62% of Small Businesses Fail with Facebook Ads. Here’s How to Fix That
Everyone is using Facebook these days. There are over 2.2 billion active daily users.
China, the largest country in the world, only contains 1.4 billion people.
The ‘population’ of Facebook is massive!
No wonder businesses all want to use it to promote their products and services.
No one wants to be throwing money at ads that don’t work! What good is such a massive pool of potential customers if you can’t successfully reach them?
Thankfully, there are ways to fix this problem. You don’t have to be part of that 62%!
I’m going to show you the most common reasons why small businesses fail with Facebook Ads and how to fix each issue.
But first, let’s look at the big picture to understand the problem better.
The Problem Isn’t Facebook Ads
96% of all B2C marketers use social media posts as a form of content marketing. That leaves only 4% that don’t!
Not only that, but out of all of the B2C companies using social media, 97% of them use Facebook!
This means nearly everyone is using Facebook for business marketing.
If everyone is doing it, it must work, right?
Overall, only 3% of companies who participated in the Content Marketing Institute survey felt that their content marketing approach was not successful.
Since I just showed you that over 97% of them were using Facebook, we have to assume they included that in these results.
And that means Facebook content marketing is successful for the majority of businesses, in general.
But small business owners seem to be struggling with success.
Manta surveyed 4,712 small business owners regarding their use of Facebook, and their results are similar to Weebly’s.
50% of small businesses feel they’re not getting a positive return on investment from Facebook.
This is important for two reasons:
- The pool of potential customers is so massive, that if you cannot do this right, you’re handing over a huge chunk of business to your competitors who succeed at it.
- You’re paying for ads that aren’t providing a return, which means you’re just throwing away time and money.
Why is it that small businesses are failing at Facebook Ads when larger companies are not?
What are small businesses doing wrong?
Problem #1 – A lack of understanding of content marketing
I just showed you that the problem is small businesses and not Facebook Ads.
So what do small businesses have in common, that big businesses do not when it comes to Facebook advertising?
Let’s look at small businesses.
About one-third of small businesses fail within the first two years, and half of all small businesses fail by year five.
Why is the failure rate so high?
There is a range of reasons, from lack of experience to lack of cash flow.
Of course, these reasons for failing in business can also be valid reasons for failing in marketing.
Let’s start with the lack of experience.
Too many small business owners try to wear too many hats.
Just because you are an expert in your field, your product, or your service, does not mean you know everything you need to know about running a business.
Facebook Ads are not like an ad you pay to have in the local newspaper.
A basic understanding of content marketing is necessary to see success unless you’re just insanely lucky.
Understanding social marketing and how it differs from traditional marketing can make all the difference.
A typical approach through the sales funnel is actually a long and winding road across different channels, devices, and messages.
Your first job, then, is to try to recreate this whole winding path within Facebook Ad campaigns.
You need to have multiple campaigns, each with different objectives, and target audiences with varying levels of intent.
That means we need to look at campaigns as a whole.
Then we need to find the bottlenecks and determine how steps right before or after them are contributing to the issue.
The good news is that Facebook helps you with this right out of the gate:
Depending on your selection, your objectives and ads should be completely different.
Is your problem low sales?
Start with conversion campaigns.
Make sure all the basics are covered.
Create a ‘tripwire’ to scale down complex or expensive areas.
Focusing on being simple and straightforward should do the trick.
Are you trying to create consideration-building campaigns?
You need to actively re-engage people who are familiar with your business.
That means recapturing past visitors.
You should be using Dynamic Product Ads to see who has viewed product pages.
Focus on getting people to download eBooks, white papers, and checklists or try getting them to attend webinars.
Make sure you use marketing automation for all of this stuff to make it seamless.
Is your priority simply increasing awareness of your brand?
Prioritize expanding your reach by optimizing ads for website visits and clicks.
Aim to promote content that will appeal to the widest possible target group.
And make sure you try carousel ads to test different messaging to see what’s most effective.
Problem #2 – No strategy, plan, or measurement system
Of course, I realize it’s not as cut and dry as ‘learn content marketing and you will be a success’!
I also realize how many hats a small business owner has to wear and how limited your time can be.
So I’ll take you through several specific areas where small businesses tend to fail with Facebook Ads and how to quickly fix them today.
First off, as with any part of your business, the biggest mistake is not having a strategy and plan.
There is massive potential to grow your business using Facebook, but if you don’t have a clear vision of how you want to use it or what you want the outcome to be, you will fail.
Facebook is just another business tool. It is used by different businesses in different ways.
Over 72% of small businesses said they want to use Facebook to raise awareness.
If this is your goal, then a low click-through rate doesn’t accurately measure whether you were successful or not.
Before you try anything else, figure out what is your goal of using Facebook.
The top goals for small business owners in the Mantra study were:
- Building awareness
- Attracting new customers
- Getting phone calls from new customers
- Increasing website traffic
- Improving customer retention
Once you know your goals, then figure out how you’re going to measure success.
To make sure you’re picking the right posts, you need to establish engagement benchmarks.
This will help you decide whether or not a paid promotion will be worth it.
Keep in mind that benchmarks will vary between companies based on their goals.
To set an engagement benchmark for your company, you’ll want to look at your current number of followers, past engagement rates, competitors’ engagement, and your overall Facebook goals.
You’ll also want to determine how much value a click and conversion hold to your company. This will allow you to view your campaign in terms of monetary value and compare it with other advertising expenses.
A monetary value will also help justify the time and resources you put into Facebook Ads.
The benefits of maintaining an active presence on social media will only increase as time goes on.
Especially if you are a small company with little social media presence, a little effort will go a long way.
The best way to start is to define your goals, whether that be brand awareness or strictly conversions.
Plan a content strategy around your goals and desired brand personality.
Then, you’ll want to know who you’re talking to. Consider your current customer base and the type of audience you want to attract on social media.
Developing a deep understanding of your audience will help you create more engaging content and, therefore, create more effective paid ads.
Once your content is flowing, you’ll want to start tracking your KPIs so you can prove that your social media is successful.
Keep in mind that the average conversion rate for Facebook Ads is only 9.21%
The report also showed that the average conversion rate is highest in the fitness industry, at 14.29%, and education, at 13.58%. It’s the lowest in the technology sector, at 2.31%.
If you’re expecting Facebook Ads to provide a 50% conversion rate, of course, you will feel like they’re failing!
That being said, Facebook does produce the best ROI of all social media platforms.
How do you know your plan is working?
Test it. Continuously.
You need to test different offers to understand what works and adjust your plan accordingly.
The problem with the standard recommended A/B tests is that most fail.
To make matters worse, they’re incredibly hard to get results from if you’re not already converting well.
You shouldn’t even bother with A/B tests if you don’t yet have at least 1,000 monthly conversions.
Any single test should have a minimum of 250 conversions before you can believe the sample size.
The companies with the highest conversions aren’t even testing variables (which is what most A/B tests do).
Instead, they’re testing different offers.
That could mean one e-book but on completely different topics.
Both topics should be top of the funnel topics that appeal to a variety of people.
Both can also apply to the same segment or target group such as startup founders.
The only way to know which one converts best is to roll the dice and see.
That’s why planning without checking the results can mean failure.
Problem #3 – You’re not investing enough time.
58% of small businesses are only spending an hour a week on their Facebook marketing efforts.
Why is this a problem?
If you’re only active on Facebook infrequently, then your ads will never be seen among all the other noise.
There is simply too much volume.
Social Media Examiner surveyed social media marketers and found out that on average, they post on a branded Facebook page 8 times per day.
Imagine how quickly your ads are getting lost in news feeds if you only post once per day.
According to Mantra, an hour a day is even more time than most small businesses are investing!
The same survey indicated that 58% of small business owners put less than an hour a week into Facebook marketing.
Social media can’t be an afterthought. You will fail if you think of it this way.
As of March 2017, almost two billion people are monthly active Facebook users. Chances are most of your target customers are among those billions of people.
39% of marketers have increased their posting frequency on Facebook over the last 12 months.
If you only post infrequently, your potential customers likely won’t even see your posts.
According to Post Planner’s research, 75% of the engagement you get on your posts happens within the first 5 hours.
After that, engagement pretty much dies off.
This means if you aren’t posting regularly, you’re basically history.
While there are roughly 60 million businesses using Facebook pages, only about 4 million of those are actively posting on their page.
A stale business page could actually hurt your business more than no business page!
Anyone who comes across your out-of-date page may wonder if you’re still open or even a real business.
Facebook is the kind of thing that needs to be done right or not done at all.
Be honest with yourself about the time and resources you are willing to commit to your company’s Facebook page.
I should also warn that it is possible to go too far in the other direction as well.
Posting too much will overwhelm people with your messages to the point where they start tuning you out.
What’s the right frequency? Aim for 3 to 8 ad appearances per person over the life of your ad.
This can help make sure that your ads don’t become white noise.
Avoid setups like this one:
A frequency of 38 won’t just make people tune you out. It could turn potential customers into haters!
Problem #4 – You’re not investing enough money
Going back to the Weebly survey of small business owners, 82% have spent less than $50 on a Facebook Ad campaign and more than half didn’t buy Facebook Ads at all.
Less than $50!
In comparison, most successful B2C marketers spent an average of 26% of their entire marketing budget on content marketing (including Facebook Ads).
I can guarantee you this was more than $50!
Not only that, but 37% of them plan on increasing that spend over the next year.
But most small business owners surveyed by Weebly don’t want to spend any money on a paid campaign.
I get it. It can be hard to throw money at ads when you don’t know if they’ll work.
The good news is that you can experiment with organic posts to understand what resonates best with your audience before spending any money.
Look at the engagement of your current social media posts. If you have a post that’s creating a lot of organic engagement, it may be a good post to turn into a paid ad.
It will have a much better chance of success.
All ads on Facebook are basically just regular posts. The only difference is that you’re paying Facebook to maximize your reach.
Only a tiny fraction of followers will see your regular posts.
The reach of organic posts has been steadily declining as Facebook updates their algorithm.
Regular posts also don’t give you the ability to target specific people who are more likely to click on them.
When using paid advertising, you can target the people who are likely to be interested in your brand based off interests that they have expressed in the past and other data that Facebook has collected.
Today, reliance on free, organic results on Facebook will doom you to failure.
Organic posts reach only about 2% of your fans!
This means that 98% of your Facebook page’s fans may not see your posts.
That’s a huge loss of traffic!
Not to mention that the 2% you’re reaching are people who are already your fans!
Good luck reaching new audiences organically.
The situation is slightly better for smaller brands, but it’s still only about 6% of your fans that you will reach with organic content.
Let’s face it, social media for businesses has changed. It’s now a pay to play arena.
If you are trying to reach a wider audience with your Facebook posts, you’ll need to use Promoted Posts and other advanced Facebook Ad strategies.
Problem #5 – You’re not targeting the right audience
It’s not that small businesses contacted by Weebly weren’t seeing any returns on their ads.
It’s the quality of the returns that seem to be in question.
According to the feedback, small business owners did get clicks and likes but struggled with sales conversions.
“Although I may get clicks or likes, it doesn’t always translate to more money coming through the door,” one owner says.
Putting it simply, another responds, “Lots of impressions but almost no conversion.”
“When businesses don’t see the results they hope for, it’s usually because they haven’t done enough testing of their ad copy, visuals, and the ideal combination to target the right audience,” says Vitruvian Digital Advertising founder Kristie McDonald.
The potential audience on Facebook is massive.
Only a small percentage of them will actually convert.
Small businesses aren’t asking themselves the right questions to determine an effective target market for Facebook Ads.
Have you been guilty of only defining your audience by their gender, age, and income?
If you’re choosing the simplest of criteria to let Facebook know your target audience, you’re going to fail.
You need to use more powerful insights into the behaviors and unique interests of your ideal audience.
That way you can deliver your ads only to people most likely to want what you have to offer.
Make sure you don’t just combine your demographics with every interest and behavior you can think of.
You need to set the criteria for only one or two interests and behaviors at a time.
If you try to go too wide, you will just spend a lot of money on audiences that don’t convert well.
You need to get laser specific in telling Facebook who you want to show your ads.
Make sure you’re targeting custom interest and lookalike audiences.
Use a social listening tool to monitor updates and sentiment.
This will tell you if what customers mean matches what they are saying.
Sometimes what they tell you is most important to them isn’t actually the most important thing.
You can use social listening to divide the market by interests instead of the typical demographic data.
Listening also allows for better personalization of ad content.
This is really valuable since 71% of consumers prefer personalized ads.
Whether you are relying on organic and paid advertising, the personalization of your brand is what will set you apart in the long run.
Once you know who you’re trying to reach, you can work on the type of content that will resonate with each segment.
Make sure that you use your value proposition to set your product or offer apart from the competition.
Remember that the value proposition needs to be phrased and marketed differently for audiences in each stage of the funnel.
Use your ads to get the right message to the right audience instead of trying to blast everyone with one message.
How do you know you successfully hit the right audience with the right message?
Facebook has a Relevance Score that will tell you.
The better you are at targeting the right ad message to the right audience, the better your click-through rate will be and the lower your cost per click.
AdEspresso decided to test this measure. They discovered that when they ran the exact same ad, but with better targeting, it got a much better Relevance Score.
Not only that, it dropped their cost per click and gained them four times more clicks when compared with the poorly targeted ad.
You can find this metric by going to one of your ad campaigns, going down to a specific Ad Set, and then looking in the lower right-hand corner.
The scoring system is one to ten, with one being the worst and ten the best.
Problem #6 – Stop trying to go for the cold sale
This is some of the feedback from one of the survey respondents who told Weebly that Facebook Ads don’t work:
We very rarely have ever gotten sales through Facebook. We feel that ‘Friends’ on Facebook would rather interact than be sold to. Trying to sell via Facebook is like walking around at a party and passing out business cards trying to sell your products to friends who would rather be socializing than dealing with a sales attempt.
It sounds to me like this person was trying to hard sell on a cold audience.
Socializing is the new way of selling.
If you only plan on pushing cold sales on social media, you might as well forget Facebook. At least that’s what Emily Pope, a small business marketing expert from Fundera thinks.
A good Facebook page strategy consists of a healthy mix of feel-good content, information your customers need to know, and a small bit of advertising. If you’re not set up for that or want to focus only on hard selling numbers, you’ll be wasting your time on a Facebook page.
In other words, you want to focus on benefitting and giving content to your consumers before asking them for anything, especially a sale.
To get the most out of Facebook, engage with your online community in positive ways.
How can you fix this?
Remember the sales funnel.
You need to build the relationship from the beginning on the funnel.
My guess is that this business owner isn’t used to coaxing customers through the funnel.
If you’re only used to selling to people once they walk into your store, you’re used to the hard sell strategy that works on people ready to buy.
This means you’re missing out on huge sales opportunities, even outside of Facebook!
On social media, you need to build trust before you can push a sale.
This isn’t something you can do with the occasional monthly post (see problem #3).
One quick way around it is to build a working relationship with influencers in your market.
This is one of the best values of Facebook Ads.
Why?
This audience is four times more likely to convert!
One reason for this is that these customers are already familiar with your brand and your product.
It’s no longer a cold sell.
No one is hanging out on Facebook looking to make a purchase.
Refer back to problem #1. You’re going to need to build multiple ad campaigns, one for each stage of the sales funnel.
Otherwise, you’re not going to be able to compete with all of the reasons they logged into Facebook.
Stop trying to jump right into the sales pitch!
Problem #7 – Understand that Facebook is a business
Some of the small business owners surveyed said they don’t believe the promise that paid posts will reach a larger audience.
Small business owners seem to begin to distrust Facebook right at the very beginning of an Ad campaign before there’s even been time to see results.
When the ad order is placed, most small business owners reached by Weebly were left saying, “Show me people. Where are the people? There are no people!”
You need to remember that Facebook is a business.
While it may seem like just a free place to hang out and socialize, it’s not.
You need to treat your relationship with Facebook the same as you would any business partnership.
You will only get a return out of it if you invest in it.
For example, linking a Facebook Pixel to your e-commerce site can have huge benefits for you.
Facebook also loves this because it provides them with tons of audience data.
If you see Facebook as anything other than a business, I’m betting you’re too uncomfortable to link all of your site data to them.
But as a business, if you don’t provide profit to them in some way (either information or money), then they have no incentive to help you succeed.
Facebook has proven results. They’re old in the social marketing world.
This is not some new kid on the block who is still untested.
The list of brands who’ve been successful with Facebook Ads goes on and on.
Facebook has an entire database of successful case studies.
Those results aren’t just for big business either.
Check out this ad for Design Pickle, (a startup):
Design Pickle offers unlimited graphics requests.
This ad is directly responsible for almost $6,000 in monthly recurring revenue for Design Pickle.
How?
They used it to target highly qualified leads. Leads who they then sent this survey:
They chose so many questions on purpose.
They used it to weed out people who were just looking for a freebie.
That meant they only got leads which were more likely to convert.
Their campaign generated around 500 leads.
30 of those leads turned into subscribers of their $200 per month service.
They estimate that their customer lifetime value to be around $1,100.
This means the one Facebook Ad resulted in an amazing 633% ROI!
If you want Facebook to work like this for you, you will have to change your viewpoint.
Treat it like a business and be willing to invest time, money, and some of your company and customer data to get an amazing return.
Conclusion
Almost two-thirds of small businesses are failing with Facebook Ads. You don’t have to be one of them!
Remember that Facebook Ads work.
There are proven results that work for companies of all sizes, and the huge majority of businesses use them for content marketing.
The problem is not with Facebook.
It’s with how you’re approaching Facebook.
Treat it like a business partnership.
Make a strategy, determine what you want out of it and how you’re going to measure your return.
Be prepared to invest more time and money into it if you want results.
As long as you invest wisely, targeting the right audiences with the right messages, you will see a positive ROI.
Facebook wasn’t designed as a place to cold-sell customers.
It is social media. Be social. Build relationships. Connect with influencers and your audience.
Those relationships can still be profitable!
What has been your biggest challenge with Facebook Ads?
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