What everlasting truths and lessons do you rely on and believe in??
It was the late, great Groucho Marx who said, “Learn from the mistakes of others. You can never live long enough to make them all yourself.”
Intelligent humans and businesses learn from experiences, as well as mistakes.
Here’s how it works for businesses:
- More time = more experiences.
- More experience = more knowledge.
- More knowledge = more business success.
Like Groucho’s truism says, we can’t buy more time.
Thanks to paid advertising, we can certainly buy more experiences. The more money invested in Facebook ads, the more knowledge you receive. The more knowledge obtained, the more successful your business will be.
Let’s do a quick demonstration:
Say that, with a 1 USD ad spend on Facebook, we can buy the experience of reaching 100 people on Facebook.
- 60 of those might look at our ad and decide to ignore it.
- 20 might decide to read our whole caption.
- 15 might click on the link but then leave the website.
- 5 people might click on the link and buy something
What if I were to express that the outcome does not matter at this stage?
Even if all 100 people decide to ignore our ad, we still win.
You may be wondering how we can call losing money a win?
We have just won the knowledge that these 100 people are not interested in our ad. Our next ad will be better.
We might lose money in the short-term. We will always win knowledge. In the world of business, knowledge ultimately leads to power.
In this post, we are going to touch on valuable Facebook advertising and marketing lessons, learned from real testing in the market.
Your objective here is to learn from our experience, use the knowledge we gained, and make your own business more successful.
Why should you trust our experience?
Here are three good reasons:
- We have been trusted to invest over $1,400,000 USD in Facebook ads over the past 12 months alone.
- In most cases, we have been working either directly with the founders/owners or with the Head of Marketing. In other cases, we worked with leading advertising agencies like Ogilvy, so we understand your pain points from a business owner perspective.
- Even better, this money has been successfully invested on behalf of over 40 clients and a huge variety of business types:
- Small businesses, like cafes, tailors or photographers
- Mid-sized businesses, like retail stores or branded chains
- Well known-brands, like holding companies or beverage brands
- Small entrepreneurs with their bootstrapped online shops
- Small entrepreneurs turned to successful entrepreneurs with 7-figures internet businesses
- Well-funded start ups and scale ups
- Not so well-funded start ups
In most cases we have made our clients a LOT of money.
For example, the US Shark Tank startup, Coco Jack, saw an increase of 126% in sales revenue after 5 weeks of working with us.
Another good example is the local vegan food brand Veganerie.
I remember the day well. I was sitting in their brand new restaurant one Sunday morning, and I noticed I was the only customer. Nobody knew about them. They went from having a single branch with very few customers to becoming a brand with 4 branches in the best locations in Bangkok!
It didn’t always work, of course.
In some cases we had to go back to our clients, having learned that their product/service does not work on Facebook, or that it will take more time and resources to make it work than these companies could afford to invest.
One thing is for sure: We have created a lot of experiences and we have learned a lot. We are now ready to share this knowledge with you.
This is not a post about the micro-techniques of Facebook ad management.
The purpose of this post is share what we have learned from seeing various companies succeed and fail on Facebook. It’s about sharing valuable, actionable takeaways you can implement for your business.
Hard Earned Lesson #1: Different businesses have different potentials and need different objectives
It was early 2017, I still remember the warm, sunny morning when a young entrepreneur in his late 20s reached out to us for help.
He had developed a digital product and was investing $600 USD a day in Facebook ads. This $600 USD ad spend generated him around $2400 USD in daily revenue.
His pain point was that he had hit a plateau and needed additional expertise to level up. We soon broke the milestone of $4000 USD daily revenue and are now, over one year later, close to hitting $10,000 USD daily revenue.
Possibly the most interesting part of this story is, that we’ve never done any branding for this client.
People have never heard of this brand. In fact, if they Googled the brand name they would not find much information about it at all.
The user simply sees an ad, gets linked to a website and then clicks the “buy” button. For every 1 USD invested in ads, our client is generating $4 USD in sales.
A similar success story is the aforementioned US Shark Tank client, Coco Jack, who basically built a whole business on profitable Facebook campaigns, even though the brand itself was virtually unknown.
There are many similar success messages out there.
You might be thinking: “If I hand you my Facebook login and $5000 USD for ad spend, can you turn this into $20,000 USD revenue?”
IF you have a product and business that has the potential for it, then: yes, let’s get started!
Unfortunately, most businesses are not like this. If your business is struggling to generate sales in the “real” world, then it is likely to struggle on Facebook as well.
It does not mean that you cannot make money from Facebook marketing. You will need to work harder for it. You’ll need to invest time and resources to out-do your competition.
Let’s have a look at a few different factors that determine the potential of your product. This helps with setting realistic objectives in order to measure success.
1. Impulsive versus planned purchases
Do people need to take a considered approach to buying your product (planned purchase)?, or do they immediately buy your product, like buying chewing gum at the cash register (impulsive purchase)?
In many cases, people will not only “think twice” about the purchase – the sales process can take weeks or even months. It can often even involve multiple decision makers, like board members or partners.Most businesses who have a strong ROI on Facebook ads, rely on impulsive purchases.
The price point of the product is easily affordable for the audience.
In real terms, this is typically somewhere between $10 USD and $60 USD. It also helps a lot if the product is unique and does not require shopping around. In this case it’s an easy decision: buy it now, or don’t.
On the flip side, many businesses rely on planned purchases.
These companies need to build trust before the purchase. This is usually the case for higher priced products/services where the stakes are higher.
Nobody signs up for insurance or buys a car after only seeing one Facebook ad.
The decision needs to be well thought through. In order to win the deal, we need to build trust along the way. In these cases it is very hard to measure the ROI of each campaign.
We are much better off measuring brand awareness, reach or engagement, as well as conversions/leads.
2. The product
This one is big.
Has the whole world been waiting to buy your product, or are you competing with a plethora of companies in a saturated market?
If it’s the former, all we need to do is to put your product in front of the right people and they will buy it. Facebook is the best place to do this.
If it’s the latter, we will almost always advise investing in branding and positioning, as there has to be a be a good reason for your buyers to go with your product in particular over others.
Let’s chat a bit more on this later.
3. Buying behavior
How and where are your customers buying your product?
If all the sales happen online and within a few days of seeing your ads, then it is easy to measure the ROI and to optimize for it. This is the case for most online shops.
If you have a local business, then it is much harder. The same is true if you have an online shop, but people end up purchasing via different communication channels such as phone, emails, Facebook messenger or Line messages.
In this case, it makes sense to measure the quantity and quality of these messages/calls. Also, measure reach and engagement. Unfortunately, though, we’ll never know whether ad Z had an ROI of 2.8 at any given point.
In these scenarios, a much more holistic measurement is needed.
Instead of focusing on the daily ROI of your campaigns you should be comparing your monthly advertising costs with monthly sales revenue.
This requires putting much more trust into your advertising efforts, as you won’t be able to see the benefits immediately and directly.
Hard Earned Lesson #2: There is no magic pill. What works best ALWAYS depends on YOUR situation
Everybody loves shortcuts.
I hear it almost every day from a friend in the industry or a client: Guru X has put out out new content with the magic formula on how to get rich using Facebook ads.
All you need to do to get rich via Facebook is Y.
Y could be:
- Set manual bidding to 20% above your max CPA for 7 days and then cut it in half
- Duplicate best winning ad sets every 24 hours
- Always start with Engagement ads before running Conversion Ads
“Could these work for me?” you may be asking yourself…
As a trusted advisor to our clients, It is our duty to test new trends and “hacks” in order provide the best results. Rest assured that we have been, and are constantly testing.
The truth is that 95% of these magic pills will not work.
Some of these “hacks” might give you a new perspective and open more options for optimization.
There is no such thing as the magic pill, blueprint or formula for success. There are best practices. Even these are changing constantly.
One good example is to do with audience size: Half a year ago, using many small and specific audiences (let’s say 10,000 to 250,000 people) worked well for most businesses. Today the Facebook algorithm evolved and is so much more advanced. In most cases, aiming for huge audiences (let’s say 500,000 to 2,500,000) usually works better.
Usually. Not always.
You can start with best practices based on recent success. You will still need to do a lot of testing to get the best results from your Facebook marketing.
At the end of the day there are no shortcuts.
From Black Hat SEO to Facebook Short-Cuts: History is repeating itself
The words, “best practices based on recent success” were chosen for a reason.
Back when I first got into online marketing, over a half a decade ago now. SEO (search engine optimization on Google) was the big thing. SEO was a lot about “cheating” the system: finding hacks and workarounds to beat Google’s algorithm and using shortcuts to get your website to page one in the search engines as quickly as possible.
Google has always said that their goal is to present users with the most relevant search results, yet there is still a huge industry built around faking authority for your website, instead of creating great content.
It wasn’t until a few years ago (and many painful Google updates like Google Panda and Penguin penalizing companies using shortcuts) that content marketing became a common tactic for SEO…
Sure, some people made a lot of money with these shortcuts and it paid off for many other companies.
The majority of people and businesses fell into a trap and lost time, money and opportunities following the holy grail of shortcuts. They got their page ranked on the first page of Google overnight. They also lost this ranking just as fast.
It’s possible to trick these tech giants for a short time. Do you really believe that you are smarter than the brightest tech minds that Google can afford to hire?
Now history is repeating itself on Facebook. Google and Facebook are quite similar in many ways:
- Both understand that they need to provide the best user experience – content matters.
- Both have the brightest minds on their payroll to work on making their vision a reality.
- Both are moving super fast and are definitely leaving short-term opportunities that can be exploited.
- Both of them will constantly correct these short-term opportunities before most of us will even now about them.
This means that, most of us will only know about these short-term opportunities AFTER they have worked.
The dangerous life cycle of Facebook/Internet Marketing advice
Here’s a simple case study that will show you why most of what you read about Facebook ads today is already out of date:
Dropshipping from Teespring via Facebook ads was a huge thing for a while. On Teespring, you can easily design your own T-Shirts (or hire a designer to do it for you). The T-Shirts are printed on-demand per order, and are then sent to the customers on your behalf. This is a great business model, as you don’t need to hold any inventory.
This is a model that works well with Facebook interests targeting, too. For example, on Facebook, we can easily target people interested in Bruce Lee, who are also into inspirational quotes and who Facebook identifies as an “Engaged Shopper”.
Let’s reduce our targeting to men between 18 and 45 years in the US. This leaves us with 490,000 people who may at the very least be interested seeing a product like this:
Teespring might charge you $12 USD for producing the T-shirt and 4 USD for shipping it.
You might find somebody to buy one T-shirt after every 4 USD spent on ads on Facebook.
Your costs are 20 USD and if you can sell each T-shirt for 26 USD then there is, theoretically, a profit of 6 USD per T-shirt sold.
This is how it used to work, and it worked great for many people.
…great while it lasted, that is.
Now let’s have a look at Google Trends for the keywords “Teespring Facebook”:
This search got the first regular attention early 2013, with the first big peak one year later in early 2014 and the highest peak 3 years later, in early 2016.
The interest has been diminishing since then, but is still there 4 years later.
One of the best-ranking search results on Google from a credible source is from February 2016. It features a success story of selling Teespring T-Shirts via Facebook:
It seems like the big Teespring + Facebook money was being made in 2013 and 2014. Some people definitely still made money in 2015. Some are even making money today or will be in the future.
It should be obvious that the gold-rush “Facebook + Teespring” age is over. By now you can rest assured that everybody tried selling T-shirts to everybody and that the people still winning the game are those who got most of the experience in it.
What happens when we search for “Teespring Facebook” on YouTube today?
Nearly 1000 videos have been uploaded showing people how to make money with this outdated method.
People are still selling the dream of printing money by using Facebook and Teespring. It is not only Youtube. We find these courses at other reliable sources as well:
Why are people still selling knowledge about Facebook ads and Teespring even though the golden days are long gone?
The answer is simple: because it is easier to sell a course on how to make money, than it is to actually make money.
Most courses and information are made and marketed AFTER they have worked. They are being marketed by people who make their money selling people ideas on how to make money.
For example, Tom wants to make money online. He might have seen some success selling T-shirts on Facebook with Teespring, but it never really took off. By now he knows the whole theory on how to make money with this method, but it is not that lucrative.
Tom is desperate to make money and he now has 2 options:
- He makes it work and actually builds a business (long and painful journey).
- He finds 1000 other Toms who are equally hungry for making a quick buck, then sells them the theory.
Option 2 is always the easier short-term way and the preferred way for many people. This makes it dangerous to absorb information.
By the way, I am not saying that there are no legit sources. There are some great people who share their knowledge online, people who are currently making money by actively working on Facebook marketing in the trenches, and are also sharing their knowledge at the same time. Some good examples from whom we enjoy learning (because usually their tips work) are Nicholas Kusmich, Jon Loomer and Ezra Firestone.
The bottom line: by the time these golden tips and hacks arrive in your newsfeed (as an industry outsider) you can be certain that most information is already outdated. Take it with a grain of salt.
Hard Earned Lesson #3: It is vital to understand the platform first
As we touched on above, I am not a big fan of finding short-term hacks that work against Facebook.
Not to say I don’t test them.
If certain ad optimization techniques get much better results than others right now, then I will certainly be using them.
Building an entire marketing strategy around a short-term hack? Not a good idea.
Facebook has a clear and strong vision and they have one of the best teams in the world to work towards it. Here’s a quote taken directly from Facebook’s company info:
“People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.”
Read the above quote a couple of times if you really want to be successful on Facebook in the long-term. It is helpful from 2 perspectives:
1. The users
Facebook is doing a superb job achieving their vision.
Most people log in to Facebook every day to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.
They don’t come to Facebook to watch the same 2-minute commercial clips that already failed to convert them on TV.
What Facebook users want is to scroll down their newsfeed, attaching heart emojis to their friend’s holiday snaps and hitting the thumbs-up on their sister in law’s dinner photos.
Basically, people open Facebook to take a break from life or to kill their boredom. People don’t come to Facebook to make complicated (buying) decisions.
To make matters worse, the same person will open Facebook for different reasons and in very different moments of their life.
For all we know, your potential buyer might be sitting on the toilet, paying the price for a much too spicy Thai Papaya salad he had the night before. The next time the very same person logs in could be during a long, boring business meeting, or just after waking up on a lazy Sunday morning.
It is important to put ourselves in the shoes of the users when creating ads.
Sure, Facebook wants to make money. And as we all know, they make a lot of money.
Almost the entirety of Facebook’s revenue comes from advertising. In 2016 they made 8,629,000,000 USD revenue from ads:
On average, Facebook made $4.83 USD revenue per person in the last quarter of 2016.
If you are reading this from the US, then you definitely made Facebook more money (average $19.81 USD). If you are reading this from Asia then chances are that you made Facebook less money (average $2.07 USD).
Comparing these numbers to the gigantic yearly revenue of $8,629,000,000 USD in 2016 the individual contributions are peanuts.
The message? Facebook wins because of their huge user base.
The moment the users decide to leave Facebook and to go elsewhere, Facebook will also lose its revenue.
This means Facebook will either lose when people stop having a desire to “stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them” or when people decide that there is a better place than Facebook to “stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them”.
The first case is hard to imagine. The second one is a valid concern.
There are many platforms working hard to be a better place for people to “stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them”.
On top of this, user behavior and demands constantly change, hence Facebook needs to constantly adapt.
Most advertising works against the vision of Facebook.
This is the reason why you have to pay more for bad advertising. You pay more for unrelated ads, than for ads that positively engage users.
Unrelated ads do not only work against Facebook, but also against its users. We are not on Facebook to know that Company X sells product Y and that we need to buy it NOW.
In a way, Facebook is protecting our time by rewarding advertisers with cheaper reach when they use engaging marketing messages.
2 things will happen as Facebook ads get more and more popular:
- Ad costs will increase. Right now Facebook ads are still hugely under-priced compared to most other advertising channels. Once the big players wake up and shift more and more marketing budgets to Facebook, this will cause the prices to increase. Simple supply and demand.
- Facebook will become more picky on which ads to show. Again, supply and demand. In some ways they have always been doing it. They simply increase the prices for ads that are not well perceived by users and eventually make them too expensive to deliver. The next logical step is to stop delivering ads at all as soon as Facebook gets signals that these ads are hurting the platform. It is already happening right now in cases of conversion-optimized campaigns and small audiences: If there is nobody who would convert based on the insights and data that Facebook has, then they will decide not to deliver your ads at all in some cases. This means they would rather not take your money if that helps them protect their vision.
The bottom line: It is most important to understand the platform, the users and the dynamics. These things help you create ads that can actually connect with your audience, which is much more valuable than becoming an expert user of the Facebook Ads Manager.
Heard Earned Lesson #4: ROI is important but not everything
While I am writing this article we are overseeing tens of thousands of dollars of daily ad spend on solely ROI-focused campaigns.
Just half an hour ago I sat with the team and we decided to add an additional increase in daily ad spend on a few selected ads for a client, because of their positive ROI and their ability to generate more money.
And at the same time, it is important to express that ROI is not everything.
The question is not whether our marketing needs a positive return on investment. Of course it does. The real question is whether or not we can really measure it. The answer is most likely no.
If we have an E-Commerce business where people make a purchase a few days or weeks (at the latest) after seeing our ad online, it works. It will be easy to measure the daily ROI. In most cases, the buyer’s journey is much longer and it is impossible to keep track of all the factors that resulted in the buying decision.
Example: You see a funny video from brand A.
6 weeks later, you see two of your friends commenting and sharing a helpful photo album post of brand A.
6 weeks after that, you see an ad from company A that promises to solve a problem you have.
You click on it and think about buying their solution. Just then your phone rings, you get busy and you forget about it.
3 days later you see a retargeting ad and you click on it. You think about buying again. You are even more excited, as this ad is showing testimonials from real people, which makes you feel at ease – their product might really work! But anyway, it is the end of the month and you are tight on money. You decide to wait some more time, then you forget about it again.
4 weeks later you are visiting your mum. Your problem comes up in a discussion and your mum wants to help you solve it. You tell her about this product and she decides to buy it for you. She opens her computer, you put it into the shopping cart for her and she adds her credit card to it.
Would any of the ads in the example above show a positive ROI? No.
- Would the purchase have happened without promoting the funny video? Maybe.
- Would the purchase have happened without your 2 friends engaging in their promoted photo album post? Possibly.
- Would the purchase have happened without the ad that targeted you directly to solve your problem? Potentially.
- Would the purchase have happened without the trust-building retargeting ad? Who knows?
- Would you have ever considered and finally purchased this product if you have never been aware of it? Definitely not.
The problem is that most business owners and decision makers simply don’t understand marketing or don’t trust their marketing team enough to make long-term decisions.
We cannot blame them, because there are also dozens of other examples where people spend millions on brand awareness without ever getting anything in return.
For us, the key is to find the right balance between performance-based campaigns AND branding campaigns. I write AND because these budgets should be separated from each other.
If your business is already making good money on Facebook ads with performance-based campaigns, then there is really no reason why you should not be investing in branding.
You have a strong product. If you believe in it, then there is no reason not to invest some money every month on making it a stronger brand. It will be hard to measure, but if you believe in your product and in marketing then you know that this will eventually lead to even more revenue.
Or, to say it with the words of Gary Vaynerchuk:
Hard Earned Lesson #5: Marketing is only as good as your product
This is one of the hardest lessons to learn for any business owner or agency.
Our first big project was growing a Swiss B2C marketplace. There was no specific niche, no unique selling point. It was just a store selling everything to everybody. It was pretty much like building Amazon on a shoestring budget, over a period of 1-2 years.
Of course it failed.
The results were always the same: long working days and weekend overtime; A lot of hard work; some results, a tired agency team and a satisfied but still fairly underwhelmed client.
While we didn’t immediately learn from the most obvious mistakes (we kept on taking clients with bad products and failed to manage their expectations better), we were forced to learn and work a lot more, which has helped us along the way.
If we train to run a mountain uphill with a heavy backpack on our shoulders, then life becomes surprisingly easy once the backpack is taken off and the road becomes flat.
When we finally got a chance to work with companies with good products, the results became much better. In fact, they were outstanding. Often enough we were able to double the revenue within a short period of time. For more details have a look at our Facebook marketing success stories.
Our most successful Facebook campaigns usually followed the same pattern:
An entrepreneur builds a great product and has gotten the campaigns to $5000 – $30,000 USD monthly ad spend with a positive ROI. They realize they need more time building the business and thus need a partner with more in-depth Facebook marketing knowledge. Within a few days, we would most likely increase their sales revenue and keep growing from there on.
The main reason why the owner got that far with Facebook on their own and why we could achieve outstanding results that easily?
A great (and usually unique) product that fills a need in the marketplace.
For us, as a company, these learnings have actually lead to big changes. We completely stopped building websites, online shops, and apps for clients. No more SEO or logo design. No more Full Service Agency. We have realized and accepted that we cannot be the best at doing everything at once.
Instead, we have decided to fully focus on Facebook marketing. We have worked since December to 2016 until today (August 2017) on building our solutions.
We haven’t done any active marketing until we got the solutions and internal systems to a place where it will be easy for us to compete in the marketplace.
We truly believe that once our backpack is empty, the hike will be much more enjoyable!
The bottom line: Make sure that your product is as good as it can possibly be. Be honest when answering the question: “why should somebody buy from you instead of your competition?” If the answers are not clear and super obvious, then it might make sense to work on improving your product before going crazy on the marketing. Empty your backpack before going for the hike!
Hard Earned Lesson #6: The world is changing faster than ever
Print had been the only advertising medium for a hundred years.
It took 200 years to get from newspapers to magazines.
It wasn’t before 1922 that a completely new medium came along: radio.
This was the big revolution until 20 years later, when television was born.Most media survived whole generations.
With the digital age, everything has changed. And it keeps changing faster and faster.
Two years ago, we were golden on Facebook if you knew how to set up demographic profiles based on interests. Today this skill has already become outdated because usually, using lookalike audience works better anyway.
Have you found a good designer for your Facebook banners yet? Yes? Good for you! Unfortunately, Facebook is now on its way to becoming a video platform and nobody can keep up with the demand for video.
This is why in 2016 Facebook had to pay media companies 50 million USD to publish live video content on Facebook.
Companies that are fast and can make the change from banners to videos are rewarded with a much better reach, which means they are simply reaching many more people with the same budget.
As the market catches up, the reach goes down and Facebook does not need to pay for live video content anymore, as their users are now doing it often enough to keep other users engaged.
By the time most companies are doing well on Facebook, there will probably already be a new channel that is more important.
Everything is changing faster than ever. Those companies that can keep up with this fast-changing world, are going to win in their market(ing).