that takes you past break even & into profitability. Get in touch with us and we’ll be happy to give you a free consultation on how to go about your online marketing! Mail us at [email protected]
To get advanced Facebook advertising tips and to hone your Facebook advertising strategy, check out the next chapter here. Hope to hear from you soon!