As I prepared to launch startupcoach.org, I decided to do a Facebook advertisement to alert the target audience to my Facebook fan page as well as the coming website.  I thought I would share my approach and results with you so that you might better understand how to design and measure your own campaign.

Establishing the goals

Before I started the campaign, I established my goals.  By experience I believe that an audience of 250 interested people is respectable for start-up website. I had budgeted $500 to promote the website between now and the end of the year.

This first campaign would be a “test,” so I could establish a benchmark for other Facebook advertising campaigns for this website. Since this was a test campaign I decided I would limit my budget because I wasn’t sure how well the it would perform, and  I wanted to make sure I had budget dollars available to conduct other campaigns should I need to do so to reach my fan goal.

So, my goal was to achieve 250 fans on Facebook with a budget of $150, or about 1/3 of my annual advertising spend.  This would leave additional dollars for future campaigns, although I had decided that I didn’t want to spend more than $1 per person to acquire a new fan.

Set up the advertisement

Facebook‘s tools give the option of promoting a Facebook page or an external website.  I chose to promote the Facebook page because I wanted to first build the Facebook community so that I could determine  interest in the service offering before launching the full startupcoach.org website.

Determine the audience

With the Facebook advertising targeting feature, one can select by location, age, gender, birthday, education, language, workplace, relationship status, and keywords.  For this campaign, I chose individuals 18+, in the United States, any education level, any gender, and with the following keywords in their profile: Being Unemployed, Entrepreneur, Small Business, Startup, Startups.  I also limited the advertisement to those who had not already become a fan of the Startup Coach on Facebook so I would not be paying for the advertising impressions of current fans.

As the keywords are added, the number of individuals in the total audience will appear at the bottom of the page.  With the targeting limitations, my total audience on Facebook appeared to be about 27,000 individuals.

I know from experience that most online campaigns, even targeted ones, generally only pull about 1% response or Click Through Rate (CTR).  If I could get a 1% CTR, that would only generate 272 responses for the campaign.  Of those 272 responses, experience also tells me only about 10% of those would actual “convert,” or in this case become a Fan of the page.  With those numbers, I was immediately skeptical that I had enough money budgeted to reach the goal of 250 Fans.  You see, 272 responses with a 10% conversion rate would only gain 27 fans.  I needed about 10 times this number; however,  I decided to launch the campaign anyway knowing that I could kill the campaign at any time.

Knowing budget was going to be a limiting factor, I decided to create a Pay per Impression (CPM – Cost per Thousand Impression) campaign, rather than a Pay for Click (CPC – Cost per Click) campaign.  Because I know that some people will click on an ad out of curiosity, I could not take the chance of burning through my limited budget paying for each click.  I decided I would rather pay to expose the target audience to the advertisement multiple times for this campaign, believing that this would be more effective given my limited budget and the small size of the target audience.  I set my daily budget cap at $10, and planned to advertise for about 15 days.  I planned to pay no more than $.33 per 1,000 impressions.

Launch the Campaign

I ran the campaign from August 16 – September 2, pausing it for two days, August 21 and again on August 26, to evaluate performance.  Prior to those pauses, I had noticed a downward trend in conversions; I paused the campaign to evaluate it more closely before spending additional dollars.  Both times, I resumed the campaign and realized a spike in conversion numbers on re-launch; however, the overall trend in conversion continued to decline.  September 2, I had 235 fans and had spent $144 of my budget.  I stopped the campaign for more thorough analysis, since I was close enough to my target goals.

Analysis and Results

Using Facebook‘s reporting tools, I pulled the data from the campaign into a spreadsheet for further analysis.

Because I was measuring conversion based on the number of subscribers or Fans to the Facebook page, I needed to also pull the new subscribers by day from the Insights Page for my analysis.  I chose not to factor in the six unsubscribed fans because I thought the number as insignificant.

Once I pulled all of the numbers into the spreadsheet, I learned:

1. The total campaign response rate against the target audience was 309 (unique clicks) or 1.14%
2. Of those 309, I converted 189 or 61% of the responses
3. My cost per conversion or acquisition was just $.76
4. The average number of impressions it took to gain a response was 4.4

I also noted that I had 46 new fans that were not attributed directly to a click-through conversion.  I believe these individuals resulted from the “social” aspect of social media.  In other words, they saw that friends “became a fan of Startup Coach,” investigated, and became a fan themselves.

It would seem that those extra 46 fans resulted in a 20% bump in acquisition as a direct result of the social media environment.  While they were not directly attributable to a click-through, they are a result of the campaign; therefore, reduced the cost per conversion to $.61 on September 2, 2009.  As I write this post, the total fan base is now 243 or up 54 extra fans, bringing the cost of conversion down to $.59 each.  Overall, I am very pleased with campaign.  I came pretty close to my target conversion/acquisition goals, while maintaining my budget.

I’m convinced that the successful conversion is due largely to targeting and content.  Immediately after the launch of the Fan page, several people asked questions and gave me the opportunity to create relevant content.  This content seems to have value for others as they clicked through to the page and resulted in new fans.  I also think the fact that the nature of the website and the campaign—no sales pitch—has contributed to the higher conversion rate.

I took a calculated risk by not having content on the Fan page when I launched.  Had I not had relevant content on the page, or had I asked people to buy something, I’m certain that the conversion rate would have been much lower.

As you can see from this campaign, Facebook advertising can be one of the best ways to build an audience for your business.  Because Facebook provides tools that allow your ads to targeted, you have a much better chance of reaching your intended audience with a limited number of advertising dollars.  Best of all, you can grow your audience through the social connections of your fans, without spending additional dollars to do so.  Just remember, you must have valuable and relevant content for your targeted audience, or you run the risk that you campaign will fail.