How Do Facebook Ads Work? And Should You Advertise on Facebook?

Learn all about Facebook ads with our video featuring Hunter from our Social Media Team!  Transcript: You might be wondering: How do Facebook ads work and do Facebook ads work? I’m here to tell you yes, they do. Facebook ads can turn social media users into your customers because they can reach the right people.

I’ll explain how this happens.   If you’ve used Facebook before, I’m sure you’ve seen an ad that seems like it was made just for you.  Maybe you like a lot of pages about music, or shopping, or sports. And then you see an ad from a business focused on one of those topics. When you or anyone on Facebook creates your profile and engages with the platform, you give Facebook valuable data about yourself that marketers can then tap into to create really, really targeted ad campaigns.  Imagine what you can do with your business’s Facebook ads—so…many…possibilities. In this video, I’ll tell you all about how Facebook advertising works, the different types of Facebook ads, and more. Keep watching!

How do Facebook ads work?

Facebook ads, which appear in Facebook newsfeeds, work by targeting users based on their location, demographics, and profile data.

When a Facebook ad earns an impression, click, or purchase, the advertiser is charged. How much an advertiser gets charged depends on their budget and bid, which they set before launching a Facebook ad.

How Facebook ads work: Ad components

Now that you know the basics of how Facebook ads work, let’s talk about the details. The components of every Facebook ad campaign are:

  • Creative: Your creative includes your ad copy, as well as any visuals, like photos or videos.
  • Targeting: Your targeting determines who will see your ads, like users in California or Vermont.
  • Placement: Your placement determines where your ad appears, like in newsfeeds or Facebook Messenger.
  • Bid: Your bid is the maximum amount you’re willing to pay for a click, view, or purchase.
  • Budget: Your budget is your maximum spend for a period, like a month.
  • Schedule: Your schedule is how long your ad will run, and when your ad will run.

Whenever you create a Facebook ad, you’ll need to think about these elements.

How Facebook ads work: Targeting options

Getting the most value and best results from Facebook ads requires taking advantage of the targeting options available. These targeting options, which range from location to workplace, are a critical part of how Facebook ads work. The targeting options available for Facebook ads are:

  • Location
  • Age
  • Gender
  • Interests
  • Connections
  • Relationship status
  • Language(s)
  • Education
  • Workplace

While you should launch your ads with targeting options, avoid over-targeting at the start of your campaign. This approach can result in low-performing ads. Instead, make your targeting broad initially and then refine it as you get more ad data.

How Facebook ads work: Ad types

Now, let’s talk about some of the different types of Facebook ads you can use with some Facebook ad examples so you know what your ads can look like.

  • Photo ads: These ads can look like a typical Facebook post, and actually, if you make a regular post with an image and a status, you can choose to turn that into your ad

A Facebook photo ad mock-up featuring someone writing on paper

  • Video ads: You have some different options when creating Facebook video ads for your business. These ads can appear within a video someone is watching, in someone’s feed, or even as a story. 

A Facebook video ad mock-up featuring an image of multicolored pencils

  • Carousel ads: A carousel ad lets a user scroll through up to 10 photos or videos from your company and click through if they’re interested in what they see. 

A Facebook carousel ad mock-up featuring someone writing, a laptop and notebook, and a stack of multicolored pencils.

  • Slideshow ads: Like a slideshow, this ad format lets you stitch together different photos or videos to get your message across and direct people to whatever landing page you may have. 

A Facebook slideshow ad mock-up featuring someone's hand writing, multicolored pencils, and a laptop with a notebook If you want to play around and see which ad types you like and which you don’t, you can pop into Facebook’s Creative Hub and make some mock-ups. There you’ll have the option to design a bunch of different ads in whatever format you want to try.  While creating the ad might be fun, you also have to consider how you’re going to get those ads to the people who will engage and, ultimately, help you meet your business goals. Don’t go anywhere! There’s even more to how Facebook ads work.

Why should you advertise on Facebook?

Okay, I don’t want to say everybody’s doing it, so I won’t.

But a lot of businesses use Facebook. The number is actually over 140 million businesses


Do Facebook ads really work?

I’ll stick with my yes from earlier—but it also depends on your industry and your goals. On average, Facebook ads do convert at a rate of 9-10%.

You can try out our super awesome AND free conversion rate calculator on our website.  But back to the main question: Do Facebook ads really work and are they worth your money?  Still, yes. Facebook is a big player when it comes to helping consumers decide what to buy. One survey says consumers are actually over 50% as likely to buy from a company they follow on Facebook over a bunch of other social media platforms. So if you want Facebook users to become customers, you should definitely consider advertising on the platform.  Now you know how effective Facebook ads can be, but how exactly does Facebook help you reach your target audience?

[Example] How Facebook ads work

If you’re looking to learn more about how Facebook advertising works, check out this example: As I mentioned at the beginning of this video, there’s a lot of audience data available to you if you advertise on Facebook.  You can target people based on things like their demographics, location, interests, or even interaction with your business’s website.  Something really cool with Facebook ads is that you can create a custom audience based on a lot of different factors like people’s industries, relationships, life events, and more.  So if you share a life event saying you just had a baby, and then you start seeing ads for baby clothes, you know why.  In addition, you can upload a list of customers who gave you their information on or offline to get even more specific.  Facebook also has a piece of code you put on your website called the Facebook pixel that can help you target people who will interact with your site and your ads.  And I’ve only just scratched the surface.

Check out our Facebook Ads Manager blog post to learn more about setting up your ads. Next up is the cost of Facebook ads.


What is the cost of Facebook ads?

The great thing about paying for Facebook ads is that you can set your budget, so you’re not forced to spend ten times what you originally planned.  Facebook ads appear because of an auction. Relevance, ad quality, and your bid are important to Facebook when determining which ad should appear.  Costs can vary depending on factors like your industry, the time of year, your ad objective, and other things, but what you decide to spend is really up to you.  So for example, if your goal is to get a purchase on your site from your ad rather than just brand awareness, it’s likely you’ll be paying more because of the value of your goal.   When you create your ads, you also choose a bid strategy. This depends on your goals and your budget.

You can check out Facebook’s entire bid strategy chart on their site, but I’ll go over a few options here. 

  • Lowest cost: With the lowest cost bidding, Facebook makes the bids for you based on what they see as the lowest cost opportunities for your ads. 
  • Bid cap: You choose your bid cap, meaning you set a limit for the max bid.
  • Target cost: If you choose target cost bidding, you try to keep your bids at the same cost.

Each bidding strategy has its pros and cons, so you have to decide what works best for your business.

Learn more about how Facebook ads work

Check out our guide on Facebook advertising to learn more about the varying costs of Facebook ads.  And that’s it for today’s lesson. I hope you have a better understanding of how Facebook ads work now. If you want to start advertising on Facebook, don’t hesitate to reach out to us at 888-601-5359. And subscribe to our YouTube channel for more digital marketing videos like this one!

We’ll see you soon!

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