The amount of opportunity for businesses (big and small) and marketers alike has never been greater. Social media and social networking are ushering in a new era of advertising that is allowing for a business of any size to pay only for performance with highly trackable analytical data. Not only is the “pay for performance” model an amazing one but new tools and technology are being introduced rapidly to keep increasing profits while minimizing overhead such as geotargetting.
To put this into perspective lets use an example of a dentist office that is hurting in the current economy and wants to start advertising. A Yellow Pages advertisement is one of the “traditional” sources I hear a lot of businesses turning to when they’re looking to extend their reach. This is a huge mistake in general for a few reasons.
1.) Yellow Page advertisements are insanely expensive from a price per viewer perspective.
2.) It is very difficult (if not impossible) to track the efficiency and ROI of the advertisement.
3.) When a prospective client/patient looks up your business in the yellow pages it shows ALL of your competition around you, potentially eliminating you on the spot.
Now, lets talk about advertising on Facebook. With this type of advertising you can pay based on two different aspects: views or clicks. Either route you choose to go will almost ALWAYS be much more cost effective than a Yellow Pages advertisement. I highly recommend starting off with CPC (Cost Per Click) until your ad has a good CTR (Click Through Rate) because you’ll need to do some testing and tweaking to get it as low as possible.
Still not convinced? Let me give you an example scenario to really show you the huge gap in price and effectiveness.
An advertisement in Yellow Pages can vary quite a bit depending on size and city – some costing upwards of $90,000 for a full page. I’m going to use an average approximation of $4,000 for a 1/4 page size advertisement in a city of 20,000 people and 12,000 Yellow Pages subscribers . For $4,000, you get one advertisement on the same page as 3 of your direct competitors.
In a perfect world, every single subscriber will see your advertisement and respond to it. In the real world, you’ll be lucky if half even acknowledges your advertisement. Lets assume you get lucky and half of the subscribers see your advertisement, the cost is then $0.66 per view. Here is the first problem, your advertisement being viewed is the very tip of the sales funnel. In my experience, a 10% viewer -> action rate is excellent so we’ll go with that. That means that out of the 6,000 people that see your advertisement, 600 will call or take interest. The rate of action -> new patient is even lower. We’ll say that out of the 600 people that took action, 40 became new patients. That makes the overall cost per lead $100.
The scenario above is what you would most likely experience AT BEST.
Now let’s talk about advertising on Facebook. When you advertise on Facebook you have the option of ONLY paying when someone takes that action step. Even if your advertisement displays to 20,000 people and nobody clicks it you won’t be charged a penny. This already creates a more ideal scenario and will put them deeper into your sales funnel from first contact. There are many other great reasons why Facebook is a better solution for advertising including:
1.) Cost efficiency and extremely low overhead. You only pay for that action step instead of viewers and you don’t have to commit $4,000 up front, you can set a budget as low as $20/day.
2.) The odds of other competition displaying along your advertisement is low.
3.) You can control your demographic. Facebook’s advertising platform allows you to choose a wide variety of factors to show your advertisement to including (but not limited to): Age, Sex, Location, Marital Status, and Interests.
4.) You can track which advertisements are working and which are not decreasing the cost/lead dramatically.
For this type of campaign, my CPC generally hovers around $0.30. Let’s use the same conversion rate for action (clicks) -> new patient of 6%. This means for every 100 people that take interest and click your advertisement it will cost you $30 and you will have an average cost/lead of $5.
Sorry to be long winded, but this is extremely crucial to the future of cost effective advertising. I’ll release some case studies and concrete data/numbers eventually on here instead of using hypothetical ones so keep on the look out!