When Mark Zuckerberg shocked the digital marketing world with his announcement that Facebook would overhaul its algorithm to let users engage with their friends and family more and less with brands, the social media giant’s CPM skyrocketed 122% -- the highest spike in Facebook ad prices over the previous 14 months.

Today, organic and paid reach are still flatlining, causing ad costs to balloon to unprecedented levels. And in a space where advertising has historically been cheap, how can marketers sustain their revenue without having to increase their Facebook ad budget?

Download Now: Free Facebook Advertising Checklist

One word: optimization. In a nutshell, ad optimization is getting the maximum bang for your buck for every single dollar you spend distributing content. To do this, you need to constantly test your Facebook ad strategy and use data to course correct it enough to maximize your results every time you send out an ad. There are a number of ads tools available that can help -- many of which are free. But still, ad optimization is easier said than done.

To help you implement an efficient and effective Facebook advertising strategy, we'll flesh out HubSpot's five-step process for optimizing Facebook advertising costs. Read on to learn about our approach to Facebook advertising.

The 5-Step Process HubSpot Uses to Optimize Facebook Advertising Costs

1. Choose a campaign objective.

From a fifty-thousand foot view, we usually pursue two types of Facebook advertising campaigns: direct response and branding.

Direct response campaigns aim to get people to take a desired action, like a download, signup, or purchase. Branding campaigns aim to get as many eyeballs on our content as possible. Clicks aren’t the goal here, exposure is.

Facebook also knows which users are most likely to click on ads and which ones are not, so whatever objective they chose at the start of their campaign, the social media giant will distribute their ads to the right audience.

2. Pick a bid strategy.

On Facebook, there are two main ways to buy advertising space: Cost Per Thousand Impressions (CPM) and Cost Per Click (CPC).

When we use CPM bidding, the risk is completely on us. We’re paying for impressions, not clicks, so if our offer or creative isn’t compelling, we’re wasting their money.

When we use CPC bidding, we share the risk with Facebook.We need to craft compelling ads and Facebook needs to distribute them to the right audience. Otherwise, both parties lose.

3. Build out targeting.

One way we like to target our ads is by building a custom audience. A custom audience is a list of people who have specific attributes, like being one of HubSpot’s monthly active users or CRM signee, that we plug into Facebook. Facebook then analyzes this list of people to match them with their Facebook profiles and builds a more robust audience for us.

A couple of years ago, we used a custom audience to target ads to CMOs who use Google Chrome.We wanted to see if their strategy would decrease our cost per acquisition and cost per click for one of HubSpot’s Google Chrome extensions.

But we also had a hunch: We could convince CMOs who use other browsers that HubSpot’s extension was valuable enough to switch browsers for.We ended up being right. When we broadened our targeting to all browsers, we discovered that we could acquire twice as many users for HubSpot’s Google Chrome extension compared to only targeting Chrome users.

Experiment Cost Per Regular User Cost Per Click
Chrome $19.32 $3.60
All Browsers $9.63 $1.07

Another way we target our ads and optimize our spend is by creating lookalike audiences. To do this, there are two relatively easy options we can leverage:

  • Pull lists of people who have specific attributes from HubSpot’s database, like anyone who is a CRM signee or invited additional team members to sign up, and plug them into Facebook.
  • Pixel one of HubSpot’s web pages, like the blog’s homepage, so the list of people who visited the page are tagged with a cookie. This way, Facebook can match these people back to theirFacebook profiles and distribute ads to their newsfeed.

Whichever route we choose, Facebook will generate a much larger group of users who “look like” the people in these lists. We can then distribute ads to a cohort of new prospects who are likely to convert into users.

For instance, during one of their Facebook advertising campaigns that promoted CRM signups, we found out that creating lookalike audiences based off people who have decision maker titles, are activated users, or are listed as a sales rep in HubSpot’s CRM helped us acquire team registrations at a lower cost than lookalike audiences based off people who visited certain pages on HubSpot’s website.

Seed List Cost Per Team Registration
Decision Maker Titles $20.31
Activated Users $20.48
All Sales Reps In CRM $23.95
Registered Users $24.33
CRM Homepage Visitors $27.66
Sales Exec Same $28.55
All HubSpot Visitors $31.48
SB4 Visitors $33.48
Sales Blog Visitors $34.14

4. Craft compelling ad creative.

When we sit down to write ad copy, our goal is write something so compelling that it can grab the attention of a distracted millennial slouched in front of the TV, with their smartphone in one hand and a slice of pizza in the other.

So what’s the process for convincing our audience to ignore that pizza and read HubSpot’s content? After testing over 500 ad creatives during the past two years, we've boiled the art of crafting compelling ad creative into three steps.

Pique Your Audience’s Curiosity

A little intrigue goes a long way in marketing. Humans are biologically driven to investigate our world, rather than respond to it. And if you can evoke enough curiosity in your audience so they can’t help but satisfy it, they’ll click on your ad.

For instance, when we used the tagline “The hidden gem buried within your Google Calendar, brand new from HubSpot”, it produced better results than the tagline “Scheduling meetings just got a whole lot easier with HubSpot’s CRM”.

Why? Without revealing what it actually is, the first tagline describes a new tool that’s right in your email inbox, evoking curiosity and excitement for something that seems valuable yet easily accessible.

On the contrary, the second tagline immediately gives away what the new tool is -- a meeting scheduler. This doesn’t evoke enough curiosity or interest to compel people to click on the ad.

Blend Into The News Feed

Most of your audience’s news feeds are filled with posts from their friends and family, especially after Facebook’s latest algorithm update. To avoid screaming “I’m an ad”, include a photo that actually looks natural.

For instance, the picture below looks like a stock photo. And when people see a stock photo, they’ll immediately know the post isn’t authentic.

However, the next picture looks like a regular picture a friend might post, organically blending in with your audience’s newsfeed and making a genuine first impression with them.

Sell A Feeling, Not A Product

Psychology tells us that emotions drive our behavior, while logic justifies our actions after the fact. Marketing confirms this theory -- humans associate the same personality traits with brands as they do with people. Choosing between two alternatives is like choosing your best friend or significant other. The people we decide to live our lives with make us feel something.

This is also the reason why pitching a product’s features is a lousy attempt at persuasion. Features only appeal to the logical part of your brain, which science suggests doesn’t drive action nearly as well as appealing to the emotional part of your brain does.

To pinpoint the exact emotion that resonated with our audience the most when we promoted our CRM through Facebook ads, we tested over 30 emotional angles against cost per regular user and click through rate. Here are our best and worst ones.

Angle Cost Per Regular User Click Through Rate
Free/Alleviates Frustration $2.86 1.07%
Transformation Version 2 $3.95 0.76%
Data Enrichment $4.08 0.68%
Saves Time $4.10 1.02%
Transformation Version 1 $4.97 0.72%
360 Degree View of Sales Process $9.65 0.53%
No More Falling Behind On Leads $10.47 0.56%
Cuts Down On Stress $10.57 0.64%

5. Design a simple landing page.

Just because you’ve grabbed someone’s attention with your ad doesn’t mean your work is done. You still need to design a compelling landing page that clearly conveys the value of our offer. To help you do this, here are three principles we live by when we design our landing pages.

Again, Pique Your Audience’s Curiosity

Curiosity is the best way to convert an audience. Don’t reveal too much about your offer, but make sure to highlight its benefits.

Don’t Distract Your Audience With External Links

Allowing people to exit your landing page through an external link pokes a hole in your funnel -- users will leak through, diminishing your conversion rate. If visitors can leave your paid acquisition funnel, there should only be two exits: exiting out the page or signing up for the offer.

Test Out A Video

Even though videos can explain the value of your offer in a more engaging way than text, they also serve as a distraction. This might lead to a dip in your landing pages’ conversion rates, but we've noticed that videos actually increased our landing pages’ activation rate, which compensated for our loss in conversions.

Variation Cost Per Regular User Cost Per Activated User
Video $21.56 $78.37
No Video $15.76 $85.32

Never stop testing.

Testing your Facebook ads is like gambling -- most of the time you’ll fail. But if you can quickly figure out which strategies work and which ones don’t, you can refine your Facebook advertising to the point where you’ll almost always earn the maximum bang for your buck on every dollar you spend distributing content on the social network.

Now that you know how HubSpot figures out ad costs, might be asking, "How much is all of this gonna cost me?"

In the next section, we're going to cover how to calculate Facebook Ads costs as much as possible (because, like with figuring out when to send emails, the answer varies).

Let's look at some strategies and tests you can use to figure out how much to spend on Facebook Ads. These suggestions can scale to your business size and goals. Feel free to use these as tips to get the ball rolling.

1. Spend at least $1 a day.

It's tricky to find out how much to spend on ads, and it may require some trial and error. This doesn't mean "Throw your entire budget at Facebook Ads and see what happens," trial and error, but more of a "Look at your data and plan accordingly," strategy.

So, let's think about a test ad strategy for Facebook Ads. For five days, spend $1 for every 100 clicks your website gets. So, if your website gets 10,000 clicks in a day, you'll spend $100 per ad set.

Ad sets can test different target audiences, such as "Teens ages 13-17," or "Millennials in urban North American communities." You can choose audiences based on your marketing goals and buyer personas.

Within your ad, include free content you created to help customers solve their challenges. For instance, if your targeted audience is small business owners, insert a blog targeted towards small business owners. After you've included beneficial content, you're ready to test.

When you run the test, you're looking to see which Facebook ad set generates the most leads for the lowest cost. Once you've figured that out, you can start to determine how much to spend on an ad strategy that cost-effectively serves your Facebook audience in the best way.

2. Think about your intended goals.

What are your intended goals when you run your Facebook ad campaign? You'll want to ensure they're SMART goals, since it's critical you're spending money when and where it counts. Goals that are clearly defined can help you decide how much to spend.

Once you've defined your goals, think about if you have enough budget to devote to Facebook ads. If, after running a test ad, you decide Facebook Ads are too expensive for you, try other ways of Facebook marketing until you have the budget to run ads successfully.

Next, make sure you have some numbers at the ready, including your overall revenue goals. In other words, how much are your projecting to make from your ad campaign? Identifying this goal will help you shape your ad budget.

Once you've defined goals, you can start thinking about ballpark numbers for Facebook ad spend. When you know who you're planning to reach, how much you have to spend, and how much you want to spend, you can begin to build your overall ad strategy accordingly.

3. Use a calculator to estimate costs.

You can use a calculator or a few simple math formulas to help you figure out how much you want to spend on ads. HubSpot offers a free ad spend calculator, but if you want to do some calculating on your own, let's talk about the figures to find.

The first step will calculate how many sales you need to make in order to hit your target revenue. You'll need to divide your revenue target by your average revenue per sale. This will get you the number of sales you need to make as it stands.

For example, let's say that in order to make $7,000 in revenue at $43.75 per product, you have to make 160 individual sales.

In the next step, you will look at your metrics to determine if you can get a valuable return on acquisition (ROA). Take your website conversion links, current click-through-rate (CTR) of ads, and the reach required to hit those targets. Then, fill those figures in.

Facebook ad spend formulaAfter calculating how many sales you need to make and analyzing metrics, you can figure out the ad spend required to make a ROA. Let's use these figures in an example.

If you wanted your wanted target to be $5,000 for the month and your average order value is $31, then you'll have to generate 161 sales to hit that number at a 2% website conversion rate. (Step 1). If you find that your budget based on metrics is $2,500 (Step 2), then you'd want to aim to make $2 for every $1 you spend.

The calculations will let you know how many impressions your ad will have to make to reach those numbers.

4. Focus on your audience size.

Next, set benchmarks focused on your audience. For example, if you want to target two million audience members on a budget of $4 a day, it'll take you months to see a return on your investment. This is because you'd be spending too little money on too wide of an audience to see any real impact in under a year's time.

Similar to the first example, your goals should reflect your audience size. To see a return on Facebook ad investment, you have to be ready for one thing: spending money.

Spending money doesn't mean spending millions of dollars, but it also doesn't mean spending a total of $20. Based on your audience, set benchmarks for yourself that leave you room to recover if you find that ad spend isn't profitable for you right now.

5. Keep best practices in mind.

Ads can be a tricky thing to get a hang of, and at times, stressful. To negate some of that stress, when you're creating your ads, keep these best practices in mind to impact their effectiveness.

First, don't keep your focus solely on building conversions. You can use Facebook ads to help a ton of other business goals, such as attracting leads or building brand awareness. If you put all of your efforts into one corner, you may be missing out on how these ads can really impact your overall marketing strategy.

Next, make sure your ad has visual elements. Videos are popular on Facebook, but if you don't have the resources to produce a video, use some type of visual that will pull scrollers in. For instance, if you have a useful graphic, company commercial, or podcast with a bright cover image, you can use them in place of a video.

Additionally, when measuring the ad's return, keep the tools you use to analyze your success to a minimum. Facebook has its own Ad Manager, but you should only be using two or fewer tools to understand the success of your campaign.

If you are using more than two tools to measure the success of one platform's ad campaigns, think of consolidating resources to keep yourself organized and your numbers accurate. For example, HubSpot's Marketing Hub offers tools that measure and build reports of ad performance.

Though the process for researching, building, and measuring ads can be a long one, don't take the easy way out and spend all you have on ads. Additionally, consider other Facebook Marketing options if you feel you don't have the budget to focus on Facebook ads at this time.

Marketers don't need to spend thousands of dollars to be successful, but you do have to conduct research to figure out how to get the most out of your ads.

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 Facebook Ad Examples

Originally published Mar 17, 2020 3:45:00 PM, updated March 18 2020

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Facebook Advertising