THE Single Critical Factor For Successful Advertising On Facebook

Since I first wrote about techniques for Facebook advertising and getting more fans, I’ve had a flood of requests for assistance. The reality is that it’s really easy to tell if a company is going to be wildly successful or suffer an exercise of futility.

Let’s first mention some of the minor factors that hurt your success—trying to re-use your Google PPC ads on Facebook, not testing with hundreds of creatives, casting a broad net instead of micro-targeting, not having an engaging landing page, sending traffic to your website instead of your Facebook page, not having robust analytics, not integrating your Facebook page with your website, not regularly interacting with fans—ok, you get the idea….

But that’s not THE biggest factor—not even close. The single most critical factor is how well you are known in your targeted audience. Thus, when we’re evaluating companies we take on as a clients, this is what we look at in qualifying them.

When you are a major brand, you already start with trust—that gives us high CTR and high conversion rates. You’re unlocking the offline value of your brand—converting what is already there into online gold. This is so easy that it’s almost like cheating. Instead of suffering with 0.002% click-through rates, it’s not unusual to get 100 times the CTR. Instead of a 10% click to fan conversion rate, you might get 70%.

Thus, you can reasonably expect to do 100 times better than the average Facebook advertiser – maybe even 700 times better. If you happen to be an ad agency, you might just take credit for harvesting what is already there.

Consider the most popular Twitter accounts – they are celebrities and large brands. Does anyone else really care what the average Tom, Dick, or Harry had for breakfast or that they’re about to walk their dog? But if you are familiar among your targeted audience, enquiring minds to know. They will lap up every juicy detail about every mundane action of your life. But if you’re not known, who cares?

Here’s how to tell if you qualify. Imagine you walk into a random Wal-Mart and ask 100 people if they’ve heard of your brand. If more than 20 people respond, you’re golden, as that’s the critical mass necessary to get people to pay attention to your ads and to be able to unlock friend of fan targeting in a massive way.

If you don’t have a household brand, then you’ve got a tough road ahead of you. Your fallback strategies are to leverage your competitor’s brand that does have such a presence and then run switcher campaigns. If your value proposition is compelling, you might be able to leech on their brand value – provided that you are not an imposter and don’t anger an already brand loyal community.

Now back to the household brand that has awesome offline presence, but a pathetic Facebook presence (less than 100,000 fans). We call this the “gap”—the difference between real world and Facebook popularity. The bigger the gap, the greater the inertia to pull the Facebook presence up to where it should naturally sit—and the greater the likelihood of having fantastic results. In a future article, we’ll discuss how a magnified Facebook presence enhances the productivity of your other marketing channels, plus increases your organic search traffic as well as offline awareness and conversion. Facebook has view-through conversion tracking and we’ll showcase a few examples.

If you are a local service business of the yellow page variety, you’re in luck! What is true for a Weekly World News is true for the local chiropractor, too. In their market (albeit a 50 mile radius from their location), they are or can be a name brand. The Cupertino chiropractor doesn’t need to be known in Boston or Chicago—they can be the big fish in the little pond, needing only to outcompete other chiropractors in Cupertino, California.

Let’s say the Cupertino metro with a radius of 10 miles has 100,000 people. 20% of that figure is 20,000 people. Assuming the average Facebook user has 130 friends, you need only 154 fans of your page to have a reach of 20% in your market. Even if you assume that only 1/3rd of friends are local, then you need only 462 fans to be the dominant chiropractor in Cupertino. By dominant, we mean that you’re not only well-known on Facebook, but that when people in the real world are talking about where they’re going to get their back cracked (sorry, “adjusted” is the preferred term), people will think of your business.

Further, if you are hyper-targeting your advertising to just your neighborhood, then you need only spend a few dollars a day to dominate. Here’s the math. If you have a good-looking ad, you might get clicks for a dollar. At a 50% click to fan conversion, you get fans for a dollar. If your local service firm needs only 500 fans to dominate, you can get there with an investment of $1,000. This is assuming that you know what you’re doing with Facebook ads and pages. That may take a couple months to build up to that point, upon which you can go into maintenance mode for $50 a month – running ads to existing fans and using Google remarketing.

There is a minor difference between national brands and the local service firm. If you are in the CPG (consumer packaged goods) space – selling well-known detergents, soft drinks, beauty products, potato chips, and so forth – odds are that you can run completely untargeted ads (United States, 18+ years old – which is 120+ million people). You have the name recognition to be able to get away with that, as so many people use your products. 20% of 120 million is 24 million people that MUST know your name if you’re going to get good CTR on your ads. 20% of your local neighborhood is a significantly different number, such as the example above for a Denver plastic surgeon .

But if you are a dentist or car dealership, you might not get 20% awareness even within your neighborhood. Maybe you have only 3% awareness. Or maybe your office is tucked away in the corner of a strip mall that isn’t visible from high traffic areas. Perhaps you have a specialty law practice that is found only when people get into a particular type of trouble. Or your practice is struggling – perhaps due to the economy or because you’re just starting off.

Now you must build sufficient awareness in the real world, in addition to offline, before you can get awesome click-through rates and a strong Facebook following. If users don’t know you, they’re not as likely to click on your face as they would be if they’ve seen your ads on TV or driven by your office. Facebook advertising doesn’t stand alone. Instead of the $1,000 investment to get to dominance as we discussed before, you might have to invest 10 times that.

But would you pay $10,000 in marketing expense to have real world name recognition, whether it be via a new neon sign outside your office, buying a banner at your son’s little league field, or hiring laborers to wear gorilla suits to dance on the street corner holding your sign? People have the mistaken belief that on-line there is a short-cut to success, such that real world marketing principles don’t apply. It just so happens that Facebook is more efficient at targeting and delivering performance than almost any other channel – but it’s not a panacea.

As we discussed at the beginning of this article, brands who have stellar success often do so because they are capitalizing on the existing brand equity they have, which has required significant offline investment over many years.

So if you’re not well known nationally or in your neighborhood, where does that leave you? You have to be well-known enough in your niche that people will easily fan you. Killiandrake sells steampunk items – for those of you who don’t know what steampunk is, don’t worry. I didn’t either.

But among the steampunk community, Killiandrake is moderately well-known and it took only a $565 investment to grow a brand new page to 1,103 fans – to capitalize on an established offline brand that wasn’t online yet. That’s 52 cents a fan– which works out to 14 cents a click and a 1 in 4 click to fan conversion rate. Were this brand a bit better known, instead of a 0.245% CTR, we might have had double that, which would be 7 cents a fan. And our conversion rate could have been 75%, as we saw with Weekly World News, which would be triple what we saw. The net effect is that this could have been 1/6th the cost per fan if we had better off-line name recognition, lowering the cost to under a dime per fan.
See how offline existing brand power is the strongest determinant of success?

And with that initial investment to build the fan base, this company now does ecommerce right inside Facebook. And for a moderate investment, they are still able to take a medium known brand and scale up to the point where it’s a self-sustaining business in a niche. There are only a few hundred thousand steampunk enthusiasts in the US, so it doesn’t take that much investment to get to critical mass. How strong is your penetration among your core audience and what will it take for you to get there?

Killiandrake, the seller of steampunk goods, needs only a few thousand fans to dominate. Their current 1,100 fans at 130 friends per fan, gives them a reach of 143,390. Assuming a base of 300,000 folks on Facebook (the counts provided by Facebook are not always accurate– plus you have to add in many more interests), we can hit almost half of the folks in this niche with a trusted endorsement.
So here are the most difficult kinds of campaigns:

  • Selling a new product, but for which they have no budget. You’re not going to get 40,000 fans overnight for a couple thousand dollars. You’ve got to invest in generating awareness in your particular niche. It’s that existing familiarity that encourages people to click on your ad. It’s no different in TV, print, and radio advertising– you have to invest in a brand or capitalize upon your existing brand awareness.
  • Selling against a large market— As we saw, the larger the market size, the larger the number you need to hit 20% of that figure. Paradoxically, large markets yield a higher chance of failure for start-ups. Focus down to your niche. Let your niche size fit your budget. Small budget? Then choose a small niche.
  • Competing against established competitors.Want to build an on-line t-shirt company or dating site? Better refine that niche, since you’re unlikely to have stronger branding than your well-known competitors. Social media is a popularity contest, so choose your battles wisely. No competitive advantage in terms of brand familiarity or having a deep pocketbook?This is like trying to play in the NBA if you’re 43 years old and 5 foot 3.

All this to say that your success on Facebook is largely determined by the effectiveness of your existing marketing efforts. If you’re a dog in the real world, you’re a dog on-line, sorry to say. Got great awareness among real people? Then expect that real people who are real friends will connect with you on Facebook. That’s why household brands and local businesses are the main winners in social networking. The exception– companies that live in well-defined niches, where they are able to interest target such that they have 20% awareness– or companies with silly amounts of funding.

Dennis Yu has helped brands grow and measure their Facebook presences. He has spoken at Search Marketing Expo, Search Engine Strategies, Web 2.0, The American Marketing Association, PubCon, Conversational Commerce Conference, Pacific Conferences, HostingCon, Affiliate Summit, Affiliate Convention, UltraLight Startups, MIVA Merchant, and other venues. Yu has also counseled the Federal Trade Commission on privacy issues for social networks. Yu has held leadership positions at Yahoo and American Airlines. His educational background is finance and economics from Southern Methodist University and London School of Economics.