Facebook offers access to 1.3 billion daily active users and 2 billion monthly active users.
According to SimilarWeb, Facebook has almost caught up with Google as the Internet's leading portal in terms of monthly visitor numbers. Also, people spend more time on Facebook - just over 17 minutes on average, well ahead of the 9 minutes for Google.
Consequently, hoteliers are increasingly turning to Facebook as an advertising platform.
Google has long enjoyed a major advantage as an online advertising platform because users are more likely to click on an ad for something they are searching for; meanwhile people on Facebook are not typically in a purchasing mode.
Nevertheless, even though Facebook users are not usually looking to buy something, their level of engagement makes the site an attractive place to advertise.
Unlike paid search on Google, which promotes businesses via keywords, 'paid social' on Facebook helps users find customers based on what interests them and their online behaviour.
The advantage of Facebook over Google is that targeting can be much more precise.
Indeed, Facebook enables a hotel or restaurant to target right down to the level of a city or even postal codes or, for example, to show ads specifically to people who’ve already visited a hotel's website.
Thus, advertising is not being wasted on people who are not part of the target market, as it might be with television, radio, or a regional newspaper.
How Facebook ads work
Since advertisers can set their own budget, the cost depends on how much they are willing to spend on the platform.
There are two different ways to price a Facebook Ad:
- Daily maximum budget – the ad runs until the maximum budget is met each day, for a specified number of days; or
- Lifetime budget – the ad runs continuously until a maximum amount is reached, or the advertisement end date arrives.
Facebook recommends a lifetime budget, which allows the platform's algorithms to decide the optimal times to deploy the ad, rather than showing the ad at predetermined intervals.
Competition with other advertisers
Facebook ads are bid for much like CPC (cost per click) ads on Google.
Advertisers are in competition for the same ad space in users' newsfeeds and Facebook limits the number of ads each user can see.
The audience targeted and who else is focussing on the same group directly affect cost.
For instance, if the target audience is a large demographic segment like all UK residents between 18 and 30 years of age, the competition from myriad businesses is likely to be intense and hence the ad relatively expensive.
Ad quality is important
There are two metrics used to evaluate the quality of an ad, which are the relevance score and the CTR (click-through rate); this is the number of clicks on an ad divided by the number of impressions.
Each ad run gets a relevance score which is rated between 1 and 10 and measures how relevant an ad is to the audience being targeted.
While a high relevance score won’t automatically mean a high rate of conversion, it will lower the cost.
The relevance score is likely to evolve as more users interact with the ad. If they react positively (e.g. click on it to a landing page), the score goes up; if they react negatively, by telling Facebook they don’t want to see the ad, the score goes down.
On Facebook, there are basically two ways to bid.
A hotelier can pay for each action (i.e. somebody clicking on the link or 'liking' the hotel's web page), or he/she can pay for each time somebody views the ad.
If the goal is to encourage a certain action – such as getting people to click on a hotel's website, the first option should be selected, because Facebook will show the ad to people who are more likely to complete that action.
Meanwhile when optimising for impressions, the ad may get shown to more people overall, but not necessarily those who will click on the link or 'like' the hotel's webpage.
These two bidding options can be summarised as follows:
- Cost Per Click (CPC) – the cost for 1 click to the hotel's website; and
- Cost Per Mille (CPM) – the cost for 1’000 impressions, or views of a hotel's ad.
Managing the bidding process
Increasing the amount bid improves the odds of an ad getting shown.
A hotelier should consider doing this if the ad isn’t getting shown often enough to reach the daily budget.
Lowering the bid price decreases the odds, though it also means paying less per click.
A hotelier should consider lowering the bid if the daily budget is being easily reached, so as to spread the cost further. However, bidding too low may cease views of the ad altogether.
Before analysing the performance of a Facebook ad, the hotelier should first determine the campaign’s KPIs, which could be, for example: page 'likes'; clicks through to the website; the number of interactions; engagement rates; cost per interaction; the cost by action; or the number of impressions.
When creating a Facebook ad campaign, the hotelier has real-time access to data about performance, which can be displayed in tabular or graphical format so as to visualise the campaign’s progress.