written by: Don Kress•edited by: Wendy Finn•updated: 10/10/2011
Facebook ads are a new frontier in business advertising. Can they be used to bolster your new customer revenue, or are they a waste of ad budgeting?
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With over 800 Million active users as of July 2011, Facebook has become the world's largest social networking destination. But a common question facing small and large businesses alike is whether Facebook's advertising prices are worth the cost.
One of the benefits of Facebook's advertising system is your ability to target your business ads within a geographical region, or according to the interests of your target consumer. Whenever consumers sign up for a Facebook account, they enter their location as well as their interests which the Facebook system then uses to target specific advertisements to them. Not only does this allow you to advertise to a specific customer, it also helps to keep your expenses low. Making these ads cost-effective though, takes a little know-how.
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Getting Started With Facebook Ads
You'll have to create a business page on the Facebook system in order to use Facebook ads. This gives potential consumers a landing page where they can "like" your business. There is no cost to you to set up a business page on Facebook. However, the page by itself isn't more than a basic advertising tool. In other words, people would have to search specifically for your business on the Facebook system in order to find it. This is where the targeted Facebook ads come into play.
Through the ads system, you can maintain as many different Facebook ads as you wish. You'll begin by selecting the destination where you would like for customers to be redirected to when they click on your ad. This can be your business Facebook page or the company website. Next, you'll select the title of your ad, which will appear above the advertisement when it is displayed, the wording of the ad, and finally, the image you want to display in your ad. Creating ads in Facebook is easy -- set up is straightforward and it can take only a few moments. You don't have to take keywords into consideration when you are entering information, but the picture you select should be indicative of the type of business you do.
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Facebook Ad Target Demographics
Following the titling of your ad, you will select who you want the ad to target, whether it be by demographic location, age or interests. For instance, if you operate a single-location sole proprietorship that draws its clientele from the surrounding community, you can select to advertise only to those people who indicate that their location is in that given area. Likewise, if you own a business such as an automotive restoration shop, you can choose to advertise to people in a given area that have indicated that their interests include classic cars or motorsports. This is a real pro of using Facebook ads.
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Budgeting For Your Facebook Ad
Before the ad is published and goes live, you select your campaign, budget and pricing. Always select a budget that you are comfortable with before allowing the ad to go live. This will allow you to reach a maximum number of clicks before the ad is no longer shown for the day. While you may not always reach this budget, you could easily exceed it if the number isn't set. When determining this number, look at your current monthly advertising budget for newspaper, radio or other media, and then take some from those to apply to your Facebook ads. This will ensure that you can get your feet wet in Facebook ads without losing much coverage with your existing advertising campaigns.
Don't be tempted to think, however, that an infinite budget will bring infinite customers. You will find that many of the clicks on your ad won't result in business. Therefore, you have to plan accordingly. If the average customer spends $50 per day who comes through your advertising channels, and you earn two customers per day, then it doesn't make sense to set your budget through Facebook ads at $50 per day or $100 per day. Much more realistic is to set the ad budget at approximately 5% of your gross income gained through advertising channels. If you've never figured this before, then it is simply a matter of separating your repeat customers from your one-time customers. Repeat customers aren't swayed by advertisements -- new or one-time customers are. As stated previously, it isn't likely that you'll reach that 5% budget, but it's good to know that the limits are in place.
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Comparing Facebook advertising to traditional media advertising is similar to comparing a shotgun to a hunting rifle. A shotgun tends to spread its effect over a wide area, and may not always hit the right target. Facebook ads, on the other hand, like a rifle, have the ability to focus in on exactly the customers you want to reach, avoiding the waste of advertising to customers who may only be peripherally interested in your business or product. As long as you've planned your budget and advertising campaign properly, there's no question that Facebook ads can be worth the cost.