What we learnt from spending $1 million a year on facebook ads


Of all the self serve ad platforms available today, Facebook ad manager is by far the best, both in terms of targeting and optimization. Facebook realized fairly early that clients are looking for outcomes not impressions. Given that inventory is limited, to maximize their revenue per impression, they then had to reduce the number of impressions it takes for every outcome. By doing this, they can effectively charge more per impression since the cost per outcome remains the same for the client.

Lead generation is surprisingly easy to set up in a facebook ad campaign and for any new product or service offering, the first few leads you get are surprisingly cheap. As it scales, leads start becoming more expensive and cost per lead starts increasing. So here are a few essential ingredients that make a facebook ad campaign scalable:

1. Targeting and audience size

When you create a new facebook ad campaign, you want to be able to target leads or customers who would be interested in your brand. Depending upon how niche your product is, you can create a stack of targeting options layered on top of each other. If you use too many targeting options, your audience size is going to be proportionately smaller. There are two risks related to that:

  • Incorrect targeting – If one of the targeting criteria does not resonate with your actual target group, conversions will drastically reduce and the optimization algorithm will not work.
  • Missing out on a large buyer base – You may miss out on a large section of your TG if you make the targeting too narrow.
Facebook ad campaign targeting options

Facebook ad campaign targeting options


If however, you make the targeting too broad, you may end up getting a lot of low quality leads. The ideal target size we’ve seen work is between 100k and 2 million but it really depends upon the product and the size of the target segment.

2. Optimization

Facebook ad manager has an incredibly complex optimization algorithm thanks largely to the mountains of data they collect on user behaviour. If you pick the wrong algorithm, you’re not going to get the best outcome. If you’re doing lead based campaign, pick the website conversion campaign. Now your algorithm starts showing ads to everyone in your target segment who has an affinity to click on ads and sign up on websites.

Your first few leads now determine how your next few leads are going to be. Monitor these very closely. If the first few leads are not of good quality, you need to change the campaign immediately. Facebook’s optimization algorithm needs about 20 outcomes a day to optimize well so budget accordingly. Facebook ad campaigns tend to get a high cost per lead initially but this cost comes down as a campaign optimizes and eventually starts increasing when the campaign has run out of people to show the ad to. This is when you lay the campaign to rest and start afresh!

3. Messaging

Imagine saying the same thing to someone again and again every day for months. You may be saying it in slightly different ways and be using different images or text, but if the underlying message is the same, you’re not making the boredom any lesser. Even if you have very few products/services to offer, you can devise different strategies of reaching out to a client. Let’s take a mutual fund investment app for example. Sounds like a boring service for a social media ad channel right? Let’s look at some creative ways to make these work:

  • Carousel ad with images and video testimonials of clients along with returns they’ve gotten.
  • A campaign about a person relaxing while his money is multiplying showcasing passive income
  • A funny negative campaign where a person hates his money and doesn’t want it to grow (to indicate that that’s the only reason to not try the app)
  • A campaign about why the old way of doing things is not always good and showcasing the benefits of investing through the app.

Facebook ad sample

Your messaging and targeting go hand in hand. If your message is relevant to a large section of the people you’ve targeted, your ad’s quality score is going to be high and you end up paying less for every lead. As your ad becomes older, your quality score also starts decreasing because most of the people who were interested in clicking on that ad have already clicked on it. When conversions start decreasing and cost per conversion starts going up, you will see a dropping quality score alongside it. That’s when you stop the campaign and start a new one.

4. Facebook lead ads, context cards and canvas ads

Facebook realized a while ago that capturing lead information on facebook itself instead of taking the customer to another web page creates a better experience for the customer and ensure he continues to spend more time on facebook. They came out with lead ads which initially were a disaster because of the poor quality of leads that were coming through. Lead ads auto-fill customer information from his facebook profile and are very low involvement for the customer. This results in people forgetting about submitting their information very soon and a lot of people filling forms accidentally or even if they are not particularly serious about it.

Facebook lead ad

However, these ads are cheaper. If you want to use lead ads, here are a few things you must do:

  • Use them with context cards and not alone.
  • Ask questions with multiple options that make them think.
  • Make phone number non-autofillable. You can just create a custom field and ask him to enter his phone number there.
  • Facebook lead ads should be responded to within 2 hours.

5. Facebook Audience Insights

I’ve known a lot of marketers who have been running Facebook ad campaigns for a long time but have only gone through audience insights once or twice, if at all. This is what completes the feedback loop. Audience Insights give you a surprising level of detail about who is engaging with your Facebook ad campaign. This data is very valuable in a number of ways.

Facebook audience insights

Facebook audience insights

You may get an insight that you can apply to target your future Facebook ad campaigns even better. However, while I say that, I would remind you to make sure you don’t make the targeting mistakes we discussed earlier in this article. You may also come up with co-branding, co-promotion or partnership ideas based on what your audience is engaging with. It’s essentially a free and detailed market research platform.