How to Use Facebook Ads to Generate Profitable Leads for Your Local Business

    Alex Jeffs / June 21, 2016

    With almost 1.6 billion monthly active users, Facebook is by far the world’s most popular social network. If your business targets a local audience, it’s also by far your biggest online marketing and lead generation opportunity.

    Facebook’s rich targeting options make it a powerful platform for local businesses that want to attract a specific audience of customers and clients. The right ad, combined with the right type of offer, can supply your business with hundreds of fresh, profitable leads every month.

    Here’s why:

    As of 2016, almost 60% of Australians have Facebook accounts. Of these people, 66% sign in to Facebook every day.

    If your business targets a young audience, there’s a good chance your prospective customers use Facebook on a daily basis.

    Facebook’s advertising platform makes it extremely easy for you to target specific audiences. If you only want to reach women aged 24 to 27 who love travelling, you can. If you want to reach men aged 40 to 55 in Sydney who are interested in sports cars, you can.

    This combination of precise targeting and incredible reach makes Facebook the ultimate tool for advertising your business. You can literally cherry pick the perfect audience and market to them on a daily basis, all while tracking your cost per lead and other key performance indicators.

    Interested in learning how to do this? Below, we’ve put together a six step guide to Facebook Ads for local businesses interested in using the platform to generate a steady supply of fresh, profitable leads.

    If you’re interested in growing your business using Facebook Ads, scroll down as we walk you through the process of defining your audience, creating your offer, monitoring conversions and launching your first Facebook Ads campaign.

    Step 1: Define your target audience

    Facebook’s biggest strength is its incredibly precise targeting. Using the right combination of demographic, location and interest targeting, you can reach the precise audience that’s most likely to respond to your offer and become your customer.

    The first step in making a profitable Facebook lead generation campaign is defining your target audience.

    If you already keep data on your customers, this process is simple. Ask yourself: Who already buys our product or service?

    If you have a specific demographic that’s very overrepresented amongst your customers — for example, women aged 25 to 40 in a certain location — you can use this audience as the basis for your campaign.

    If you don’t know your exact audience, you can start your campaign by approximating the best audience for your offer.

    At the beginning of a campaign, targeting a wide audience isn’t a bad thing. Facebook’s pixel (a code snippet you can place on your website) will track which demographics perform best for any campaign, making it easy for you to optimise later.

    We’ll start the process of defining our audience by looking at the user volume on Facebook for our demographic and area.

    For our example campaign, we’ll create an example business: a luxury wristwatch shop in Sydney that’s primarily aimed at men aged 50 and up.

    To start building your audience, go to Facebook Ads and create a new campaign. Because this campaign is just for testing, select “Clicks to Website” as the campaign objective:

    Facebook: Click to website ads

    We’ll call our campaign “Example Campaign”, since we’re building it specifically for this guide. In a test campaign, there’s no need to set a pixel. We’ll make a tracking pixel for our live campaign later — for now, this campaign is just for learning more about our target audience.

    Example Facebook Ads campaign

    Let’s assume our example business is located in Sydney. We’ll set the target location to Sydney and include surrounding cities within a 10 mile radius.

    Geo-targeting Facebook Ads

    As our targeting becomes more defined, the size of our audience starts to shrink. Before setting Sydney as the campaign location, we had an audience of 14 million. With Sydney as our target area, our campaign will reach a maximum of 2.1 million people.

    Example Audience Size

    From here, it’s time to narrow down our age and gender targeting to reach the people who are most likely to become customers. For our example campaign, we’ll use a demographic of men aged 50 and up.

    With our targeting narrowed, our campaign has a maximum reach of about 210,000 people. As a general rule, the smaller your audience is, the more you’ll be able to create ads that speak to their needs, interests and goals.

    For most campaigns, the sweet spot for a local audience is 10,000 to 250,000 people. Any more than this and you’ll struggle to create a specific, targeted message. Any fewer and you’ll find the campaign producing very few results because it’s audience is so small.

    Audience example #2

    Once we start building a real campaign, we’ll use interests and other targeting options to reach the most specific possible audience. For now, seeing that there are 210,000 people that fit our ideal customer profile is enough to know that a Facebook Ads campaign has potential.

    Step 2: Create a simple, “30 second” offer

    Before we can create our campaign, we need to have an offer. An offer is a “hook” that draws in people who might be interested in our product or service.

    When people browse Facebook, they usually aren’t planning to buy anything. While a Google AdWords ad targets a warm, interested person looking for information about a certain item, an ad on Facebook reaches someone who’s usually just browsing passively.

    This means that selling a product or service directly on Facebook usually isn’t a good way to run a campaign. You’ll make a few sales with a direct-to-product Facebook Ads campaign, but you’ll usually struggle to become profitable without extremely specific and defined targeting.

    When you use an offer, you reduce the amount of friction for the consumer. Instead of having to buy something online, all they need to do is express interest in something (typically a free offer) to signal that they’re a good lead for your business to follow up on.

    What type of offers work best with Facebook Ads?

    The best type of offer for Facebook Ads is a free offer. By giving away a sample product, useful information or any other form of value for free, you’ll attract the attention of people who have the potential to become your customers.

    This doesn’t mean that you should give anything away for free. The value you offer for free has to be related to your product or service.

    If you’re an architect, you can offer a free consultation for people interested in designing a new home or building. If you’re a dentist, you can offer a free check up in the hope of attracting new patients interested in cosmetic dental work.

    If you’re a cleaning company, you can offer a free quote for people who might be interested in signing up for your weekly cleaning service.

    The best free offers are directly related to your product and service, cheap for you to supply, and ideal for upselling a more expensive product or service to the customer.

    For our luxury wristwatch shop, we’ll create a simple free offer. When a person types their name and phone number into our web form, we’ll contact them to schedule a free consultation with our watch experts to work out which type of watch best suits their style and wrist size.

    This type of offer is great for attractions motivated leads. Since the offer makes them even more interested in the product (after all, they’ll discover the perfect wristwatch for their style) they will have a high level of motivation to complete the purchase and become a customer.

    The “60 second” offer

    Here’s a great way to test if your Facebook Ads offer is likely to succeed or not. Ask yourself, is my target customer able to understand and claim this offer within 60 seconds of seeing the ad?

    If your offer is overly complicated, it’s going to repel as many people as it attracts. If it takes too long to understand or claim, it’s going to have a low conversion rate. The best offers are easy to understand and claim within 60 seconds of seeing them advertised.

    Keep your offer as simple as possible. It should be easy for people to understand within a few seconds of seeing your advertisement, and easy to claim using a short, simple lead generation form on your landing page.

    Tips for creating a great offer

    • Don’t give away a product or service that’s too expensive. Focus on inexpensive offers that provide a lot of value to the audience you’re targeting and motivate people to buy your product or service.
    • The broader your targeting, the broader the appeal of your offer. Focus on using offers that everyone in your target audience can find value in, as this will boost your response rate and help you generate more leads from your campaign.
    • Keep it simple. From seeing your ad to claiming your offer, the entire process of going from viewer to prospect should only take people around 60 seconds.

    Step 3: Use the Facebook pixel to track conversions

    Facebook lets you track conversions using the Facebook pixel — a snippet of code that you can add to your website. This pixel records user behavior on your website and tracks conversions in Facebook’s ad interface, letting you see how your campaign performs.

    To set up a Facebook pixel, you’ll need to have a landing page for your campaign. You can send traffic to your main business website, but unless it specifically mentions your offer, it’s unlikely to perform well.

    A far better solution is to create a landing page specifically for your offer.

    A landing page is a page designed specifically for users arriving from your ad. It captures their attention, explains your offer and encourages them to take action and enter their name, phone number, email address and other information into your lead generation form.

    There are several ways to create a landing page for your Facebook Ads campaign. You can:

    • Use landing page software like Instapage or LeadPages, which let you create a simple landing page in just a few minutes
    • Ask your web designer to create a landing page for you as part of your existing business website
    • Set up your Facebook Page as a landing page, and encourage users to take action from there

    In most cases, the best solution is to add a landing page to your website. Your landing page has several jobs to perform. It needs to explain your offer to users, convince them that it’s valuable, and finally encourage them to take action.

    Here’s an example of a great landing page for Facebook Ads, courtesy of H. Bloom:

    Landing page example

    Image source:

    This landing page has all of the elements required for lead generation success with Facebook. It has:

    • A clear explanation of the offer (“Custom floral arrangements tailored to your style and space. Starting at $75 per delivery.”)
    • A description of how the offer works (see the “How it Works” section of the page)
    • A simple lead generation form that asks for the user’s name, phone number, email address and city

    Within just a few seconds of opening the page, the user completely understands what the offer is, how it works, and how to claim it. This landing page is a great example of a 60 second offer that provides lots of value to prospective customers.

    Adding the Facebook pixel to your landing page

    The Facebook pixel records activity on your landing page. This lets you track how many people who click on your ads become leads. Facebook’s pixel can also be used for retargeting — a form of long-term advertising that can help your business remarket to prospective customers.

    Setting up a Facebook pixel and adding it to your landing page is a simple process. Click “Tools” in the Facebook Ads navigational menu, then click “Pixels” to reach the tracking pixels page.

    Setting up the Facebook Pixel

    Once you’ve created your pixel, click “Actions” and then “View Pixel Code”. A modal window will pop up containing JavaScript code. Using this code and your event code, you can monitor how many conversions your campaign generates and which ads perform the best.

    Inserting Facebook Pixel Code

    Before you start building campaign, check that your pixel is active. Facebook lists data for your pixel, including the date of the last conversion, on the Pixels page. If your pixel is active, you’re ready to start creating ad sets and developing your campaign.

    Step 4: Start with highly targeted News Feed ads

    Facebook has several different ad types. There are News Feed ads, which display in the News Feed alongside your friends’ status updates. There are also right sidebar ads, which are much smaller ad display on the right side of the page.

    There are also mobile and Instagram ads, which display on the mobile version of Facebook and Instagram, respectively.

    For our campaign, we’re going to stick with News Feed ads. News Feed ads generally have the highest clickthrough rate and best conversion rate of all Facebook Ad types, which makes them a great type of ad for starting your campaign.

    Increase Conversions ad option

    Let’s start by creating a new campaign. Select “Increase conversions on your website” as your campaign’s goal and enter the name of your campaign.

    Once you’ve created your campaign, enter your targeting criteria and deselect all ad placements except Desktop News Feed.

    News Feed Ads

    Set a small to medium daily budget that so that you can generate enough conversions to learn if your campaign is likely to be profitable. Then, configure the campaign delivery settings using the options below:

    Delivery settings for FB Ads

    Notice that we’ve selected “Link Clicks to Your Website” as our optimization goal. Facebook Ads includes an option to optimise for conversions. However, since we have no conversion data yet, Facebook won’t be able to optimise our campaign to reach a high-converting audience.

    For the time being, we’ll optimise for clicks to our website and use a CPC bid to determine how much we’re willing to pay per click.

    We’ve selected automatic bidding, which lets Facebook optimise our CPC for us, and scheduled our ads to run all the time. We’ve also selected Standard delivery, which means our ads will run throughout the entire day, with our daily budget spent steadily from morning until night.

    Writing an effective, profitable ad

    Targeting gives your campaign the potential to be profitable. It’s a great ad that will turn it into a profitable campaign. Below, we’ll break the process of creating a great Facebook Newsfeed Ad down into five steps.

    Start with the right format. Select “A single image or video in your ads” from Facebook’s image options. This means each of our ads will only contain a single image, giving us reliable data on image performance that we can use later to optimise our campaign.

    Image options

    Second, choose an eye-catching, relevant image. Your image has the biggest impact on your ad’s visibility, clickthrough rate and conversion rate. A great image can make or break your ad, so it’s important to choose something suitable.

    The best images for Facebook Ads usually have a few features in common:

    • They don’t look overly produced or staged. For Facebook Ads, spontaneous, natural looking photos almost always outperform obvious stock photos.
    • They’re relevant to your target audience. If you’re advertising a health service, use a picture of your target customer demographic. If you’re advertising a product, put your product in the photograph.
    • They stand out. The higher your clickthrough rate, the less you’ll pay for each click from Facebook Ads. Images that stand out and command attention get clicked on much more frequently, resulting in more conversions and a lower cost per lead.

    Facebook advertisers all have access to the Shutterstock image library. Click “Stock Photos” in the “Select Images” window to access Facebook’s huge library of stock photos, then search for your target keyword to find free pictures that you can use in your ads.

    To find images for our luxury watch business, we searched for “watch” in Facebook’s library of stock photos.

    Stock photo options example

    Facebook lets you add up to six ad images at a time. It’s best to use at least four images in your campaign from the beginning. After you’ve found the top performing image, you can pause all of the others to give your campaign the highest possible clickthrough rate.

    Remember that the image is by far the most important element of your ad. Choose a variety of different images — for example, products, people and visual metaphors — to find out which gives your campaign the best performance.

    Third, give your campaign a compelling, effective title. Since you’re giving away a free product or service as part of your offer, the best type of title is usually a straightforward statement telling people to claim your offer.

    Fourth, add some descriptive text to your campaign. This is your chance to sell your business — talk about your benefits, your history and how you’ve helped other people. Your title and image will attract attention; this is your opportunity turn that attention into real interest.

    If you’d like to add some extra text, enter it into the News Feed Link Description field. Since our ad will only run in the News Feed, this extra text will always display. Use it to further change the viewer’s state of mind from attention to interest and desire.

    Finally, choose a call to action button. Since we’re trying to encourage people to visit our store for an appointment, we chose “Book Now”. Choose whichever call to action is most relevant to your offer.

    After following the five steps above, here’s our ad:

    The Final result of our Facebook Ad

    After you’ve created your ads, Facebook’s team will review them before approving them. Once they are approved, you’ll start to see traffic within a few hours. Since Facebook controls our bid, there’s no need to adjust the amount we spend per click for this campaign.

    Facebook’s algorithm will automatically optimise your campaign to show the ad that performs the best. After a few days, you’ll have clickthrough, impression and performance data for each ad in your campaign.

    Note: If you notice one ad getting more traffic than the others, pause it to spread impressions more evenly. Facebook’s algorithm usually optimises accurately, but it will sometimes find the “winning ad” too quickly, leaving you with 100 clicks on one ad and only 1-2 on the others.

    Step 5: Optimise using Facebook’s conversion data

    Once your campaign is generating traffic, you can take steps to optimise its performance and become profitable. Let your campaign rack up at least 20 conversions before you start making any optimisations, since you don’t want to edit it based on unreliable, incomplete data.

    After your campaign starts to produce conversions, you can use Facebook’s conversion data to find out which demographics and ads perform best.

    If a certain demographic performs poorly — for example, people aged 65+ — you can adjust your targeting criteria to exclude them from your campaign. Optimise to show your ads to the people that produce the least expensive conversions, since they’ll become your most profitable leads.

    Once you’ve identified your top performing demographics, you can create ad sets to target them specifically. This type of optimisation can lower your cost per conversion by 50% or more, giving you a much more profitable campaign.

    No campaign is optimised right from the beginning. You’ll pay a higher average price for each of your conversions at the beginning of your campaign, but the data you generate will play a major role in helping you find profitable lead sources as your campaign grows in scale.

    After you’ve created ad sets for your top performing demographics, raise the budget to a level that you’re comfortable with and scale your campaign so that you have a continual flow of new leads.

    Step 6: As frequency increases, refresh your campaign

    Unlike Google AdWords and other search advertising platforms, where you’ll show your ads to a different audience every day, Facebook Ads are displayed to the same audience over the weeks or months in which your campaign runs.

    This means that “ad fatigue” can set in over time, as your target audience eventually gets used to seeing your ads constantly displayed. Ads that once drew attention and attracted lots of clicks can start to blend into the background and attract little, if any, attention or results.

    The best way to combat this is to replace or refresh your ads when you notice the clickthrough rate begin to decline. Facebook will increase your average CPC as your clickthrough rate gets lower. If it’s ever too high for you to turn a profit, it’s probably time to refresh your ads.

    One way to refresh your ads is to switch to a different image. Another way is to rewrite your ad copy to deliver a different message. Just like when you start a campaign, testing five or six new images is a great way to find a new winner and bring your campaign’s clickthrough rate back up.

    Depending on the size of your target audience, you’ll normally need to refresh your campaign on a bi-weekly or monthly basis. Refreshing your campaign keeps it current and helps you use the same targeting and offer to generate fresh, profitable leads over the long term.

    Learn more about using Facebook Ads to grow your local business

    We specialise in helping Australian businesses generate new leads and increase revenue using online marketing platforms like Facebook Ads. Contact us today to learn how your business can generate hundreds of profitable leads every month using Facebook Ads.

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