Are Facebook Ads Worth the Money?

I'm sure there are a million articles out there that discuss Facebook advertising.  Many will probably tell you what I'm about to tell you.  But I'd like to share my personal experience with advertising on Facebook.

I recently read (and cannot find the link to) an article about how proportionately, smaller businesses are actually more successful on Facebook ads than larger businesses.  This makes some sense to me.  If I see an ad from P&G I think yeah, whatever, I can find the same coupons somewhere else.  But if it's a small, unique-looking store, I'll click because I may never find it again.

My journey with Facebook advertising started in the fall of 2012 when I received a $50 credit.  Score!  I'm never one to turn down something that's free...

I dove in and began to use the credit for Marion's Mittens, the business I run for my grandma.  (If you are looking for quality, handmade mittens, I suggest you check it out!)

Some pros of Facebook ads:

• Setup is straightforward and relatively easy.
• It's really easy to choose an audience.  You can select from many demographics including things you may not have thought of, like new parents or people who recently moved.
• You can set a time frame for the ad based on budget (until the money runs out) or dates.  
• The ad can be tied to a Facebook fan page or an external website. I chose to direct my audience to the Marion's Mittens Etsy page.

Some cons of Facebook ads:

• It was expensive (for me).  Based on the demographics I chose, my ad cost about $1.08 per click.  (Back in April 2012, the average was also around $1.08.)
• I had a low click-thru rate (CTR) of 0.008%, the average being 0.04%.  In plain English - my ad was displayed 396,025 times and clicked on 33 times.

These 33 clicks turned into three sales.  Here's how much the ad "really" cost:

Advertising:  $39.04

Mittens Bought:  $30

Etsy & PayPal Fees:  $2.30 (approx.)

So I lost $11.34.

Of course, in some cases it may be "okay" to lose money in this way. Say exposure, for example, is more important to you than being profitable right now.  Then an ad scenario like this may work for you.

That's not the direction I want to take this business where profit margins are already incredibly small.

Next time I'll look at using ads through Etsy.  It seemed to be more cost effective but I'll have to do some calculations to see if that's actually true!

Read about my second experiment with Facebook ads.

This post was first published on another blog on 12/21/2012 - it's now only found here on the Marion's Mittens blog!