Are Facebook Ads the most effective advertising there is?

6 minute read

Let me say in this my first post for Business2 (thanks for having me) I have no shares in Facebook (more’s the pity) and no real axe to grind either way in this tale. I just thought this might be of interest to anyone looking to brand and differentiate themselves effectively, potentially save some advertising dollars (who doesn’t want to do that?) try something new and maybe make themselves look pretty tech savvy in the process.

Facebook Ads.

OK, I was the same too – deeply skeptical as I was of all Web 2.0, self-indulgent bloggers, twits and lamebookers. I’d heard all about alleged ‘click frauds’ last year (search ‘Facebook click fraud’ and you get 18 million results).

About a year ago I attended a small business seminar where the concept of advertising on Facebook came up, and a quick demo was run on how easy it was to setup and how quickly results were viewed. I had try it for myself. I put up an ad (it was easy to do), aimed it towards 35-55 year olds who live in Perth (I hail from there) and sat back and watched the results.

Now 11 months have ticked over (long enough time to measure results I feel sure), the ad has been served up almost 22 million times (22 million!) to my target audience and it has cost me a tad over $3500 (or $300/month for 2mn views/month on average). I humbly show you the stats (screen shot of my Facebook Advertising account below) and invite you to pore over the numbers.  [Note: $ values are US dollars]

Being a small business owner with a limited marketing budget, I have experimented with many things over the years (local papers, radio, billboards, cinema ads, car ads…) but the results of my Facebook advertising have blown me away.  I don’t know anywhere you can get potentially millions of directed ads ‘served up’ into your local market for this cost. It equates  to an average CPM (cost per thousand views) of 16 cents.

CPM for my various Google ads run at over 10 times that, and I can’t (as easily) send my ads to people on Google as determined by their age nor where they live. Moreover, all Facebook ads include a thumbnail image of my choosing. Google ads are mainly text based.

If you compare Facebook advertising to more traditional advertising (local papers, cineads, billboards and the rest) the latter tend to follow the old media rules of a ‘shotgun blast at a target’ approach, which is (literally) ‘hit or miss’ at best and (to stretch a tired metaphor still further) provides less ‘bang for the buck’, Charlie Gunningham

As audiences reach for their own divergent media, an advertiser can get lost in the choice, or use that choice to target people directly. I know of an experiment done by fellow Business2 contributor Peter Fletcher who targeted a Facebook ad to be viewed by ONE specific person. As Peter knew their profile settings, he could send up an ad on to their pages when that person next logged on to Facebook. The ad garnered 7 views and was clicked on once – by that person. You can’t get any more targeted than that! I’ve seen shorter Ad campaigns targeted at filling a seminar room and this has been their only marketing spend (about $50) to fill a room of 100 paying $200 a ticket. (That’s a pretty good ROI). No need for brochures, mail outs, email campaigns. Grab people where they are, and who you want to grab.

Moreover, you can run as many ads as you like, set a daily budget (you never go above it), determine your cost per click, pause and delete the ads whenever you want. You can send ads onto Facebook pages of people living in different cities and countries in different age ranges. Enter your credit card details and it gets billed automatically, with notifications of amount spent. You are in total control, can view the results and adjust your ads and settings whenever you like.

Over 6.6 million Australians are on Facebook. 300 million globally (75 million in the States). 1.6mn over the age of 18 are on Facebook in Sydney, 1.4mn Melbourne, 885,000 in Brisbane, 562,000 in Perth… (To check these stats yourself and research further, go to ‘Advertising’ in the footer on Facebook and click ‘Create an Ad’ – under ‘Targeting’ you can play with the variables).

What surprised me at first is that more people over age 40 are on Facebook  than under age 20. It’s a myth that this thing is for kids. And 90% of Facebook users are active (login more than once a week) and 50% login daily. Often 2 or 3 times a day. Do you think these people are interested in real estate?

A few caveats at this stage. You’ll notice that my ad had 22 million views and ‘only’ 6000 or so clicks. A pretty poor ‘click thru rate’ (CTR) you might say (a miserable 0.029%). However, that was deliberate. Being a penny pinching sort of guy I adjusted the settings to maximise possible views (which are free). I was doing it as a branding, differentiation and “getting your name out there” exercise. (You can also set them up to get traffic to your properties, profiles, home page and pay per views if you wish.)

The real estate advertising applications are obvious

  • real estate reps can put a photo of themselves, a brief heading and 135 characters of text, and link the ad to their own profile page
  • individual properties can be put up (as a normal part of every marketing campaign) linking to their individual pages on the agency’s own sites
  • Auction campaigns with standalone web sites or individual pages within sites
  • Simple branding ads sending users to your home page, or better yet, some specific landing page (competition, offer, new blog post…)
  • Ads linking to your Facebook page to drum up ‘fans’
  • Use these ads for recruitment of staff (e.g. you’re looking for a property manager and can using age, interests and possibly gender targeting)
  • Setting up these ads as a normal way of doing things could make you look extremely tech savvy with your vendors and other clients

It would seem something to (at least) consider; but if all the above is true (and I have probably missed most of the advantages others can see straight away) is this the future of targeted advertising – if not on Facebook, but on social networking sites in general? What does this mean for traditional media who rely on local advertising? is already breaking even on this advertising stream. I believe they are going to earn a mint from this, in the same way Google did from Adwords. I have reduced my Adwords spend and moved the money to Facebook. If more and more do the same, what will this mean for Google?

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  • Peter Ricci
    Posted January 8, 2010 at 4:33 am 0Likes

    Go Charlie

    Great post first up. I think Facebook can be great, I prefer to keep my Facebook for family and close friends but see how it can boost your profile!

  • Craig
    Posted January 8, 2010 at 7:54 am 0Likes

    Good article. It has made me take a look at using Facebook when in the past I just concentrated on Adwords.

  • Greg Vincent
    Posted January 8, 2010 at 12:45 pm 0Likes

    Great to see you on B2 Charlie with such a great post. I hope it helps to open agent’s eyes to the possibilities that Facebook can offer.

    Facebook is so intuitive & the demographic of users makes it an ideal place for real estate agents to advertise, plus it can be very inexpensive.

    Imagine, the power of being able to create a facebook ad for a listing for an over 55’s development or targeting Baby Boomers with investment properties, etc.

    At the same time, I wouldn’t necessarily write off Google Adwords.

    If agents can get a relevant ad appearing on Google Adwords targeted at the right keyword they can generate some great listing leads very quickly.

    But the key to getting either Facebook or Adwords to work effectively depends upon the conversion rate of the landing page/website that the ad is sending people across to.

    A lot of real estate agent websites don’t convert very well, so the idea of promoting listings seperately would probably work more effectively.

  • Greg Vincent
    Posted January 8, 2010 at 12:52 pm 0Likes

    Also, Charlie have you tried a Geo-Targeted campaign on Google Adwords? You may find that it will get you a better ROI.

  • Lisa H
    Posted January 9, 2010 at 3:49 am 0Likes

    G’Day, Charlie –

    It’s about quantification, not delivering ads. (Not asking that you post a figure, but) how many actual sales and dollar ROI did you get out of your $300 a month? What percentage of your marketing budget is ppc? These and other figures are what everyone should be aware of before they ever try ppc advertising. Read about inverse search at ROI is always 100%. We’d love your comments. Thank you.

  • Greg Putland
    Posted January 9, 2010 at 11:16 am 0Likes

    Googles Adwords superiority to Facebooks Ads is the simple fact that with Adwords you are actively targeting people who are searching for your products and services, where with Facebook you are not.

    The Facebook ad might be relevant to the Facebook profile but that doesnt mean they are interested in your product. To increase brand recognition Facebook has its place but you really cannot say its superior in any to Adwords.

  • Glenn Batten
    Posted January 11, 2010 at 1:35 pm 0Likes

    Greg Putland,

    On a per display basis Google Adwords certainly beats Facebook hands down every time. Google deliver at around 2 to 4% click through rate whereas Charlie gave his example of 0.029% or about 1 hundredth of the click through rate.

    The reasons for this are exactly as you stated but I don’t think he was that concerned with the CTR at all.

    Since this is PPC (pay per click) what I am interested in is how they compare on a click by click basis and then the quality of each of those visitors as Lisa H is talking about. Because there is no product sold on our websites this is a not so easy but you can gauge the quality of visitors by where they go on your website and what they signup for.

    Using Google Analytics and setting goals and then analysing the traffic from adwords and facebook against those goals should tell us something…

    (Charlie… do you use GA and do you have Goals setup that you can look at how the facebook traffic compares??)

    It seems to me that one of the best benefit of such a low CTR is that Facebook ads provide you significant brand advertising for very little. If those that do click through do follow through and view property, download market reports, signup for newsletters or whatever goals you have set for your website then this is an excellent opportunity.


    Great post.

  • Glenn Batten
    Posted January 11, 2010 at 4:12 pm 0Likes


    I checked out our Geographic targetting options for our area today in Facebook and unfortunately the Gold Coast is not listed.. Funnily though Nerang is but with only 80 people. This makes sense as it stands to reason that most people would just put their hometown as the Gold Coast rather than a suburb but not being able to select the Gold Coast is a bit crazy.

    So the Gold Coast is not available but a suburb of the Gold Coast is..

    I was hoping to try and capture the rest of the Gold Coast in a radius search from Nerang but when I select Nerang and a radius of 10 or 25 miles the population does not increase but if I change it to 50 miles it picks up about 900,000 people in Brisbane.

    So for us at least we cannot get as good a geographic targeting as Google Adwords.

    The other thing that always amazes me is the CPC that people pay on Google… and now facebook. 50 cents per click average is just way too much and yet many people pay way over the dollar.

    In the past three months we have paid on average 6.46 cents per click on Google Adwords for just under 4000 clicks. The vast majority are 6c but I have some chasing appraisals and landlords so we are prepared to go a bit higher on those… not much higher mind you 🙂

    You just have to optimize your ads and your landing page and have a bit of patience. If you write good ads with high CTR then google will show your ads more often. So in the beginning you are not getting lots of clicks.. but the traffic builds and builds. In the beginning we were only getting a few clicks per day day but our daily average clicks after a year is now close to 30 and are rising every week. We seem to be increasing the number of clicks about 10 to 15% per month now.

    Your 6200 or so clicks cost you about $3500 whereas at just 6.46c it would cost us about $400. So unless we can optimise facebook to get the CPC rate down it is going to come down to us whether the extra $3100 investment is worth the profile building. My gut feeling is it would be hard to justify for us at that rate.

    Unless the geographic targeting gets much better for our area we cant give it a test drive but I would suggest people give it a go.

  • Glenn Batten
    Posted January 12, 2010 at 10:46 am 0Likes

    Whoops.. that was not three months for 4000 clicks.. it was 15 months.

  • Greg Vincent
    Posted January 12, 2010 at 4:01 pm 0Likes

    Glenn, is there any Google Adsense within those figures or do you prefer to keep your PPC campaigns within Google’s Adwords?

  • Michael
    Posted January 12, 2010 at 9:01 pm 0Likes

    Another cheaper option than Google is Yahoo. Of course does not bring as much traffic as Google but it is cheaper.

  • Charlie
    Posted January 14, 2010 at 5:09 am 0Likes

    Fascinating discussion – thanks so much everybody; all good. Agree with all the above; the point I was making was about branding, getting the word out, and with demographic data FB allows, I can see nothing better. I would say it would be an important part of the marketing mix, and at the moment few agents are using them – so there’s an opportunity there. And for real estate, it’s about location. True, not everyone (hardly anyone) puts in their suburb on their profile so FB can’t find them when you get geographically specific in this way. It therefore works best when used in capital cities (a drawback for many I expect). So it might not be the be all and end all, but it sure is amazing for targetted, cheap views.

    Incidentially, I’m in New York this week attending the Real Estate Connect conference; just heard a session on Facebook – facebook ads warranted a mention, one guy called them “phenomenal”, another lady (agent) said she had used them and they didn’t work for her. So horses for courses I suppose.

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