Facebook, with its 800+ million users, presents a huge opportunity for business. But the first question people ask is, “Can it really generate money?”
If you’ve read any of the Facebook marketing case studies over the last year, you’ve seen examples of small business profits and boosts in eCommerce sales via Facebook sharing.
If your business is ready to move toward Facebook profits, your next question should be: “What distinguishes profitable and unprofitable Facebook marketing campaigns?”
First, consider your revenue model. What steps will get your users to buy? How do you attract their attention in the first place? What does the conversion funnel look like? And how does Facebook fit with the marketing channels that already work for you, like email, text messages and affiliate revenue?
There are a number of strategies companies use to do Facebook business effectively. Let’s look at five of them.
1. Advertising-Based Ecommerce
Marketers can leverage the massive reach and highly customizable targeting of Facebook’s ad platform. They can create ads that take clickers straight to an ecommerce site, bypassing fan marketing entirely. The ads-direct-to-websites option is often overlooked, but can be immediately profitable. If you’re not 100% sure about committing to the time and creativity required for fan marketing, then test direct-to-site ad traffic first.
For example, Vamplets.com, which sells plush vampire baby dolls, achieved a 300% ROI on ecommerce sales in its first month of advertising directly to the ecommerce site, according to a company representative.
2. Fan Marketing Ecommerce
Fan marketing is selling to fans by posting from your page into their news feeds.
Fans appear to be more responsive when acquired through ads than through contests, content or legacy. Data analysis in 2011 from companies like PageLever revealed that many multimillion-fan brand pages were reaching 7% or fewer of their fans. Some pages have hundreds of thousands of fans who never liked or commented on a post, and have not seen the page’s posts for years.
Success with fan marketing requires that you be as visible as possible to your fans, and EdgeRank has a time decay factor. New fans may be required in some cases. Some businesses have taken the radical step to start entirely new pages and use Facebook ads to grow a new and more targeted fan base. With their more sophisticated and up-to-date understanding of how to engage fans, they achieve better results than they had with their old page.
Some profitable examples include Baseball Roses, Rosehall Kennel, WUSLU and SuperHeroStuff.
Baseball Roses sells artificial roses made from real baseballs. Founder of the company, Mark Ellingson, explained that they were unsuccessful with Google AdWords because no one was searching for their innovative product. They achieved a 473% ROI from their spend on fan acquisition via Facebook ads.
Rosehall Kennel breeds and sells German Shepherds, and has achieved more than 4,000% ROI on its fan acquisition spend, according to owner Eliot Roberts. What’s more, they have seen fewer requests for discounts and a shorter sales cycle.
WUSLU is a Woot-like site for home decor. While the company would not release exact profitability numbers, they are excited about their Facebook marketing results and have no plans to stop.
SuperHeroStuff.com’s founder Ronando Long told me that when the company began to use Facebook in 2011, it was the only new thing they were doing, and their revenues increased 150%.
3. Facebook ads and email
Many companies already have email dialed in. They know how much the average email subscriber is worth to their company, and they have an email marketing process that’s profitable.
For these companies, whether they initiate fan marketing or not, it makes sense to use Facebook ads to acquire even more subscribers, as long as those subscribers are qualified. Facebook advertising can be targeted according to 16 different criteria, including age, gender, interests, location, relationship status, connection to pages you admin, workplace, education level, majors in college and more. Add to that some ad copy that calls out the people you want to target, and you can ensure these new subscribers are qualified.
By sending contest-based email campaigns integrated with social networking, one Fortune 500 company achieved a 400% increase in email open rate, click rates of 14%, and one-fifth of their email subscribers also became fans, according to Steve Gaither, president of JB Chicago, the marketing agency that worked with the company.
4. Facebook ads and text messaging
Businesses haven’t rushed to adopt SMS marketing, but 24% of mobile marketers have found their campaign ROI met or exceeded their expectations, and 4% of all mobile users have responded to a coupon for a product or service.
One local store (from a popular fast food franchise I’m not allowed to name) boosted revenue with this approach. It posted information about free text message coupons to its Facebook fans. Fans who opted in received an SMS coupon every day for 30 days. The result was $65,000 additional store revenue.
5. Generating traffic to your ad-supported site
If you’re a publisher or blogger, content is your stock in trade, and advertising is usually your bread and butter. Why not create a Facebook page for your site, grow that fan base, then post a link to every new article? This boosts traffic to your website. Since your advertising revenue is tied to pageviews, more traffic from new readers and repeat traffic from fans mean more advertising revenues for your website.
Proud Single Moms, which created a Facebook page, grew about 98,000 fans via Facebook ads for less than $5,000, according to the site’s creator. Since the website uses AdSense ads, they chose to blog on topics that not only were interesting to moms, but which also had Google keywords generating high click fees. You can use a combination of the Facebook advertising platform and AdWords’ Keyword Tool to find interesting and profitable topics. Then they posted links to their blog posts on Facebook each day. Proud Single Moms was on track to break even on its initial ad investment within six months, and was privately sold to another party.
Which Revenue Model Should You Choose?
If one of these models isn’t an obvious match for your business, I’d recommend you first test direct Facebook ads to whatever is already working for your business. Do you have products or services that already sell well? Use Facebook ads to send more traffic to them.
Fans can also be affordably acquired through Facebook ads, but make sure you understand the amount of time and creativity required for fan marketing before you start. Companies that jump into fan marketing without that understanding and a good plan usually post in a way that doesn’t lead to much interaction. Then, EdgeRank reduces the reach and value of your Facebook page. Overall, the ROI of your efforts becomes low or negative. But when you get the right fans from Facebook ads and engage them with interesting content, profits often follow.