Facebook News Feed ads and Custom Audiences: the new playbook

Until last year a Facebook ad was a small box with a 25-character headline and a thumbnail, tucked beside the content people were actually reading. Click-through rates of 0.03 to 0.05 percent were considered normal. Then Facebook went public, the pressure to earn from mobile became urgent, and the company started placing paid units directly in the stream of stories. Mobile has no right column at all, so for the roughly 60 percent of US users who now check Facebook on a phone, the feed is the only place an ad can appear.

The result is a different medium. A News Feed ad is a page post with money behind it: a photo, a link, a short message, with likes and comments attached. It competes with photos of friends' children, not with other ads. That cuts two ways. Engagement is far higher, but a dull or pushy post is both ignored and visibly ignored, and Facebook's reporting now flags negative feedback such as hides and spam reports, which raise your costs.

Facebook has more than two dozen ad formats and has said it intends to simplify them. For most businesses only a few count.

Two practical rules sit underneath this. First, images in feed ads can carry no more than 20 percent text, enforced by Facebook's grid tool since January. Design the photo to do the work and put the words in the caption. Second, you can create unpublished page posts in Power Editor, ads that never appear on your page timeline, so you can test five variations without flooding your fans' feeds with near-duplicates.

Custom Audiences, which opened to all advertisers through Power Editor over the past few months, is the most important addition to Facebook advertising since the platform launched. You upload a file of customer emails or phone numbers. Facebook hashes and matches them against accounts. You then have an audience you can target, exclude or combine with interest and demographic filters.

The uses that pay off quickest:

1. Lapsed customers. Everyone who bought more than six months ago and has not returned. A photo post with a soft reason to come back, capped at a few impressions a week.
2. Newsletter subscribers who have never purchased. They know you; they need a nudge. Offers work well here.
3. Exclusions. Upload your current customers and exclude them from acquisition campaigns, so you stop paying to acquire people you already have.
4. Lookalike Audiences. Rolled out this spring, this takes a Custom Audience of at least a few hundred people and finds the one percent, or up to five percent, of US users who most resemble them. For a business with a good customer list, it is the best cold-prospecting tool Facebook has ever offered.

Expect match rates of 40 to 70 percent; consumer brands with personal email addresses do best, B2B lists with work addresses do worst. Refresh the upload monthly, because a static list ages fast.

A note on privacy: the data is hashed before it leaves your browser, Facebook does not get your raw list, and you must have the right to use the data for marketing. Say so in your privacy policy.

Facebook released a conversion tracking pixel in January. Put it on your thank-you page, order confirmation or sign-up success page, and the ads interface reports conversions and cost per conversion by ad. Install the pixel before you spend a dollar on the new campaigns, and use optimized CPM bidding against it once a campaign has a few dozen conversions, so Facebook shows the ad to people more likely to act.

Pair this with tagged links. Add campaign parameters to every URL so Google Analytics attributes the visits properly, and compare the two reports. Facebook counts view-through conversions within a window; Analytics counts only clicks. Decide which one you will manage against.

Typical numbers for US small and mid-size businesses right now:

• CPM in the feed: $2 to $6, higher in finance and insurance, lower for broad consumer products.
• CPC: $0.30 to $1.50. Mobile feed clicks are often cheaper, but check that your site works on a phone before you buy them.
• Click-through rate: 0.5 to 2 percent in the feed, against 0.04 percent in the right column.
• Page Like cost: $0.50 to $2.00 per like when targeting is tight; cheaper likes are usually worthless.
• Test budget: $500 to $1,500 a month across three or four audiences for six weeks.

Set a lifetime or daily budget per ad set, not per account, so one strong audience does not starve the rest. Start with optimized CPM for conversions where you have the pixel, and CPC where you do not. Review frequency weekly: once an audience has seen a post more than three or four times, refresh the creative or pause.

A feed ad is judged in the half second between a cousin's wedding photo and a news story. The posts that work share a few traits.

• One strong image, no clutter, cropped for the roughly 400-pixel feed width and legible on a phone screen.
• A first sentence that could stand alone. Longer captions are truncated behind "See more."
• A reason that is true today. New arrival, limited stock, seasonal, local event. Evergreen posts fade.
• Social proof you actually have. Run the post organically for a day, collect genuine comments and likes, then promote the same post so the ad carries them.
• A link that lands on a matching page. Sending a shoe ad to your homepage wastes the click. Build or adapt a landing page for each major campaign.

Boosting from the page button. The Boost Post button targets fans and their friends with no exclusions and no placement control. Fine for a quick $20; wrong for a program.

Buying likes from broad or international audiences. Cheap likes from accounts that will never buy dilute your page reach and make every later post look weaker.

No frequency control. The same audience shown the same photo twelve times produces hides, and hides raise your cost for months.

Judging on likes instead of conversions. Install the pixel, tag the links and report revenue or leads per dollar. Nothing else settles the argument about whether Facebook works for you.

Ignoring mobile. Mobile is more than half of Facebook usage and your checkout may not work there. Fix the site or exclude mobile placements until it does.

Discover: we audit your page, your past ad spend, your customer list and how your site performs on phones, and find where the money went. Plan: we define audiences, placements, budgets, creative themes and a measurement setup in one document, with a cost-per-result target for each audience before anything runs. Build: our performance marketing team sets up Power Editor, Custom and Lookalike Audiences, the conversion pixel and the campaigns; our social media team produces the posts and manages the comments the ads generate; our web team builds the landing experiences the clicks arrive on. Improve: weekly reviews of frequency, negative feedback and cost per conversion, fortnightly creative refreshes and monthly list uploads. Because brand, growth, web and technology sit in one team, the post, the audience and the page are built together.

The Ecommerce Growth engagement is the representative pattern. An online retailer with a healthy customer file and a disappointing history of sidebar ads moved its Facebook budget entirely into the feed: Custom Audiences built from purchase history and segmented by last order date, current buyers excluded from acquisition, Lookalikes seeded from the best customers, photo posts shot specifically for a phone screen, and the conversion pixel on the order confirmation page so every decision could be made on cost per order rather than cost per like.