We’re probably all familiar with and possibly a little bored by that famous old line: “I know half of my advertising budget is wasted, I just don’t know which half!” by now, and as we enter an age where, allegedly, everything is measurable and can be broken down into KPIs, MI’s and metrics, it’s tempting to think the statement no longer has any relevance.
In a funny kind of way though, it probably applies more than ever; yes we have more data to play with than ever before thanks to our ability to track people’s activities, particularly online, but that data can be sliced and diced, broken down and interpreted in so many different ways, it’s hard to believe that we can rely on an algorithm to get all of our marketing decisions right for us. The age of machine learning is upon us, but it’s far from perfect. “Users who brought such and such, also bought…” can often be so inaccurate it feels more like an amusing sideshow than a reliable resource.
There is still an unquantifiable element to why one business succeeds while another fails, at least it’s unquantifiable to the one that fails anyway. Can success be learned like algebra or the lines to a script? Or is it just a fact of life that some founders are destined to succeed while others keep making the same old mistakes?
Social media is often cited as the closest thing we have to a perfect science when it comes to making marketing decisions, but it’s important to recognise the fact that it is far from a foregone conclusion that by increasing your marketing spend you will increase your levels of engagement, recognition, sales and ultimately your profits. “boost post”, is categorically not the same thing as “boost sales”.
The best way to think about social media advertising is that what you are purchasing is a sophisticated dashboard or set of controls, not a one way ticket to success. Leveraging the success of another business, Facebook, Instagram or Twitter, say, is a sensible strategy, but like outsourcing, you only get what you pay for if you put in the time and effort and manage the tools at your disposal effectively.
So think carefully before you start paying for social media advertising, and remember that first and foremost you are purchasing an opportunity, not a sales boost. You need to be thinking about concepts like cost per acquisition; sure, I can find customers on Facebook (of course you can), but how much will I have to spend on each new customer? The likelihood is that the better your product is, the less you will have to spend, but it’s all relative; if you’re selling houses, your CPA will obviously be far greater than if you are selling ice creams.
As a start-up founder or small business CEO, you should by default understand your business better than anybody else, so if you do decide to allocate marketing budget to a social media site you should set yourself goals and then watch the numbers as closely as you can and make adjustments to your strategy as you go.
To get the ball rolling, here are some basic stats concerning Facebook advertising that we found on the web which may help to give you a competitive advantage. A quick caveat, though; facts or otherwise, generic stats like these are the tip of the iceberg; to achieve the perfect marketing campaign the reality is you need to start boiling the ocean.
- The average increase in Facebook advertising CPM between Nov 2013 and Nov 2014 was 7x; the average increase in Facebook advertising ROI over the same period? 2x
- The best performing Facebook ad Call-to-Action button as at Oct 2014 is “Learn More”. The most popular Facebook ad Call-to-Action button? “Shop Now”. The overall click-through rate lift from adding a Call-to-Action button to a Facebook ad? 2.85x
- The percentage of total retail Facebook ads that appear in newsfeeds? 57%
- Total number of Facebook pages promoting posts: 500,000; number of promoted posts: 2.5m
- Average ecommerce order value from a Facebook referral: $85.87
- Increase in Facebook mobile social referrals from September 2013-January 2014: 197.24%
- Average match rate for email lists and Facebook custom audiences: 68%
- Increase in ROI for Facebook ads on iOS versus Android: 17.9x
- Average Facebook ad clickthrough rate: 1.5%; for retail advertisers: 0.2%
- Facebook Q3 2013 revenue from ads: $1.8bn; Q4 2013 revenue from ads: $2.34bn
- Number of active Facebook advertisers: 2m; number of SME businesses advertising on Facebook: 1m
- Average Facebook ad cost per click: $0.27
- Average Facebook ad cost per impression: $4.03
- Average clickthrough rate for Facebook Website Custom Audience ads:1.25%