Why Facebook Ads Matter
Facebook is competition. Facebook is nothing more than a bidding system. Let me explain both those concepts. On Facebook, what I mean by competition is there is only so much real estate. There's only so many places to show an ad. So, therefore, there is more advertisers than there are spots. So Facebook has to decide which advertisement I'm going to show. And so, and in the bidding part, the bidding part means you pay Facebook per click on the advertising side. If someone is willing to pay more than you to show that person the ad, whose ad are they gonna show? The person who's paying the most. So, I did this example, and I'm gonna take it slow, but I think it's the best way to describe Facebook's advertising platform. Can I walk through it with you guys? Okay. So, let's check this out. Here's why it matters; advertiser A, advertiser B. Okay? So, let's just say advertiser A showed an advertisement to 100 people. And then let's also say that advertiser B says, I also want to target those...
people. So, if advertiser A showed an ad to 100 people, and only two people clicked it, and advertiser B showed an ad to the same 100 people, and five people clicked it, and they both were paying one dollar per click; well, then advertiser A would have paid Facebook two bucks, and advertiser B would have paid Facebook five bucks. Pretty clear, straightforward? So, advertiser B wins all day long. Also too, a metric that you guys should pay attention to, and I have it here on the left hand side, It says, two people clicked. That's a 2% click through rate. When you're advertising on Facebook, you will see something called CTR. CTR. The reason why this is important, and I'm going into terms, because it dictates how they will show everything. Once you get this concept, it literally controls all of Facebook, okay? CTR, click through rate, and it's very simple to get the math. How many people did you show it to, how many people clicked? That's where the 2% came from, and that's where the 5% came from. Is that clear? Not too much yet? So, by the way, this even works on your social post, your personal profiles. Click through rate still runs things. So, for example, you wonder why when someone gets married, or announces that they're in a relationship on Facebook, it's always at the top of your news feed? It's because you're kind of an, a mean person if you don't like someone's post who just got married. You're kind of a hater. You know what I mean? So everyone's like, ah, you got married, I don't think you should be together, but fine, like. (audience laughs) Right? So funny about Facebook. People are actually stingy with their likes. As if it genuinely cost you something. Like to click something and make someone else feel good. Anyways, that's a different story. So, it works both ways, right? It's basically what I'm telling you is, the most engaging content wins. Okay, and to go a little bit deeper, part of the battle with click through rate, and just getting people to click, is just showing the right message to the right people. So, for example, how many of you on Xbox One, play NBA2K; in the audience, or at home? You play NBA2K on Xbox One. Two of us. Two of us, okay? So, if we show, if they showed an ad to everybody in this room, and we were the only two, and there was 100 of us in this room, that be a 2% click through rate. All the rest of you would be like, why is this in my news feed? But now, what if there was another ad for a TV show that we probably all seen, called Shark Tank? And we're entrepreneurs. And the offer was, you get to come and hang out for a day with Mark Cuban and Lori. And you get to go to the spa and talk about your business, and it costs you nothing. How many of you are clicking that? That's the difference. The right offer, the right message. If your offer doesn't feel like that, it doesn't have that Disneyland effect, you'll lose, okay? So, next. There's a catch to all this. When you do good to Facebook, and you put engaging content on there, and you pay them more money, they reward you. So, I'm gonna switch this up here. So let's take that same scenario. You show an ad to 100 people. The advertiser B shows an ad to those same people. Two people click, five people click advertiser Bs. But the difference is this time Facebook knows you have good and engaging content, they know your CTR 'cause they track all that data. So now, if advertiser A paid one dollar per click, and advertiser B paid 50 cents a click, advertiser A would pay Facebook two bucks, but advertiser B would pay Facebook $2.50. They still make more money, but yet they gave a discount to advertiser B for actually being a good advertiser. That's the magic. That's the whole thing. Sometimes those click can not just be 50 cents, but 10 cents, five cents. It just depends on how good your content is. So, basically in short, the more engaging your content is, the less you have to pay. And the more sell you make because more people are clicking your stuff. Is that clear; raise your hands if that's clear, if you followed me through that example, okay? That's as like, mathematical as I'll get today. But everyone, you have to understand like, this is the way it actually works. It's a billboard that works on a bidding system, that's dictated by stuff like this. How entertaining and cool your videos are. How relevant they are to the audience.