Social media advertising, especially on Facebook, now represents a huge part of the overall advertising market. Last year, Facebook alone accounted for nearly 21% of all money spent on digital ads in the U.S., according to research firm eMarketer. And small- to medium-sized businesses are an important part of that share, with Facebook unveiling a new set of tools for just this segment at its annual developer conference in May.
If you’re new to advertising on social media, one of the first challenges you face is setting your initial budget. And once you’ve cleared that hurdle, how do you track whether the investment is paying off for you?
Fortunately, social media networks are some of the most accessible advertising options for small- to medium-sized businesses. They provide targeting and tracking tools anyone can learn to use, and the initial budget can be as low as a dollar a day.
For Karla Arjona, a REALTOR® in Sugar Land, that’s enough.
Match Your Budget to Your Audience
Arjona has been advertising on Facebook since 2015, and her budget has floated with the platform’s minimum daily spend, which was $5 per day at one point but now sits at $1 per day.
“It’s worked beautifully to increase exposure on my Facebook page,” Arjona says. “I haven’t really increased
Targeting your sphere is a good way to start advertising on Facebook for a low initial budget, according to Aarin Chung, CEO of Honey Bar Media and creator of the Community Influencer Show, a real estate marketing podcast. That strategy may include advertising to your Facebook followers, creating a Facebook audience with your email list, or embedding a pixel on your website to retarget visitors when they log into Facebook.
“One dollar a day is more than sufficient to stay top of mind with those in your sphere,” says Chung. “Those are people who know you, like you, trust you—very hot audiences for you.”
From there, Chung recommends reaching out to what she terms warm audiences: those who’ve seen your signs or heard your name but aren’t a lead yet.
Bridget Goodenbour, a REALTOR® in Pearland, uses Facebook ads as part of a multi-pronged marketing approach that also includes signs, other marketing collateral, networking events, open houses, and door knocking. She spends an average of $2 per day on Facebook ads with the goal of building brand awareness and familiarizing potential clients with her website.
Her leads may have been exposed to multiple aspects of her marketing campaign. “As you can imagine, there’s a lot of crossover,” Goodenbour says. “Together, it brands me as the local expert.”
The less familiar an audience is with you, the more it will cost to reach, according to Chung. Warm audiences may take up to $5 per day to effectively reach on Facebook, she says. Those who are completely unfamiliar with you—a cold audience in Chung’s terms—are the most expensive to reach and convert. If used effectively, however, $5 to $10 per day can be enough to advertise to a cold audience on Facebook, Chung says.
Monitor and Measure Your Campaign
Facebook provides a host of metrics and data for your campaigns. Commonly used metrics in digital advertising include click through rates (CTR), cost per click (CPC), cost per acquisition (CPA), cost per 1,000 impressions (CPM)—all of which are calculated for you in Facebook’s Ad Manager.
Travis Thom, a Facebook marketing strategist for real estate agents, tracks the click-through rates and conversion rates of campaigns for his clients. As those are often lead-generation campaigns using Facebook’s lead-ad form, the click-through rate measures clicks to open the form, and the conversion rate would measure how many users finished and submitted the form.
“The industry benchmark click-through rate that we look for is 1%,” Thom says. “If it’s below that, something is off—the targeting, the ad copy—something is not resonating with the audience.”
Facebook assigns each ad a relevance score from one to 10. The relevance score reflects how positively Facebook expects your target audience to respond to the ad, with 10 being the highest. “If you have a relevance score of seven or higher, you know you’re doing something right,” Chung says.
Thom says you can get an idea of how the campaign is going to perform after it has reached around 2,500 impressions. Before that, Facebook is still in the learning phase. Then you can start to evaluate the reach, frequency (how often a user has seen the ad), relevancy score of the ad, and click-through rate or other measure of engagement with the ad.
If you use other automated systems as part of your marketing—automated text messages, transactional emails, etc.—track those conversions, too. Thom tracks conversions on and off Facebook, counting each home viewing appointment or listing presentation as a conversion.
When evaluating your cost per acquisition, you need to keep in mind the overall cost to convert a warm lead versus a cold lead, according to Thom. Even if your ad is relevant, setting your budget too low may allow other advertisers to outbid you for the leads most likely to take action. “If you’re fishing at the bottom of an auction, you might be disappointed with low-quality prospects,” Thom says.
Tracking the revenue generated by Facebook advertising down to the click or conversion can be helpful, Thom says, but you need a significant amount of data to get an accurate view. “If you run a campaign for a month, then measure it 60 days later, that timeline is too short,” he says. Six months is a more realistic time span to evaluate the effectiveness and return of an ongoing campaign, according to Thom.
How to Define Success
“Ideally, yes, I want conversions into transactions,” Arjona says. But her Facebook campaign is focused on branding and growing her audience, with impressions being her most closely tracked metric.
“My success has come from people seeing my ads, looking me up somewhere else, reading my reviews, then calling me and giving me an opportunity to work with them,” Arjona says.
Like Arjona, Goodenbour’s social media ads focus on branding, but she does track where her clients come from. “While the majority of my business is referrals from my clients and network, approximately 25% of my business has mentioned to me that they saw me on social media, even if that isn’t ultimately how they came to work with me directly,” Goodenbour says.
Tracking conversions, cost per acquisition, revenue per click, and other metrics is important, Chung says, but she tells her clients not to obsess over individual metrics. A house is a very involved decision-making process, she says. You can’t treat it the same way as you would an impulse buy from an ad in your news feed.
You’ll know your social media ads are working if you’re getting feedback, which can happen within hours after starting a campaign. If you’re advertising to hot audiences, your phone will start ringing, Chung says. For warm or cold audiences, the feedback may be people signing up for your newsletter, registering to receive a list of open houses, or whatever interaction your ad is designed to promote. If you’re not getting any feedback in the first couple days of a campaign, check your ad’s relevance score, click-through rate, or other metric you’re targeting and make changes.
When showings of a listing start to tail off, Arjona will run Facebook ads promoting that specific property. “Often when I start running the ad, showings increase again,” she says.
“So even if those agents aren’t telling me they saw the ad, I know that it’s generating showings.”
Doing Advertising Math
Click-through rate (CTR)
Clicks / Impressions or Views x 100
The click-through rate measures what share of your audience clicked on your ad. A low CTR (1% is a benchmark) can indicate improvements need to be made, while a high rate may indicate that further investment should be made.
Cost per Click (CPC) and Revenue per Click (RPC)
Cost or Revenue / Clicks
Cost per click and revenue per click measure how much money each individual click costs or brings in, on average. These metrics can show whether a campaign can be expected to be revenue positive, but be careful not to underestimate the revenue attributable to the campaign and otherwise discount a successful effort.
Conversion Rate (CR)
Number of unique actions taken / unique visits x 100
The conversion rate is the percentage of your audience who follows through on the action you want them to take. For example, if you have a Facebook lead ad, the conversion rate would be [People who completed the form] / [Unique reach of that ad] x 100.
Cost per Acquisition (CPA)
Total campaign cost / Number of desired results
The cost per acquisition is how much it costs to get a user to take your desired action, such as completing a lead form. CPA can be used to compare campaigns, channels, or strategies to one another or to track the same campaign over time.
Return on Investment (ROI)
(Revenue – Cost) / Cost x 100
To evaluate your marketing plan or any aspect of it, you need to know if the return is greater than the cost. ROI calculates the ratio of profit or loss to the original costs.